Growth led execution momentum…
About the stock: Kilburn Engineering Limited (KEL), incorporated in 1987, largest player in customised drying solutions and process equipment. With a strong proprietary technology base in drying systems, the company has established itself as a niche solutions provider.
• Their products find applications across multiple sectors such as chemicals, petrochemicals, fertilizers, carbon black, pharma, food, oil & gas, power (including nuclear), metals and cement etc.
• The company has strategically transitioned from a product supplier to a comprehensive solution provider resulting in Revenue and PAT CAGR of 38% and 44% over FY23-25, respectively. Q3FY26 performance: Kilburn Engineering Limited reported a strong consolidated Q3FY26 performance, with revenue from operations rising 45% YoY to ₹156.8 crore, driven by healthy execution and higher subsidiary contribution. Operating EBITDA grew 54% YoY to ₹36.1 crore, with EBITDA margin expanding by 134 bps YoY to 23%, reflecting operating leverage and efficiency gains. Consequently, PAT increased 53% YoY to ₹23.2 crore, highlighting robust profitability growth despite a high base. The company reported an order backlog of ₹495 crore as of December 31, 2025, supplemented by post-quarter wins/LOIs of ₹70 crore and a robust enquiry pipeline exceeding ₹4,000 crore, providing strong medium-term revenue visibility.
Investment Rationale:
• Strong Revenue Visibility Supported by Healthy Order Book & strong Inquiry Pipeline: The company’s order backlog stood at ₹495 crore as of December 31, 2025, aided by post-quarter wins/LOIs of ₹70 crore and a healthy inquiry pipeline of ~₹4,000 crore across petrochemicals, chemicals, fertilizers, metals, nuclear and recycling segments. Management expects to open FY27E with ~₹500+ crore order book, providing healthy near-term revenue visibility. With FY26E revenue guided at ₹625–650 crore (~50% YoY growth) and a targeted 25% CAGR over FY27–28E, the company has a clear roadmap to scale toward ~₹800 crore and subsequently ~₹1,000 crore revenue. Diversified sector exposure and ~30% export contribution further de-risk revenue concentration and enhance structural growth visibility.
• Sustainable EBITDA margin and Capacity Expansion to Drive Next Leg of Upside: Despite project mix volatility inherent in EPC-style execution, Kilburn has consistently delivered EBITDA margins in the 22–23% range and guided for a sustainable 20%+ margin profile. Margin resilience is supported by disciplined raw material procurement (blocking ~80% inputs at LOI stage), strong engineering capabilities, and increasing contribution from higher-value solutions across drying, heat recovery and process equipment segments. Ongoing capacity expansion at Saravali and ME Energy (Pune) is expected to drive operating leverage as scale improves, enabling better fixed-cost absorption. With capex of ~₹40–45 crore over the next 12 months, Kilburn appears well positioned to capitalize on India’s industrial capex upcycle.
Rating and Target Price
• We expect Revenue and PAT to grow at 29.8% and 32.8% CAGR over FY25-FY28E. We maintain Buy on KEL with a Target Price of ₹770 (based on 25x P/E on FY28E EPS)
