Pumps are essential devices used in a variety of applications, from supplying drinking water to moving industrial fluids. They are crucial in agriculture for irrigation, in households for water supply, and in industries for cooling and heating systems.

Pumps ensure that water reaches our homes, farms, and factories, playing a vital role in our daily lives and the economy. Kirloskar Brothers (KBL) is a prominent name in the pump manufacturing industry, known for its innovative and reliable products.

The company has a long history of excellence and has established a significant presence in both the domestic and international markets. Kirloskar pumps are used in various sectors, including agriculture, industry, and domestic applications, making the company a household name in India and beyond.

One of the remarkable achievements of Kirloskar Brothers is its contribution to providing drinking water to over 35% of India’s population. This feat highlights the company’s commitment to improving access to clean water and enhancing the quality of life for millions of people.

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The stock of the company has soared almost 200 percent over the last year, tripling the investors wealth. Even over the longer time frame of three years, the stock has delivered an incredible performance giving a return of 483 percent.

In this article, we will delve deeper into Kirloskar Brothers’ corporate overview, explore its various business segments, analyse its financial performance, and discuss its future outlook.

Corporate Overview Of Kirloskar Brothers

Kirloskar Brothers (KBL), founded in 1888 and incorporated in 1920, is the flagship firm of the Kirloskar Group. They are a world-class pump manufacturer with experience in engineering and fluid management systems.

The company is one of the largest pump manufacturers, with a wide range of products including pumps, valves, and turbines. They design, manufacture, and develop a variety of cutting-edge systems for total fluid management.

The company’s skills range from huge infrastructure projects such as water supply, irrigation, power generation, oil and gas, building construction, industrial, and marine and defence to tiny pumps for home and agricultural applications.

Business Segments Of Kirloskar Brothers

Water

With the extensive implementation of Jal Jeevan Mission (JJM) and AMRUT 2.0 initiatives by state governments to improve water delivery in rural India, the water sector has enormous growth potential.

The solar industry is expanding in both the institutional and open markets. The Company’s efforts in both the water and solar industries have yielded major orders from large OEMs and mid-sized contractors.

Valves

In FY 2022-23, the valves sector witnessed robust growth with an increase in fresh order intake. Strong government focus on clean drinking water and sanitation projects has created ample opportunities in this sector. 

Additionally, this segment received repeated orders for large-sized valves in major irrigation projects.

Building and Construction

This segment experienced a healthy 25% growth in fiscal year 2022-23. FM/UL fire pumps were commissioned at GMR Goa International Airport Limited and the Sabarmati High-Speed Rail Depot in Ahmedabad.

Industry

The industry company experienced strong revenue increase in fiscal year 2022-23, led by the steel, chemical, sugar, and zero liquid discharge divisions. The addition of additional clients resulted in higher revenue and volume.

The industries company reached new heights with breakthrough orders for several packages in the steel and chemicals segments. Replacement business opportunities saw a 12-15% increase. Furthermore, the firm benefited in terms of booking value-added products across various consumer categories. 

Oil and Gas

The Company’s oil & gas segment provides non-API pumps for upstream, midstream, and downstream applications such as crude oil transfer, refinery processes, and fertiliser. In fiscal year 2022-23, the segment’s sales increased by 29%, owing to strong demand from the oil and gas sector, among other factors.

The Company’s strong emphasis on innovation, quality, and customer happiness has helped it create a significant presence in both domestic and international markets.

Small Pump Business

The small pump company was strategically restructured in fiscal year 2022-23 in response to the changing market situation and previous learnings. As the market’s acceptance of ‘energy saving products’ grew, so did demand for KBL’s energy-efficient pumps.

Strategic promotional initiatives, combined with new product launches, helped the company to expand into broader markets.

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Financials Of Kirloskar Brothers

FY2023FY2022FY2021FY2020
Revenue (in ₹crore)3,730.223,057.632,716.543,135.43
Net Profit (in ₹crore)225.0681.53153.9168.28
ROE17.44%7.15%15.03%7.37%
ROCE20.29%10.63%14.62%11.71%

In the fiscal year 2023, Kirloskar Brothers saw a substantial increase in revenue, surging by 22% to reach ₹3,730.22 crore as opposed to ₹3,057.63 crore in FY2022. Analyzing a span of four years, encompassing FY2020 to FY2023, the company displayed a  Compound Annual Growth Rate (CAGR) of 6% in revenue.

Simultaneously, there was a noteworthy upturn in net profit, experiencing a 176% increase from ₹81.53 crore in FY2022 to ₹225.06 crore in FY2023. Over the cumulative four-year period from FY2020 to FY2023, the net profit showcased 49% CAGR.

In FY23, Kirloskar Brothers maintained favourable financial metrics with a Return on Equity (ROE) of 17.44% and Return on Capital Employed (ROCE) of 20.29%.

Future Plans Of Kirloskar Brothers

Future Growth Prospects

Kirloskar Brothers appears optimistic about its future growth prospects. The company believes that the positive demand trend witnessed in the current quarter will continue in the coming quarters, supported by its robust order book. 

Additionally, Kirloskar Brothers is taking a multidimensional approach to value creation, aimed at consolidating its market position, increasing profitability, and maximizing its strong potential, thereby unlocking stakeholder value.

Focus on International Markets 

The company seems focused on expanding its presence in international markets. Kirloskar Brothers has made substantial investments in its services business, which is a high-margin business, as evident from the numerous framework contracts currently active across all its subsidiaries worldwide. 

The company is also working on expanding its product portfolio in international markets, particularly in segments such as fish-friendly pumps and multistage, multi-outlet pumps for firefighting.

Robust Order Book 

Kirloskar Brothers order book position appears strong, providing visibility for future growth. As of March 2024, the company’s stand-alone pending order book stood at Rs.1,826 crores, while the consolidated pending order book stood at Rs.2,999 crores, reflecting a growth of 4% on a year-on-year basis. 

The company’s focus on expanding its services business and product portfolio, coupled with a healthy order book, bodes well for its future performance.

Emphasis on Operational Excellence 

The company is also placing emphasis on operational excellence. It has implemented initiatives such as Total Quality Productive Maintenance and the establishment of a mega store to improve efficiency, consistency in deliveries, and customer service. These efforts are expected to enhance Kirloskar Brothers competitiveness and support its sustainable growth trajectory.

Conclusion

Overall, Kirloskar Brothers seems well-positioned to capitalize on growth opportunities in domestic and international markets. With a robust order book, diversified product portfolio, focus on operational excellence, and investments in high-margin businesses, the company’s future outlook appears promising. 

However, what are your thoughts on Kirloskar Brothers’ future prospects? Do you believe the company can sustain its momentum and continue delivering strong financial performance? Share your insights and perspectives on the company’s growth trajectory.

Written by Nalin Suriya

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