Shares of Kirloskar Oil Engines Ltd have soared 31% over two days, hitting a 20% upper circuit on AI data centre order win, extending the rally from the initial 8% gain on Monday when BofA Securities initiated coverage with a 'Buy' rating and ₹2,815 target price. The stock was trading ₹2,286.40 with significant momentum, building on the earlier ₹2,410 intraday high that snapped a six-day losing streak. According to Moneycontrol, the latest surge was driven by the company's June 2026 order win from HyperNext for 96 OptiPrime 2,500 kVA gensets, marking a breakthrough into the hyperscale data centre market. The stock has demonstrated exceptional performance with 27.4% gains in the past month and 91.9% so far this year, reflecting strong investor confidence in the company's strategic expansion.
BofA Securities highlighted that KOEL, the second-largest player in India's power backup genset market, is climbing the value chain by expanding its footprint in the high horsepower (HHP) segment, which carries fatter margins than the company's traditional low and medium horsepower offerings. The brokerage expects KOEL's HHP market share to rise to 6-7% by FY30 from 4% in FY26, as the company builds on its 2023 foray into the segment. Last week, company vice-chairperson and managing director Gauri Kirloskar said the data centre segment is only the beginning of a much larger opportunity, with the company now focused on executing its first hyperscaler project successfully. The June 2026 HyperNext order for 96 units or 192 MW of Optiprime Dual Core power systems represents a significant milestone in this strategic expansion, with the contract being among the largest deployments of high-capacity power systems for hyperscale data centres in India.
BofA Securities expects KOEL's earnings per share to grow at a 22% compound annual rate between FY26 and FY30, with return on equity improving to more than 20% from 18% currently. According to CNBC TV18, the brokerage forecasts KOEL's consolidated revenue rising at a 16% CAGR to ₹1.41 lakh crore by FY30, with EBITDA margins improving by 136 basis points to 19.7% over the same period, aided by a richer product mix, higher aftermarket revenue and growing export contribution. The growth is expected to be led by margin improvement and capital allocation strategies, with the broader genset industry projected to grow at a 16% CAGR through FY30, with the HHP category alone expanding faster at 22%, driven largely by data centre capacity additions. Jefferies has valued the stock at 45 times its estimated FY28 price-to-earnings multiple and noted that the company's foray into the data centre segment could provide further upside.
BofA Securities noted that data centres could add material upside, pointing to the company's June 2026 order win from HyperNext for 96 OptiPrime 2,500 kVA gensets as a breakthrough into the hyperscale data centre market. The brokerage expects the broader genset industry to grow at a 16% CAGR through FY30, with the HHP category alone expanding faster at 22%, driven largely by data centre capacity additions. Last month, KOEL secured an order from HyperNext for the supply of 96 units or 192 MW of its 2,500 kVA Optiprime Dual Core power systems, marking a significant entry into the high-value hyperscale segment. The company's strategic focus on executing this first hyperscaler project successfully positions it well for future growth in the rapidly expanding data centre infrastructure market.
The company has demonstrated strong quarterly performance with QoQ growth of 42.40% in the quarter ended March 2026, a significant improvement from -3.14% in December 2025. The half-year ended September 2025 showed growth of 18.38% compared to 10.10% in September 2024. Additionally, KOEL has declared a 125% dividend with an ex-date of February 20, 2026, reflecting the company's strong cash generation capabilities and commitment to shareholder returns. The latest surge of 31% over two days on the AI data centre order win demonstrates the market's recognition of the strategic significance of this breakthrough order, with the stock opening 2.83% higher and later climbing 8.03% to an intraday high of ₹2,410 before profit booking at higher levels.
