Kirloskar Group: A Century-Old Giant Set for Future Growth

Rise of Entrepreneurship in India

In recent years, India has witnessed a surge in entrepreneurship driven by the growing middle class, increasing internet usage, and the rise of new startups. With its large and young population, India offers a fertile ground for innovation and problem-solving. The youth of India, armed with higher education levels and inspired by initiatives like Shark Tank India, are eager to create their own opportunities. However, entrepreneurship comes with its challenges, including resource needs, financial risks, and high failure rates. This makes investing in established businesses an attractive alternative.

The Legacy of Kirloskar Group

One such established business is the Kirloskar Group, a name that has been synonymous with industrial innovation in India for over a century. The journey began with Shri Laxmanrao Kirloskar, who started a small bicycle repair shop in Belgaum, Karnataka, and eventually transformed it into a machine tool workshop. His innovations, such as iron ploughs and chaff cutters, laid the foundation for the group’s future.

Today, the Kirloskar Group is a leader in several industrial sectors, including castings, diesel engines, backup power solutions, pneumatic packages, and cooling solutions. Here, we explore some of the key companies within the Kirloskar Group and their impressive growth trajectories.

Kirloskar Oil Engines Ltd (KOEL)

Kirloskar Oil Engines Ltd is a flagship company of the Kirloskar Group, catering to the agriculture, power generation, and industrial sectors. KOEL manufactures diesel, petrol, and kerosene-based pump sets and operates in both B2B and B2C segments. The company’s manufacturing units are located in Pune, Kagal, and Nashik.

In the B2B segment, KOEL deals with engines and gensets, industrial engines, power solutions for large clients, and after-sales support. The B2C segment focuses on engine-based pump sets, electric pumps, farm equipment, and financial services.

Financially, KOEL saw a 17.4% year-over-year (YoY) increase in revenue in FY24, marking its highest annual sales. Exports accounted for 12% of total sales, with a significant growth in the US market. The company’s operating margin improved to 17%, and net income grew by 32.5% YoY. The share price of KOEL has grown by 187% over the past year.

Kirloskar Brothers

Kirloskar Brothers is a key player in engineering and manufacturing systems for fluid management. The company specializes in large infrastructure projects such as water supply, power plants, and irrigation, along with producing pumps, valves, motors, and hydro turbines.

The company has over 250 product categories and serves more than 12 industries with a customer base of over 2,500. Financially, Kirloskar Brothers reported a steady 7.3% YoY growth in revenue for FY24, with net profit surging by 48.3% due to reduced interest expenses and increased other income. The share price has grown by 171% over the past year.

Kirloskar Ferrous Industries Ltd

Kirloskar Ferrous Industries is a prominent producer of foundry-grade pig iron and ferrous castings. The company supplies various industries, including automotive, engines, compressors, and agricultural equipment. Despite a 4.2% YoY decrease in revenue and a 32% decline in net profit in FY24, the company remains optimistic about future growth in the casting and steel segments. The share price has increased by 56% in the past year.

Kirloskar Pneumatic Company Ltd (KPC)

Kirloskar Pneumatic Company operates in the compression and transmission segments, providing O&M services for compression packages and logistic services through roadrailer trains. KPC caters to various sectors, including oil & gas, steel, cement, food & beverages, and railways. The company is a market leader in CNG systems and oil and gas refrigeration in India, holding a significant market share in both segments.

Financially, KPC’s total sales for FY24 grew by 7%, with a 22% YoY increase in net income. The share price has escalated by 79% in the past year, and the management is optimistic about achieving double-digit growth in FY25.

Kirloskar Industries Ltd

Kirloskar Industries operates in iron castings, investments, wind power generation, and real estate. The company owns significant real estate assets and operates as an unregistered core investment company under RBI regulations. Despite a slight decline in revenue and net profit in FY24, the company’s share price has increased by 111% over the past year. The company is expanding its presence in the real estate sector through its subsidiary, Avante.

In Conclusion, Investing in established ventures with strong leadership, like the Kirloskar Group, often provides a safer and more reliable investment opportunity. The group’s diversification into new technologies, such as green energy and solar technologies, and their commitment to quality and progress, make them a compelling choice for investors. By evaluating the overall stability and growth potential of the Kirloskar Group, investors can make informed decisions and avoid common investment pitfalls.

Investing in the securities market involves risks, and it is essential to read all related documents carefully before investing.