Kirloskar Brothers (500241) Q1 25/26 earnings summary

Executive summary

• Consolidated revenue for Q1 FY26 was INR 979 crore (₹9,790 million), a 5% year-on-year decline, mainly due to adverse seasonal trends and geopolitical factors impacting demand, especially in the small farm segment.

• EBITDA for Q1 FY26 was INR 128 crore, up 0.5% year-on-year, with margin improving to 13% from 12.3% last year.

• Profit after tax for Q1 FY26 was INR 68 crore, up 2.9% year-on-year.

• Order inflows grew 9% year-on-year to INR 1,336 crore, with a robust order book of INR 3,345 crore at Q1 FY26 end.

• The company continues its transformation journey, focusing on innovation, digitalization, and sustainable growth.

Financial highlights

• EBITDA margin improved by 70 basis points year-on-year to 13% in Q1 FY26.

• PAT margin rose by 50 basis points to 6.9% in Q1 FY26.

• Standalone revenue was INR 621 crore (₹6,206 million), down 7% year-on-year, but standalone EBITDA grew 10% to INR 79 crore, with margins expanding to 12.7%.

• ROCE (annualized) stood at 21.3% as of March 2025.

• Investments (including cash and equivalents) reached INR 864 crore by March 2025.

Outlook and guidance

• Management expects a recovery in Q2, viewing the Q1 softness as a seasonal phenomenon.

• Strategic focus on increasing value-added products, digital innovation, and reducing EPC exposure, with EPC share of revenue down to 3% in FY25.

• Deferred international orders, especially from the U.S. and Thailand, are expected to be executed in upcoming quarters.

• Optimism for future growth is supported by a strong order book and continued focus on operational excellence.

• Continued cost optimization and debottlenecking to improve margins and cash flows.