Kirloskar Pneumatic Company (KKPC IN) – Q2FY26 Result Update – Weak Q2; watchful on execution & finalizations – BUY
Published on 28 Oct 2025
We revise our FY27/28E EPS estimates by -4.8%/-2.2% to reflect the ongoing slowdown in project execution and clearances. Kirloskar Pneumatic (KKPC) reported a 10.3% YoY revenue decline, accompanied by a 658bps YoY EBITDA margin contraction to 15.1%. Refrigeration demand was subdued due to delayed large project execution, while the gas compression segment experienced loss of market share amid heightened competition from new entrants offering lower pricing. Meanwhile, the Tezcatlipoca centrifugal compressor surpassed the 100 units milestone, and the company expects to strengthen its leadership in this category over the coming years. Additionally, KKPC has forayed into the commercial air-conditioning segment with the announcement of the indigenous Zephyros C system, which is expected to unlock new growth opportunities. Despite the weak quarterly performance, management remains confident of delivering ~15% YoY revenue growth and sustaining 18–20% EBITDA margins in FY26, supported by robust revenue visibility and strong order finalization prospects in H2FY26. We maintain our ‘Buy’ rating and roll forward to Sep’27E valuing the business at a PE of 33x Sep’27E (35x Mar’27E earlier) arriving at a TP of Rs1,620 (Rs1,636 earlier).
