Kirloskar Oil Engines Ltd. shares extended their decline on Tuesday, falling 2.38% to ₹2,362.50 and marking a 7.84% decline over the three trading sessions amid profit booking. Despite the recent pullback, the stock has witnessed significant volatility driven by the company's major order wins and strategic expansion into the data centre segment. The stock was trading at ₹2,484.60, up ₹94.80 or 3.97% from the previous close at 11:50 am, with the stock touching an intraday low of ₹2,478.40 during the session. The recent correction follows a sharp 29.25% rally in the previous four sessions, with the stock still maintaining strong performance up 78% in the last three months and 178% over the past year. Management speaking to CNBC-TV18 emphasized that the recent order from a hyperscaler marked "a breakthrough" and expects to deliver the project during FY27.
Motilal Oswal has reiterated its 'Buy' rating on Kirloskar Oil Engines Ltd. shares, citing multiple growth levers across powergen, industrial, and export segments, along with a strong order pipeline. The brokerage has raised its target price from ₹1,900 to ₹2,750, reflecting confidence in execution and demand visibility. As per Motilal Oswal's latest report, the company's ongoing capex will enable it to capitalize on strong demand in powergen and industrial segments, while initiatives on new product development will yield results over time. The brokerage believes the successful and timely completion of this order will open up opportunities from other data centre projects, with execution to be completed during this fiscal as previously reported.
The recent rally was triggered by a large order announced on June 19, 2026, where Kirloskar Oil Engines secured an order from HyperNext for power generation systems to be deployed in hyperscale and AI-enabled data centres. The order is for 192 MW of power generation capacity and comprises 96 units of 2,500 kVA Optiprime Dual Core power systems. This deal strengthened investor sentiment as it positions Kirloskar Oil Engines to benefit from India's fast-growing data centre and artificial intelligence infrastructure build-out. Traditionally known for its engines and power generation business, the company is increasingly gaining exposure to the country's digital infrastructure sector. The company specializes in the design and manufacture of internal combustion engines, gensets and integrated power solutions, offering a comprehensive engine & power systems portfolio ranging from 1 kW to 10 MW, serving critical sectors including infrastructure, data centres, real estate, defense, marine, and railways.
Motilal Oswal believes the contract strengthens KOEL's positioning in the power generation business and reinforces management's long-term strategy. The brokerage expects execution of large orders over the next two years to provide support to the industrial business and partially offset weakness in the construction segment. Higher volumes could also improve operating leverage and profitability. The successful and timely completion of this order will open up opportunities from other data centre projects, with execution to be completed during this fiscal as previously reported. Motilal Oswal has raised its FY27/FY28 estimates by 3%/10% following the order execution timeline, with the brokerage expecting revenue/EBITDA/PAT to post a CAGR of 28%/34%/38% over FY26-29E.
The company demonstrated robust financial performance in Q4 FY26, with consolidated net profit jumping 22.65% to ₹155.22 crore compared with ₹126.56 crore in Q4 FY25. Revenue from operations climbed 20.97% YoY to ₹2,116.23 crore in Q4 FY26, reflecting strong operational execution and market demand. The company's ability to secure large orders and maintain strong financial performance positions it well for its ambitious growth targets, with management reiterating its ambition to become a $2 billion company by FY30. The power generation business is expected to lead growth, with the data centre business to deliver more than 30% growth, while increasing the share of higher-margin businesses through high-horsepower products, exports and the aftermarket segment.
