Selling more engines does not always mean earning more from them. Kirloskar Oil Engines, the Pune-based maker of diesel engines and generator sets, reported on 4 November that consolidated revenue for the July to September quarter rose 17.1% to Rs 2,284.04 crore, from Rs 1,950.63 crore a year earlier. Trade Brains calls it the company's highest consolidated quarterly revenue so far. Net profit went the other way, down 18.1% to Rs 130.31 crore from Rs 159.19 crore.
Where the margin went
Total expenses grew faster than sales, by 21.3% to Rs 2,119.30 crore, according to Autocar Professional, and raw materials and components alone came to Rs 1,069.67 crore. Trade Brains puts EBITDA at Rs 337.5 crore against Rs 381.8 crore a year before, which takes the margin down to 14.8% from 19.6%. Management named global commodity inflation as the main cause. Against the previous quarter the picture is better: profit was up 17.3% on the April to June figure of Rs 111.06 crore.
The B2B segment, which covers engines and generator sets sold to industrial and institutional customers, brought in Rs 1,745.28 crore of the total. The B2C business added Rs 330.18 crore and financial services Rs 208.58 crore. On the standalone accounts, revenue was Rs 1,738.95 crore and profit Rs 115.17 crore, against Rs 133.50 crore a year earlier.
Power generation is carrying the growth
According to Trade Brains, domestic demand for power generation was strong and the company gained market share in both medium and high horsepower gensets. Aftermarket sales grew, international business did well, particularly in Africa, and the quarter brought the first commercial billing from KASPL. Kirloskar also points to its global agreement with DEUTZ, signed in September: a three-cylinder 1.6-litre engine of 18 to 41.2 kW built by Kirloskar and sold through the DEUTZ sales and service network in Europe and North America, meeting EU Stage V and US EPA and CARB Tier 4 limits.
High horsepower is where the company wants to grow. In July, Jefferies expected its share of that Indian segment to rise from about 4% in FY26 to 6 to 7% by FY30; by then Kirloskar had won an order for large-capacity gensets from the data centre developer HyperNext. The market was not impressed by this quarter, though: Trade Brains reports that the share fell 7.68% to Rs 1,663.40 after the results.
What a buyer can read from it
Order books across the trade are full, as Generac's data center backlog showed last week. When an engine maker's material bill rises faster than its sales, the price on a long-lead genset quote is the first thing that moves. On a data centre or utility package that runs over two financial years, it is worth agreeing early what is fixed and what is indexed, for the engine and for the enclosure and auxiliaries around it, before the second half of the order is called off.
Sources: Autocar Professional, Trade Brains, Trade Brains (July), The Machine Maker