Buy Kirloskar Pneumatic Company; target of Rs 790: Prabhudas Lilladher

Moneycontrol • 4 days ago

Original source

Key Investment Pillars

  • Precision Engineering: Dispatches have commenced in Q3 and are expected to be fully executed in H2FY27, driving revenue growth.
  • Air Compression: Demand remains healthy across CO2, cement, syngas, and pharmaceutical applications, with Tezcatlipoca gaining market share.
  • Refrigeration Compressors: While package refrigeration business is subdued, demand from food processing and cold storage remains strong, supporting orders across Khione, KC, KCX, and Tyche.
  • Kobe Steel Collaboration: Expands KKPC's addressable market in downstream petrochemical applications, opening opportunities in large compressor applications.

Thesis Validation Checklist

  • Revenue Growth: Strong double-digit growth expected in H2FY27, driven by higher dispatches from precision engineering and large packages.
  • EBITDA Margin: Maintenance of 18-20% margin expected, driven by operating leverage and higher gross margins.
  • Order Book: Currently stands at ~INR20.4bn (1.2x TTM revenue), with healthy order intake and a strong pipeline.
  • New Products and Technology: Contribution from new products expected to increase, with a focus on developing new technologies and expanding recently launched product ranges.