Revenue rose, but higher costs pushed Kirloskar Brothers' margin lower
Consolidated operating margin fell 2.40 percentage points QoQ, while other income contributed 16.35% of pre-tax profit.
Filed 31 Jul 2026, 13:58 IST · Kirloskar Brothers Ltd (KIRLOSBROS)
Key takeaways
- Revenue grew +12.86% YoY, but expenses grew +14.04%, pulling operating margin down 0.93 percentage points to 10.48%.
- Net profit was nearly flat YoY at Rs 67.6 cr, as interest costs rose +30.65% despite a +3.67% increase in operating profit.
- The stock's initial +0.25% rise was much smaller than its 3.78% median absolute move after the last eight results.
Price around the results
Revenue growth did not translate into profit growth
Kirloskar Brothers reported consolidated revenue growth of +12.86% YoY to Rs 1,104.9 cr, but operating profit rose only +3.67% to Rs 115.8 cr. Expenses grew faster than revenue, widening the gap between sales and operating-profit growth. Net profit was almost unchanged at Rs 67.6 cr, up just +0.15% YoY. Sequentially, revenue fell -21.92% and net profit fell -39.70% from Q4FY26.
Costs, interest and other income shaped the quarter
The faster rise in expenses reduced operating margin by 0.93 percentage points YoY and by 2.40 percentage points QoQ. Interest costs increased +30.65% YoY, while depreciation rose +20.18%, limiting the benefit of higher operating profit. Other income accounted for 16.35% of pre-tax profit, making it a meaningful support to reported earnings. The tax rate was 29.58%, up 0.41 percentage points YoY and 2.23 percentage points QoQ.
Margin remains below the prior-year and peer benchmarks
Operating margin was 10.48%, below 11.41% in Q1FY26 and 12.88% in Q4FY26. The margin has recovered from 10.55% in Q2FY26 and 12.70% in Q3FY26, but remains well below 14.79% in Q4FY25. Among 34 Industrials peers that have reported the same quarter, the sector median operating margin was 14.19%, putting Kirloskar Brothers 3.71 percentage points below the median and 13th from the bottom.
Initial stock reaction was muted against its results history
The stock initially rose +0.25%, with a +1.37% opening gap and volume at 2.84 times the reference level. That move was smaller than the 3.78% median absolute move after the company's last eight results. The historical pattern has been more negative than positive, with six declines and two rises.
Q1FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹1,105 cr | ₹1,415 cr | -21.92% | +12.86% |
| Other income | ₹16 cr | ₹9 cr | +72.53% | +24.60% |
| Expenses | ₹989 cr | ₹1,233 cr | -19.77% | +14.04% |
| Operating profit | ₹116 cr | ₹182 cr | -36.44% | +3.67% |
| Operating margin (%) | 10.48% | 12.88% | — | — |
| Interest | ₹8 cr | ₹9 cr | -7.95% | +30.65% |
| Depreciation | ₹27 cr | ₹28 cr | -2.84% | +20.18% |
| Profit before tax | ₹96 cr | ₹154 cr | -37.78% | +0.73% |
| Tax | ₹28 cr | ₹42 cr | -32.70% | +2.16% |
| Net profit | ₹68 cr | ₹112 cr | -39.70% | +0.15% |
| EPS (₹) | ₹8.39 | ₹14.04 | -40.24% | -0.12% |
Operating margin of 10.48% compares with a Industrials sector median of 14.19% across 34 peers that have reported Q1FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +0.25% | -0.02% |
Volume on the results session was 2.84× its 20-day average.
What to watch
- Whether consolidated operating margin moves back above 10.48% after the 2.40 percentage-point QoQ decline.
- Whether revenue growth outpaces expense growth after +12.86% versus +14.04% YoY.
- Whether other income's 16.35% share of pre-tax profit changes in the next quarter.