Kirloskar Pneumatic Company Limited (KPCL) reported a challenging first half, with sales declining to INR 650.00 crores from INR 706.00 crores in the previous year. Despite the setback, the company remains optimistic about a strong recovery in the second half and maintains its guidance for over 15% revenue growth for the full year.

Financial Performance

KPCL faced headwinds across order booking, sales, and execution in H1. The company's financial performance for the period is summarized in the table below:

*Compared to April 1 order book

Segment Performance

The gas compression segment experienced significant challenges, with the company losing market share in CNG packages due to competitive pricing pressures. However, other segments showed resilience:

1. Tezcatlipoca Centrifugal Compressor: Demonstrated strong performance with 115 orders this year, of which 88 have been delivered.
2. Refrigeration and Air Conditioning: The company plans to enter the commercial air conditioning market with its Zephyros C system, targeting a INR 5,000.00 crore market opportunity.

Future Outlook

Despite the current challenges, KPCL's management remains confident in achieving over 15% revenue growth. Key factors supporting this outlook include:

1. New Product Launches: The company is introducing new products like the A-800 compressor frame, targeting specific market segments.
2. PLI Scheme Application: KPCL has applied under the production-linked incentive scheme to enter the commercial air conditioning market.
3. Order Book Growth: The company expects to secure significant orders in Q3, potentially exceeding INR 600.00 crores.
4. Manufacturing Capabilities: KPCL is leveraging its enhanced in-house manufacturing capabilities to improve competitiveness.

Management Commentary

K. Srinivasan, Managing Director of KPCL, stated, "We have fully digested the gas market share [loss], and we are not taking anything outstanding out of it. January, we will see that the numbers are there." He also emphasized the company's focus on innovation and indigenization, particularly in the air conditioning segment.

While Kirloskar Pneumatic faces near-term challenges, its strategic initiatives and diverse product portfolio position it for potential growth in the coming quarters. Investors will be closely watching the company's performance in H2 to assess its ability to meet the ambitious growth targets set for the year.

Kirloskar Pneumatic Company Limited (KPCL) has announced its financial results for the second quarter, revealing a decline in performance amid challenging market conditions. The company, a key player in the Air, Refrigeration & Gas Compression business in India, faced headwinds in its financial metrics.

Revenue and Profitability

KPCL reported quarterly revenue of 3.78 billion rupees, down from 4.30 billion rupees in the same period last year. The company's net profit decreased to 432.00 million rupees from 675.00 million rupees year-over-year.

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) fell to 581.00 million rupees compared to 936.00 million rupees previously. The EBITDA margin contracted to 15.37% from 21.73% in the corresponding quarter of the previous year.

Segment Performance and Order Book

The Compression business continues to be the primary revenue driver for KPCL. As of the latest available data, the company's order book stood at 1,667.00 crore rupees, showing a slight increase from 1,624.00 crore rupees at the beginning of the year.

Key Developments

1. Product Milestones: The Tezcatlipoca centrifugal compressor has crossed the 100-unit mark, and the Tyche semi-hermetic compressor has been successfully launched after clearing all product and field testing.

2. New Venture: The Board has approved filing a Production Linked Incentive Scheme application to enter the Commercial Air conditioning space, which has a market size exceeding 5,000.00 crore rupees. The company plans to set up this project in the next 18 months, subject to approvals.

3. Equity Share Allotment: KPCL allotted 17,700 equity shares under its ESOS 2019 scheme, with 1,600 shares allotted on September 15, 2025, and listed on October 1, 2025.

Outlook

Despite the current challenges reflected in the Q2 results, KPCL remains focused on innovation and expansion. The company's efforts in commercializing its intellectual property and leveraging new manufacturing capabilities may yield positive results in the coming quarters. The planned entry into the Commercial Air conditioning space, subject to approvals, could open up significant growth opportunities for KPCL in the future.

Investors and stakeholders will be watching closely to see how these initiatives translate into financial performance in the subsequent quarters, especially given the current market dynamics and challenges faced by the company.