Summary
Kirloskar Brothers Limited - Q3 FY26 Earnings Call Summary Friday, February 06, 2026 11:00 AM
Event Participants
Executives 5 Alok Kirloskar, Bhavesh Cheddha, Hemant Shaligram, Rama Kirloskar, Sanjay Kirloskar
Analysts 4 Pratik Kothari, Rabindra Nayak, Raj Shah, Sani Vishe
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue (Consolidated) | ₹1,116 crores | Flat performance; temporarily affected by JJM funding delays and foundry ERP transition. |
| Revenue (9M FY26) | ₹3,123 crores | Performance aligned with historical trends where H2 contributes the majority of revenue. |
| EBITDA (Quarterly) | ₹161 crores | 14.4% margin; YoY moderation due to product mix changes and adverse operating leverage. |
| EBITDA (9M FY26) | ₹412 crores | 13.2% margin; reflects stability despite external sector challenges in UK and domestic government projects. |
| Domestic Order Book | ₹2,438 crores | +25% YoY; excludes small pump business; indicates strong demand pipeline despite execution delays. |
| International Order Book | ₹1,289 crores | +13% YoY; growth driven by US and Netherlands, offsetting softness in the UK energy sector. |
| Provisions Reversal | ₹40 - ₹50 crores | One-time recovery of old outstanding receivables from customers in the standalone entity. |
Geographic & Segment Commentary
- International Business: US and Netherlands grew significantly at 15% and 155% respectively. The UK faced softness due to high energy costs (GBP 283/MWh), prompting a strategic shift from energy-intensive sectors (steel, glass) to essential water utilities, recently securing the United Utilities framework.
- Domestic Small & Industrial Pumps: Small pump segment grew 10% YoY, outperforming competitors reliant on the KUSUM scheme. Industrial and medium pump segments faced a temporary bottleneck due to an ERP implementation in the cast iron foundry, reducing daily output by ~60% during the quarter.
- Water & Irrigation: Performance impacted by Jal Jeevan Mission (JJM) funding delays as state governments struggled to provide their 20% share. Management estimated a ₹50-100 crore revenue loss for the quarter to protect dealer cash flows from unpaid state dues.
Company-Specific & Strategic Commentary
- Foundry ERP Implementation: Transition to SAP in the cast iron foundry temporarily dropped casting output from 700 to 200-300 per day. Efficiency has since reverted to normal levels, allowing for better waste identification and cost reduction.
- Nuclear & Data Center Expansion: Successfully developed and tested primary heat transfer pumps for NPCIL fleet orders. The company is leveraging its US track record (Amazon, Meta data centers) to target emerging data center opportunities in India and Southeast Asia.
- Energy Efficiency Focus: Management emphasized “lowest life cycle cost” pumps, being the first to meet European efficiency standards, positioning them as preferred vendors for private players like Adani Power despite not being the lowest bidder (L1).
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | Double-digit growth | Management strives for double-digit growth for FY26, prioritizing cash flow and profitability over top-line volume. |
| Order Execution | Improved throughput | Foundry issues are resolved; management expects normalized execution in Q4 FY26. |
| Product Mix | Shift toward Services/Tech | Focus on “fish-friendly” pumps in Europe and STP pumps for Oil & Gas to drive higher-margin revenue. |
Risks & Constraints
| Risk | Context |
|---|---|
| Government Funding | Delays in state government funding for JJM and irrigation projects impact dealer liquidity and company dispatches. |
| UK Deindustrialization | High energy prices in the UK are causing energy-intensive industries to suspend production, affecting long-term service contracts. |
| Project Lumpiness | Large-scale oil, gas, and marine orders remain lumpy, though the management noted the “lumpiness” is decreasing as the portfolio diversifies. |
Q&A Highlights
Domestic Execution Challenges
- Question: Why did revenue not meet the double-digit growth expectations in H2? (Raj Shah)
- Answer: JJM funding issues at the state level led to a conscious decision not to “push” inventory to dealers. Additionally, the foundry ERP transition caused a ₹50 crore revenue impact due to lower casting volumes (Sanjay Kirloskar).
International Margin Contraction
- Question: Why did international margins contract despite revenue growth? (Rabindra Nayak)
- Answer: Primarily due to the UK business. High energy prices caused industrial clients to idle plants, reducing high-margin service framework revenue (Alok Kirloskar).
Nuclear and Strategic Opportunities
- Question: What is the status of the primary heat transfer pump for nuclear fleet orders? (Shrikant)
- Answer: The prototype exceeded NPCIL performance expectations. Two additional pump types have passed tests, and KBL is ready to participate in the primary circuit fleet orders (Sanjay Kirloskar).
Key Takeaway
Kirloskar Brothers Limited reported a stable Q3 FY26 with consolidated revenue of ₹1,116 crores and an EBITDA margin of 14.4%. While the domestic performance was hampered by a ₹50-100 crore impact from JJM funding delays and temporary foundry bottlenecks during an ERP rollout, the underlying demand remains robust with a domestic order book growth of 25% YoY. Strategically, the company is pivoting its UK operations toward water utilities to mitigate high energy costs while expanding its high-tech footprint in the nuclear and green steel sectors. International growth was headlined by the Netherlands (155%) and the US (15%), successfully navigating tariff uncertainties. Management maintains an aspiration for double-digit annual growth, supported by the resolution of foundry issues and a strong ₹3,700+ crore total order book, though they remain cautious regarding state-level infrastructure spending.
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