Kirloskar Brothers' margin falls for a second straight quarter
Costs grew faster than revenue both year on year and sequentially, while higher interest expense limited profit growth despite a lower tax rate.
Filed 27 Oct 2026, 15:52 IST · after market close · Kirloskar Brothers Ltd (KIRLOSBROS)
Key takeaways
- Q2FY27 consolidated revenue grew 24.23% year on year, but expenses grew faster at 25.36%, reducing operating margin by 0.81 percentage points.
- Net profit rose only 3.46% year on year as interest costs increased 50.77% and other income fell 18.94%.
- Operating margin declined for the second straight quarter to 9.74%, 1.20 percentage points below the 10.94% median for 37 Industrials peers.
Price around the results
Revenue growth did not translate into operating leverage
Kirloskar Brothers reported consolidated revenue growth of 24.23% year on year and 15.55% quarter on quarter in Q2FY27. Expenses grew faster, at 25.36% year on year and 16.51% sequentially, leaving operating profit growth at 14.67% and 7.34%, respectively. Operating margin consequently narrowed by 0.81 percentage points year on year and 0.74 percentage points from Q1FY27.
Interest and other income weighed on profit conversion
Interest expense increased 50.77% year on year and 20.99% sequentially, outpacing the growth in operating profit. Other income fell 18.94% year on year, although it still represented 17.69% of profit before tax, making it a material contributor to reported profit. Sequentially, the tax rate fell by 1.41 percentage points to support the 10.50% rise in net profit despite the pressure below operating profit.
Margin is below peers after two consecutive quarterly declines
Operating margin has fallen from 12.88% in Q4FY26 to 10.48% in Q1FY27 and 9.74% in Q2FY27, marking two straight quarterly declines. The latest margin was 1.20 percentage points below the 10.94% median among 37 Industrials companies that had reported the same quarter. Year-on-year profit growth was therefore modest at 3.46%, despite the higher revenue base.
No immediate market reaction after the post-close filing
The consolidated results were filed after market close, so there was no market reaction to report yet. After its last eight results, the stock rose twice and fell six times, with a median absolute move of 2.84%. That history shows declines have been more common than gains after results, but the typical move has remained contained.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹1,277 cr | ₹1,105 cr | +15.55% | +24.23% |
| Other income | ₹18 cr | ₹16 cr | +17.20% | -18.94% |
| Expenses | ₹1,152 cr | ₹989 cr | +16.51% | +25.36% |
| Operating profit | ₹124 cr | ₹116 cr | +7.34% | +14.67% |
| Operating margin (%) | 9.74% | 10.48% | — | — |
| Interest | ₹10 cr | ₹8 cr | +20.99% | +50.77% |
| Depreciation | ₹29 cr | ₹27 cr | +5.47% | +20.92% |
| Profit before tax | ₹104 cr | ₹96 cr | +8.33% | +3.28% |
| Tax | ₹29 cr | ₹28 cr | +3.17% | +2.81% |
| Net profit | ₹75 cr | ₹68 cr | +10.50% | +3.46% |
| EPS (₹) | ₹9.28 | ₹8.39 | +10.61% | +3.80% |
Operating margin of 9.74% compares with a Industrials sector median of 10.94% across 37 peers that have reported Q2FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +1.84% | +2.07% |
Volume on the results session was 0.94× its 20-day average.
What to watch
- Whether operating margin holds above 9.74% after two consecutive quarterly declines.
- Whether expense growth stays below the 24.23% year-on-year revenue growth rate.
- Whether interest-cost growth moderates from 50.77% year on year.