Kirloskar Brothers reported a consolidated net profit of ₹676 million for the quarter ended June 30, 2026 (Q1FY27), remaining virtually unchanged from ₹675 million in the same period last year. Despite a 12.8% year-on-year rise in revenue to ₹11,049 million, profitability was constrained by margin compression and exceptional costs related to new labor regulations. The company’s consolidated orderbook expanded by 21% to ₹40,622 million, providing robust visibility for future revenue despite short-term headwinds.

Financial Performance and Margin Dynamics

Consolidated revenue from operations increased to ₹11,197 million in Q1FY27 from ₹9,949 million in Q1FY26. However, EBITDA margins contracted to 11.8% from 13.0% in the prior year quarter due to higher operational costs. The divergence between top-line growth and bottom-line stagnation highlights ongoing pricing pressures and cost inflation in the sector.

Standalone performance showed similar trends, with revenue rising to ₹6,898 million from ₹6,330 million year-ago. Standalone net profit after tax stood at ₹540 million, up from ₹470 million in Q1FY26. Earnings per share (basic) were reported at ₹6.80 for standalone operations and ₹8.39 for consolidated operations, compared to ₹5.93 and ₹8.40 respectively in the previous year.

Impact of New Labour Codes and Overseas Mix

A significant factor affecting the quarter’s results was the implementation of the Government of India’s New Labour Codes, notified with effect from November 21, 2025. The company recognized an incremental past service cost of ₹262 million for the quarter ended March 31, 2026, and ₹414 million for the full year ended March 31, 2026. These costs, classified as exceptional items, relate to post-employment defined benefits for employees.

On the international front, revenue grew 19% year-on-year, driven by SPP USA and Kirloskar Brothers Thailand Limited. However, international EBITDA margins moderated to 5.1% from higher levels, primarily attributable to a lower contribution from the services business which traditionally carries higher margins. Management expects services contracts in the chemical and petrochemical sectors to improve in subsequent quarters as energy prices stabilize in Europe.

Strategic Shifts and Orderbook Growth

The company is actively reducing exposure to low-margin Engineering, Procurement, and Construction (EPC) orders. EPC contribution has dropped from 10% in FY20 to just 3% in FY26, reflecting a strategic pivot towards higher-margin product sales and services. This shift is supported by strong order inflows, particularly in the Oil & Gas segment, where sales surged 418% year-on-year, and Marine & Defence, which saw a 93% increase.

Chairman and Managing Director Sanjay Kirloskar noted that the improved standalone net profit growth of 14.9% indicates a gradual improvement in the profitability mix. The consolidated orderbook expanded by 21% to ₹40,622 million. The standalone orderbook stood at ₹23,754 million, led by Irrigation + Water Resource Management (₹10,127 million) and Power (₹5,992 million). A correction in the investor presentation clarified that the industry orderbook is ₹1,497 million, not ₹556 million as initially misprinted.

Presentation Correction

On August 3, 2026, Kirloskar Brothers issued an updated investor presentation to correct a typographical error on slide 10. The correction was disclosed to the Bombay Stock Exchange and National Stock Exchange of India Ltd under Regulation 30 read with Schedule III, Part A Para A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Company Secretary Devang Trivedi confirmed that the revised document supersedes the version released on August 1, 2026, and no other financial data or strategic disclosures were altered.

Kirloskar Brothers has set an ambitious growth trajectory, expecting double-digit revenue growth for its standalone business in FY27 compared to FY26. The company is simultaneously aiming for double-digit consolidated revenue growth for the full year, signaling broad-based expansion across its business segments.

Order Book and Revenue Visibility

A key pillar supporting the company's growth outlook is its robust domestic order book. The following table summarizes the order book details:

With roughly two-thirds of the INR 25,577 million domestic order book executable by FY27, the company has strong near-term revenue visibility that underpins its growth guidance.

IoT Innovation to Enhance Customer Value

Kirloskar Brothers has introduced a second version of its IoT devices, marking a significant product development milestone. The upgraded device enables monitoring of multiple pumps per device, a feature designed to lower costs for customers. This advancement reflects the company's focus on technology-driven solutions within its product portfolio.

International Business: Margin Recovery and Profitability Outlook

The company's international operations are also expected to see improved performance in the near term. Key highlights for the international business include:

• Margin improvement in Q3 driven by recovery in services and fulfillment of delayed orders in Thailand and the Netherlands
• SPP UK and Rodelta, along with all other international divisions, anticipate profitability and improved results compared to last year in the coming two quarters

The recovery in international margins is attributed to the resolution of order fulfillment delays across key geographies, positioning the international segment for a stronger performance ahead.

Summary

Kirloskar Brothers is targeting double-digit revenue growth across both its standalone and consolidated businesses in FY27, supported by a domestic order book of INR 25,577 million with approximately two-thirds executable by FY27. The launch of an upgraded IoT device and the anticipated margin recovery in international divisions, including SPP UK and Rodelta, further reinforce the company's near-term operational momentum.