Market leader stock to buy now for an upside of 56%; Do you own it?

Synopsis: Prabhudas​‍​‌‍​‍‌​‍​‌‍​‍‌ Liladhar is bullish on Kirloskar Pneumatic’s long-term prospects, citing the non-gas businesses that are growing rapidly and a Rs 5,000-cr refrigeration opportunity as the main drivers. The brokerage has given a Buy rating with a significant ​‍​‌‍​‍‌​‍​‌‍​‍‌upside of 56%.

The shares of this market leader in CNG systems and oil and gas refrigeration in India are in focus after a leading domestic brokerage laid out numerous reasons behind the 56 percent uptick. In this article, we will dive more into the details.

With a market capitalisation of Rs 6,741 crore, the shares of Kirloskar Pneumatic Company Ltd are currently trading at Rs 1,044.20 per share, up 0.61 percent from its previous day’s closing price of Rs 1,037.85 per share. In the last one year, the stock has corrected by over 41 percent, as compared to NIFTY 50’s positive return of 6 percent.

Analyst Comments

Leading domestic brokerage house, Prabhudas Liladhar, has assigned a Buy call on the stock and has fixed a target price of Rs 1,620 per share, signalling an upside potential of 56 percent from its previous day’s closing price of Rs 1,037.85 per share.

The brokerage cited that Kirloskar Pneumatic Company (KKPC) is currently facing a challenging environment. Both government and private sector investments are slow, leading to delays in project approvals and order finalisations, especially in its Gas Compression business. Despite these issues, the company is confident in achieving double-digit revenue growth in FY26 with stable margins. The main reason for this confidence is rapid growth in its non-gas business, which is driving most of the momentum.

One of KKPC’s major success stories is its new product platform, Tezcatlipoca. The company has already sold 115 units. As the only Indian manufacturer in this category, and with the market mainly reliant on imports, management expects to capture 75 percent to 80 percent market share over time. The present market for this segment is Rs 300 crore, but once once the company launches the full range it will increase to Rs 500 crore.Another product, Tyche, is also gaining popularity and is expected to reach about 200 units in FY26. This will help KKPC access the 2,000-unit domestic market, which currently depends entirely on imports. 

A key long-term growth driver is KKPC’s entry into the Rs 5000-crore commercial refrigeration market with its new platform, Zephyros. This product uses ammonia refrigerant, has no environmental impact, and offers better efficiency than existing systems. 

KKPC plans to scale Zephyros significantly over the next three years, targeting potential peak revenue of Rs 1,000 crore annually. New factories planned in Saswad and Nashik will allow the company to produce up to 6,000 packages a year, with initial pricing set 15 percent to 20 percent lower than competitors. This gives KKPC a strong edge against major players like Voltas, Daikin, and Blue Star.

The company is also broadening its product range with new launches such as ARiA, Calana, and Jarilo, which target centrifugal compressors, CNG daughter stations, and CBG plants. Another product, Khione, is expected to capture a significant share of the industrial refrigeration market. Along with the acquisition of S&C India, these new products will help KKPC strengthen its presence in several growing segments.

KKPC​‍​‌‍​‍‌​‍​‌‍​‍‌ is looking at a quarterly revenue of approximately Rs 500 crore in Q3 FY26 (46 percent YoY growth), with the second half of the year crossing Rs 1,000 crore in revenues, thereby backing its double-digit growth projection for the year. Although slower project approvals are expected to result in a reduction of FY26 order intake by Rs 200-400 crore, margins are expected to remain stable at around 18 percent. 

Weak​‍​‌‍​‍‌​‍​‌‍​‍‌ project inflows may put the 20%+ growth delivery in question in FY27,  despite the strength in consumption-led segments. Moreover, these new contracts also have higher margins, thereby changing the business mix towards more profitable, consumption-led products such as Tezcatlipoca and ​‍​‌‍​‍‌​‍​‌‍​‍‌Tyche.

Overall, despite short-term challenges in project execution and order intake, Prabhudas Liladhar believes KKPC is well-positioned for healthy long-term growth. Its focus on innovation, import substitution, higher-margin products, and a solid balance sheet provides a strong foundation for the company.

Kirloskar Pneumatic Company Limited is a designer and manufacturer of air, gas, and refrigeration compressors, besides pneumatic tools and transmission products. Its product line includes refrigeration systems, CNG and biogas compressor packages, marine and industrial compressors, as well as gearboxes for rail, marine, wind, and hydro. 

The company has a diverse customer base that includes the oil & gas, power, steel, automotive, railways, chemicals, food, and construction sectors, and is also engaged in logistics services through the rail networks.

Written by Satyajeet Mukherjee

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