Expense growth outpaced sales, driving an 18.14% fall in net profit
The consolidated operating margin fell for a second straight quarter, while lower interest and tax costs provided limited support.
Filed 04 Nov 2026, 16:31 IST · after market close · Kirloskar Oil Engines Ltd (KIRLOSENG)
Key takeaways
- Revenue grew 17.23% year on year, but expenses grew 24.25%, pulling operating margin down 4.81 percentage points to 14.78%.
- Net profit fell 18.14% year on year to Rs 130.31 cr despite interest expense declining 10.88%.
- Operating margin remained 2.54 percentage points above the 12.24% median for 143 reported Industrials peers.
Price around the results
Sales growth did not translate into profit growth
Kirloskar Oil Engines' consolidated revenue rose 17.23% year on year and 14.23% sequentially to Rs 2,284.04 cr. Yet net profit declined 18.14% year on year because expenses increased 24.25%, more quickly than revenue. Sequentially, net profit improved 17.33% as revenue growth slightly outpaced expense growth.
Margin pressure extended into a second quarter
Operating margin narrowed 4.81 percentage points year on year and 0.24 percentage points sequentially, as costs grew faster than revenue in both comparisons. The 14.78% margin was still 2.54 percentage points above the 12.24% median among 143 Industrials peers that had reported the quarter. The trend has weakened for two consecutive quarters, from 17.75% in Q4FY26 to 15.02% in Q1FY27 and 14.78% in Q2FY27.
Lower interest and tax rates softened the decline
Interest expense fell 10.88% year on year but rose 4.51% sequentially, while depreciation increased 22.80% year on year. The tax rate eased 0.66 percentage points year on year and 0.74 percentage points sequentially, which cushioned the pressure on net profit. Other income accounted for 6.12% of pre-tax profit, so it was a modest but meaningful contributor to reported earnings quality.
No immediate market read-through yet
The consolidated results were filed after market close, so there is no immediate stock reaction to assess. Across the last eight results, the stock rose four times and fell four times, with a median absolute move of 4.19%; its recent moves ranged from -3.88% to +17.29%.
Q2FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹2,284 cr | ₹2,000 cr | +14.23% | +17.23% |
| Other income | ₹11 cr | ₹15 cr | -29.45% | -14.50% |
| Expenses | ₹1,947 cr | ₹1,699 cr | +14.55% | +24.25% |
| Operating profit | ₹338 cr | ₹300 cr | +12.39% | -11.58% |
| Operating margin (%) | 14.78% | 15.02% | — | — |
| Interest | ₹121 cr | ₹116 cr | +4.51% | -10.88% |
| Depreciation | ₹52 cr | ₹49 cr | +6.37% | +22.80% |
| Profit before tax | ₹175 cr | ₹151 cr | +16.15% | -18.88% |
| Tax | ₹45 cr | ₹40 cr | +12.87% | -20.92% |
| Net profit | ₹130 cr | ₹111 cr | +17.33% | -18.14% |
| EPS (₹) | ₹9.04 | ₹7.82 | +15.60% | -19.14% |
Operating margin of 14.78% compares with a Industrials sector median of 12.24% across 143 peers that have reported Q2FY27.
What to watch
- Whether operating margin can move back above 14.78% after its second straight quarterly decline.
- Whether expense growth falls below the 14.23% sequential revenue growth rate.
- Whether interest expense remains near or below the current Rs 121.19 cr level.