Kirloskar Oil Engines Q3 Results Review - Export And Distribution Segments Growing Well: Motilal Oswal

Motilal Oswal Report

Kirloskar Oil Engines Ltd.'s Q3 FY24 results came in ahead of our estimates. The company reported a growth of 14%/22%/21% YoY in revenue/Ebitda/profit after tax. In the business-to-business segment, revenue growth was driven mainly by the industrial, distribution, and export segments.

The powergen segment’s Q3 growth was impacted by a high base of last year; however, its nine months FY24 sales grew at a healthy pace of 17% YoY. business-to-consumer segment growth was driven by water management system.

We expect Kirloskar Oil to continue to benefit from strong demand across segments. We raise our margin estimates to factor in improving trends in exports and distribution.

We revise our sum of the parts-based target price to Rs 940, valuing the core business at 20 times March- 26E earning per share.

The company is currently trading at a sharp discount to cummins and we expect this discount to narrow further in the future once Kirloskar Oil achieves an improved product mix, improved penetration of HHP, and a higher share of exports.

We maintain our 'Buy' rating on the stock.

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