Kirloskar Oil (KIRLOSENG)

FairStock Score: 22/100 — RISKY

Score breakdown: P/E: 0/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Revenue growth is strong: 17.34% latest year and 14.01% 5-year CAGR.
• ROE of 17.71% shows decent capital efficiency despite leverage.
• Piotroski F-score of 7/9 suggests reasonable operational health.
• Promoter holding of 41.09% provides some alignment with minority shareholders.

Concerns

• Valuation is extreme: P/E 37.26, P/B 7.57, and Graham Number ₹424.64 implies negative margin of safety of -228.09%.
• Free cash flow is deeply negative at -₹1,261 Cr despite reported profits.
• High debt/equity of 1.64 and Altman Z-Score of 2.57 point to balance sheet and distress risk.
• Profit growth of 7.91% lags sales growth significantly, indicating margin compression; EV/EBITDA of 331.36 is dangerously high.

AI Analysis

Kirloskar Oil has grown revenue at 14% annually over five years and 17.34% in the latest year, so there is real demand for its engines and pumps. But I buy businesses at a price that makes sense, and at ₹1,607.50 this makes no sense to me. The P/E is 37.26 and P/B is 7.57. Graham's number is only ₹424.64, giving me a margin of safety of negative 228%. The market is paying for perfection. ROE of 17.71% is good, but with debt/equity of 1.64 and free cash flow of -₹1,261 Cr, the quality of earnings is weak. The company earned ₹109 Cr in the latest quarter on sales of ₹1,873 Cr, but cash generation is negative. Reported profit growth of 7.91% is well below sales growth of 17.34%, hinting at margin pressure. Piotroski F-score of 7 is healthy, but Altman Z of 2.57 puts it in the grey zone, and EV/EBITDA of 331.36 is a red flag on valuation. Even the PEG ratio of 4.01 tells me growth is already priced in. I see a cyclical capital goods business benefiting from a good order environment, but not a stable compounding machine. The 52-week range of ₹855.80 to ₹2,720.35 shows how volatile this can be. Promoter holding of 41.09% is adequate, but I cannot rely on hope. A fair score of 30/100 labels it risky, and I agree. As Graham said, price is what you pay, value is what you get. Here the price is far beyond any conservative value I can calculate. If quality improves, cash flow turns positive, and debt comes down, I may revisit. But today, this is not an investment; it is speculation.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer