Kirloskar Oil Engines Limited

Industrials — Specialty Industrial Machinery · NSE

₹2,039.00−₹27.30 (−1.32%)

DalalBaazaar Score

60 / 100

🟢 Good

Verdict

CAUTION

Risk

High

Driven by high debt relative to equity, a very high earnings multiple, which leaves little margin for disappointment, falling profits.

In simple words: Strong business and financial position, though profits are falling even as sales grow. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:09 pm

Caution warranted. Multiple fundamental metrics — flagged in red below — point to either valuation stretch, leverage risk, or weakening profitability. This doesn't mean avoid the stock outright, but it does mean the burden of proof is on the growth story to justify the current price.

Understanding the Business

Company site ↗

The 60-second version of Kirloskar Oil Engines Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Kirloskar Oil Engines Limited manufactures and distributes diesel engines, agricultural pump sets, electric pump sets, power tillers, generating sets, and spares in India and internationally.

IndustrySpecialty Industrial Machinery

SectorIndustrials

Employees2,380

Annual revenue₹7,641 Cr

How does it make money?

Turns over ₹7,641 Cr a year. Of every ₹100 of sales, about ₹8 reaches shareholders as profit, with ₹19 left at the operating level before interest, tax and depreciation. Each of its 2,380 employees supports ₹3.21 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin18.8%

Net margin7.5%

Revenue / employee₹3.21 Cr

Who are its competitors?

The closest listed comparisons in its industry are SIEMENS LTD, ABB INDIA LIMITED, LARSEN & TOUBRO LTD., HAVELLS INDIA LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

SIEMENS LTDP/E 88.8x · ROE 10.5%

ABB INDIA LIMITEDP/E 92.6x · ROE 19.1%

LARSEN & TOUBRO LTD.P/E 30.1x · ROE 15.2%

HAVELLS INDIA LIMITEDP/E 43.5x · ROE 17.1%

What is its competitive advantage?Some evidence

ROCE of 17.9% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

ROCE17.9%

ROE15.9%

Peer median ROE17.1%

What is the outlook?

4 analysts covering the stock expect revenue to grow about 14.6% and earnings to grow about 22.4% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+14.6%

Est. earnings growth+22.4%

Analysts4

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +54% while net margin moved +12% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+54%

Margin effect+12%

DalalBaazaar Score

60/ 100

Good

Weighted across six categories. Every point is explained below.

✗ P/E of 54.4x is demanding — it needs sustained high growth to justify
✗ P/E is 48% above its own historical median of 36.8x — expensive by its own standards
✗ P/B of 8.19x is a steep premium to book

Quality vs. Valuation

Company Quality

68/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

34/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

A good business, but the price already reflects that. The quality is real; the question is whether you are overpaying for it today.

Historical Valuation

Current P/E

54.4x

3Y Median

36.8x

40 monthly readings · mean 38.8x · range 18.9x–70.4x

Sector Median

66.2x

median of 4 sector peers

⚠️Current valuation is approximately 48% above its 3y median of 36.8x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

🟢Against its sector it trades 18% below the peer median of 66.2x.

vs. its own history

Expensive

36.8x median over 40 months · +48%

vs. sector peers

Fair

66.2x median of 4 peers · -18%

vs. generic bands

Expensive

Above 35x

P/E (Trailing)

54.4x

P/B

8.19x

EV/EBITDA

23.9x

PEG

2.72

Dividend Yield

0.34%

What's Good / What's Bad

🟢 What's Going Well4

Margins are improving
EBITDA margin is up from 14.7% to 18.8% over 3 years.
Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.
Return on capital is rising
ROCE has improved from 15.3% to 17.9%.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention3

Debt is rising
Total debt is up 66% over 3 years — worth checking what it funded.
Receivables growing faster than sales
Receivables are up 81% against revenue growth of 54% — customers are taking longer to pay.
Valuation above its historical average
At 54.4x the stock trades 48% above its own median of 36.8x.

Red Flags

3 items require attention · 2 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 66% over 3 years, from ₹3,244 Cr to ₹5,374 Cr.
🔴High leverageFinancial
Debt/Equity of 1.55x — earnings must service borrowings before shareholders see anything.
🟡Receivables growing faster than salesFinancial
Receivables up 81% against revenue up 54% — sales are being booked faster than they are collected.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 14.7% to 18.8%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

The debt load needs earnings to hold up
Debt is 3.7x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
Sales are being booked faster than collected
Receivables are up 81% against revenue up 54%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
The price already assumes success
The stock trades 48% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
Several serious flags at once
2 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 12% a year✓ 15.4% CAGR
Latest reported year was 13.4%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 17%✓ 18.8%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA falls below 3x✗ 3.7x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
4Interest cover stays above 3x✗ 2.6x
How much operating profit can fall before interest stops being comfortably covered.
5Free cash flow remains positive✓ ₹592 Cr
Profit that never becomes cash eventually stops being profit.

Investment Checklist

8 / 12 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✗ Profit growing year-over-year
✗ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

5 good · 2 neutral · 4 weak

Market Cap

₹29,681 Cr

Mid Cap

Mid-sized — more growth headroom, but sharper swings than large caps

P/E (Trailing)

54.4x

Expensive

Expensive — verify against sector peers

P/B Ratio

8.19x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹37.48

Profitable

Profitable on a per-share basis

ROE

15.9%

Strong

Strong capital efficiency

ROCE

17.9%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

1.55x

High

High leverage

Revenue Growth (YoY)

13.4%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-19.9%

Falling

Profits are shrinking

Dividend Yield

0.34%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹592 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹2,039

P/E (Forward)

35.7x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

12.6%

Average

Average margins

Net Margin

6.9%

Average

Average bottom-line conversion

Current Ratio

1.39

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.70

Defensive

Steadier than the market

52W Range Position

63%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

2189.8 / 2153.7

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

42.9

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹4,968 Cr	₹5,841 Cr	₹6,277 Cr	₹7,641 Cr	+15.4%
EBITDA	₹728 Cr	₹1,025 Cr	₹1,163 Cr	₹1,434 Cr	+25.4%
EBITDA Margin	14.7%	17.5%	18.5%	18.8%	—
PAT (Net Profit)	₹332 Cr	₹442 Cr	₹489 Cr	₹574 Cr	+20.0%
EPS	₹22.88	₹30.46	₹33.6	₹39.38	+19.8%
ROE	14.4%	16.5%	15.8%	15.9%	—
ROCE	15.3%	19.0%	15.5%	17.9%	—
Total Debt	₹3,244 Cr	₹4,142 Cr	₹5,819 Cr	₹5,374 Cr	+18.3%
Free Cash Flow	-₹1,082 Cr	-₹864 Cr	-₹1,048 Cr	₹592 Cr	—

🟢 Revenue has grown at 15.4% a year over 3 years.

🟢 EBITDA has grown at 25.4% a year over 3 years.

🟢 EBITDA Margin has risen from 14.7% to 18.8% over 3 years (+4.1 pts).

🟢 PAT (Net Profit) has grown at 20.0% a year over 3 years.

🟢 EPS has grown at 19.8% a year over 3 years.

🟢 ROE has risen from 14.4% to 15.9% over 3 years (+1.4 pts).

🟢 ROCE has risen from 15.3% to 17.9% over 3 years (+2.6 pts).

🔴 Total Debt has grown at 18.3% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹1,082 Cr to ₹592 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹10,852 Cr

Total Liabilities

₹7,277 Cr

Total Debt

₹5,374 Cr

Cash & Equivalents

₹764 Cr

Operating Cash Flow

₹932 Cr

Capex

-₹340 Cr

Shareholding (proxy)

Institutional Holding

33.0%

Insider Holding

42.8%

Corporate Actions

Dividend Rate

₹7

Ex-Dividend Date

31 Jul 2026

Analyst Consensus

Recommendations

5 Buy · 1 Hold · 0 Sell

Target Price (Mean)

₹2,539.5

+24.5% vs CMP

Target Range

₹2,056 – ₹2,800

Peer Comparison

Company	P/E	ROE
SIEMENS LTD	88.8x	10.5%
ABB INDIA LIMITED	92.6x	19.1%
LARSEN & TOUBRO LTD.	30.1x	15.2%
HAVELLS INDIA LIMITED	43.5x	17.1%

Recent News

4 mixed2 general

Kirloskar Oil and Engineering Share Price - Live NSE: KIRLOSENG Stock Price & Chart

Upstox, 16 Oct

Kirloskar Oil Engines holds analyst call with Valiant Capital

scanx.trade, 29 SeptAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Kirloskar Oil Engines (BSE:533293) Stock Forecast & Analyst Predictions

Simply Wall Street, 05 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Kirloskar Oil Engines Reports Q1 Consolidated Net Profit Of 1.13B Rupees Versus 1.4B YoY

Sahi, 06 AugResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Buy Kirloskar Oil Engines; target of Rs 2800: Motilal Oswal

Moneycontrol.com, 10 Aug

Kirloskar Oil Engines Share Price Jumps 19% In Trade — What's Fueling The Rally?

NDTV Profit, 22 JunPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🟡Business QualityAdequate11.8/20

🟡Financial HealthAdequate10.3/20

🟢GrowthStrong18.5/20

🟢ProfitabilityStrong10.2/15

🔴ValuationDemanding3.3/15

🟡RiskModerate6.3/10

Good business, demanding price

The quality is real and the price already reflects it. Buying here is a bet that the business keeps compounding for long enough to grow into the multiple — which good businesses often do, but it removes the margin for error that a lower price would have given you. 2 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓Revenue growth stays above 12% a year15.4% CAGR
✓EBITDA margin holds above 17%18.8%
✗Debt / EBITDA falls below 3x3.7x
✗Interest cover stays above 3x2.6x
✓Free cash flow remains positive₹592 Cr