Scaling fast with more to come…
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.
Q2FY26 performance: Kilburn Engineering Limited reported a strong Q2FY26 performance, with consolidated revenue rising 48% YoY to ₹153.6 crore and EBITDA surging 72% YoY to ₹40 crore, reflecting robust execution and margin expansion. EBITDA margin improved 360 bps YoY to 26%, while PAT jumped 77% YoY to ₹27 crore. The company’s order backlog stood at ₹492 crore as of September 30, 2025, with additional ₹129 crore in new orders post-quarter, ensuring revenue visibility.
Investment Rationale:
• Diversity across sectors and geographies: Helps rides sector cyclicality KEL is present across 20+ sectors with wide variety of products and product applications. KEL expects strong momentum from fertilizer, metal recovery, chemicals, frozen foods and nuclear which will drive order inflows in FY26- FY28E. Moreover, company has in-house R&D through which it continuously works on enhancing product applications to new industries which helps company navigate sector cyclicality. This differentiates KEL from its peers as it caters to more comprehensive basket of sectors and product applications. KEL won an order in ME energy marking its entry into Ferro alloy sector. KEL has an order backlog of ~₹600 crore as at October 2025 and has an order pipeline of ₹4000 crore with a conversion rate of 20-25%, we expect the company to report strong order inflows of ₹615, ₹800 and ₹960 crore respectively for FY26E, FY27E and FY28E.
• Value accretive acquisitions to create cross sell and new product synergies: KEL is expanding its product portfolio through strategic acquisitions, it acquired ME Energy (waste heat recovery and waste heat reutilisation provider), Monga Strayfield (RF drying technology) these will augment KEL’s product portfolio, enable penetration in new sectors thus expanding its clientele base. The company continues to look for strategic acquisitions in the drying solution offering space. We believe strategic acquisitions at attractive valuations (6-7 times EBITDA and 4.5x Asset turn) will aid consolidated revenue and profitability growth over FY26E-28E.
Rating and Target Price
• KEL is well positioned to benefit substantially from strong opportunities across segments like fertilizer, metal recovery, petrochemical, carbon black, oil and gas (sludge recovery), nuclear & food. Margins are expected to improve further led by continuous focus on operational efficiencies. For the period FY25-28E, we estimate revenue EBITDA and PAT CAGR at ~30% ~29% & ~32% respectively.
• We maintain Buy on KEL with a Target Price of ₹730 (based on 30x P/E on FY27E EPS)
