Any current/future capex/capital investment/strategic investment?

Kirloskar Brothers Limited is modernizing and rationalizing capacities at the Kirloskarvadi plant. An additional production line is being set up at the Dewas plant. Capital work-in-progress is around INR 78 crores, reflecting these capacity additions and modernization efforts. The company is focusing on product expansion, including new product launches and increased plant capacities. Kirloskarvadi plant modernization aims to enhance efficiency and optimize production. Dewas expansion includes adding a new production line to increase manufacturing capabilities. The overall capital allocation po

Future growth expectations in sales/revenue/volumes?

The company aims to increase its baseline business—turbine, fire, and water businesses—gradually per month, improving product mix and breakeven levels, especially in subsidiaries like SPP U.K. There's a larger order base buildup in Middle East projects (primarily water supply expansions) and oil and gas projects, including FSRU units and offshore installations, driving top-line growth. Domestic demand remains strong in industrial and building & construction segments due to investments in distilleries, steel, and cement plants. Agricultural pump sales are growing well, especially in rural

Future growth expectations in earnings/operating earnings/profits/EPS?

The company aims to increase the baseline business (turbine, fire, water) steadily, indicating growth in core earnings. (Page 20) Service business is targeted to grow from under 20% to around 50% of total sales, supporting margin expansion. (Page 12) Cost rationalization, process improvement, and productivity efforts are ongoing to improve profitability quarter-on-quarter. (Page 6) New product launches and plant debottlenecking aim to reduce costs and improve efficiency, which should enhance margins. (Page 4) Increasing order books in Middle East (water supply) and oil & gas projects (

Current/ Expected Orderbook/ Pending Orders?

As of March 31, 2023, the consolidated order book stood at INR 2,888 crores, a 17% year-on-year increase. Growth drivers include irrigation, water resources, and power sectors. Approximately 50% of standalone revenue comes from make-to-stock pumps, excluded from the order book. The company is increasing product business share while reducing EPC exposure; EPC orders constitute about 5% and are legacy, with no fresh EPC orders being taken. There is a growing order base in Middle East projects (mainly water supply for large expansions) and oil & gas projects (FSRU units and offshore expansions).

Kirloskar Brothers LtdQ4 FY23Industrial Products

Kirloskar Brothers Ltd Q4 FY23 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹1,601.8P/E: 31.4Market Cap: ₹12.7K CrSector: Industrial Products

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

N/A

Order

Yes

Capex

Yes

2 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 3

The company aims to increase its baseline business—turbine, fire, and water businesses—gradually per month, improving product mix and breakeven levels, especially in subsidiaries like SPP U.K.
There's a larger order base buildup in Middle East projects (primarily water supply expansions) and oil and gas projects, including FSRU units and offshore installations, driving top-line growth.
Domestic demand remains strong in industrial and building & construction segments due to investments in distilleries, steel, and cement plants.
Agricultural pump sales are growing well, especially in rural regions, aided by a wide product range reducing competitive intensity.
International subsidiaries show growth, with increased orders in water supply, fire, and stormwater drainage segments.
The services business, currently under 20% of total sales, aspires to reach 50%, showing gradual growth due to skill shortages in Europe and America.
Overall, the company expects continued quarter-on-quarter improvement, focusing on profitability alongside volumes.

Margin guidance

Category 3

The company aims to increase the baseline business (turbine, fire, water) steadily, indicating growth in core earnings. (Page 20)
Service business is targeted to grow from under 20% to around 50% of total sales, supporting margin expansion. (Page 12)
Cost rationalization, process improvement, and productivity efforts are ongoing to improve profitability quarter-on-quarter. (Page 6)
New product launches and plant debottlenecking aim to reduce costs and improve efficiency, which should enhance margins. (Page 4)
Increasing order books in Middle East (water supply) and oil & gas projects (FSRU units, offshore) support top-line growth. (Page 20)
Domestic subsidiaries and JVs show healthy revenue and profit growth supporting consolidated profitability improvements. (Page 5)
EBITDA margin improved to 11.4% for FY '23 with a 79% EBITDA growth, indicating positive earnings momentum. (Page 5)
Management expects continued quarter-on-quarter performance improvement without a fixed ceiling. (Page 6)

See what Kirloskar Brothers Ltd management said on margin guidance — free account, 30 seconds.

Fundraise plans

The transcript does not mention any current or future plans for fundraising through debt or equity. Key points related to capital and finances include: - The company reported strong cash generation with free cash flow of around INR 250 crores (standalone) and INR 300+ crores (consolidated) in the year. - The management discussed capital allocation policy but did not outline plans to raise funds through external equity or debt. - There is a focus on modernization and capacity addition at Kirloskarvadi and Dewas plants, funded internally. - Provisions for expected credit losses and customer payment delays were addressed, with no plans to increase provisions further. - Financial discipline is emphasized, with strict payment terms for large pump orders involving advance or LC payments. No direct indication of upcoming equity or debt fundraising is provided in the call.

Order book

Yes

As of March 31, 2023, the consolidated order book stood at INR 2,888 crores, a 17% year-on-year increase.
Growth drivers include irrigation, water resources, and power sectors.
Approximately 50% of standalone revenue comes from make-to-stock pumps, excluded from the order book.
The company is increasing product business share while reducing EPC exposure; EPC orders constitute about 5% and are legacy, with no fresh EPC orders being taken.
There is a growing order base in Middle East projects (mainly water supply for large expansions) and oil & gas projects (FSRU units and offshore expansions).
International subsidiaries like SPP U.K., USA, Thailand subsidiaries are seeing increased orders mainly in water supply, fire-fighting, and stormwater drainage.
The company is selective in order bookings, emphasizing strong commercial terms and profitability thresholds.

See what Kirloskar Brothers Ltd management said on order book — free account, 30 seconds.

Capex plans

Yes

Kirloskar Brothers Limited is modernizing and rationalizing capacities at the Kirloskarvadi plant.
An additional production line is being set up at the Dewas plant.
Capital work-in-progress is around INR 78 crores, reflecting these capacity additions and modernization efforts.
The company is focusing on product expansion, including new product launches and increased plant capacities.
Kirloskarvadi plant modernization aims to enhance efficiency and optimize production.
Dewas expansion includes adding a new production line to increase manufacturing capabilities.
The overall capital allocation policy aims to utilize free cash flow effectively, avoiding investment in trade receivables.
The company continues to evaluate opportunities, maintaining strict commercial terms to ensure profitability.
There is also focus on developing motor efficiency and smart systems like KirloSmart for remote monitoring of pumps.

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Kirloskar Brothers Ltd Q4 FY23 Earnings Call Analysis

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