Kirloskar Oil Engines Ltd’s shares jumped 20% on Monday, and rose another 3% on Tuesday, hitting a new 52-week high of ₹2,720, after a big-ticket order award. The order from a digital infrastructure company, HyperNext, involves the supply of 96 units of 2,500 KVA power generators (gensets), totalling 192 megawatts (MW) for its data centres.
The order marks a big inroad into data centres. “The data centre segment is dominated by Cummins (80%+ market share) and, thus, this news flow represents a key breakthrough highlighting reduced technology gap,” noted JM Financial Institutional Securities. Amid rising adoption of artificial intelligence, India’s data centre market is expected to grow sharply over the next five years, from 1,500MW in 2025.
The order award is thanks to Kirloskar’s enhanced focus on product innovation, particularly in the high-horsepower (HHP) segment, introducing engines up to 3,000/3,300 KVA. Its share in HHP segment reached double digits in FY26, from negligible in FY22. Further, it is developing a prototype of a 6MW marine propulsion engine for the Indian Navy, which is funding 70% of the cost, aiming at least 50% indigenization. Exports are in focus too (about 10% revenue contribution now); delivering its first order in South Africa of five gensets.
Kirloskar announced a capital expenditure (capex) of ₹1,400 crore last month, to expand the capacity of its Kagal, Maharashtra factory by 20,000 engines annually. Plus, there is ongoing capex of ₹700 crore. The expansion, expected to be completed by FY28-end, is primarily for HHP products and would help improve margins as the mix improves.
Strong financial performance and a better outlook have led to the stock gaining as much as 200% over the past year. Standalone FY26 revenue increased by 25% to ₹5,650 crore and Ebitda by 24% to ₹737 crore. FY25 revenue fell by 7%, while Ebitda grew just 5%.
Investors will closely track the impact of new orders on financials for more cues. “Kirloskar’s entry into hyperscalers as well as its fast-growing overall powergen and industrial business is resulting in a further reduction in the valuation discount versus Cummins, which we believe will play out as such orders increase,” observed Motilal Oswal Financial Services. Kirloskar’s stock now trades about 53 times FY27 estimated earnings versus Cummins India’s 57.5 times, as per Bloomberg.