Ladies and gentlemen, good day and welcome to the Kirloskar Oil Engines Ltd. post earnings conference call. As a reminder, all participant lines will be in the listen only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchstone phone. I now hand the conference over to Mr. Amit Shah from Antique Stockbroking. Thank you. Over to you sir.
Thank you, Buddha. Good evening, everyone. On behalf of Antique Stockbroking Ltd., I welcome you all to the post earnings call of Kirloskar Oil Engines Limited t o discuss the result, we have the senior management team of the company represented by Ms. Gauri Kirloskar, Managing Director of the company, Mr. Rahul Sahai, CEO of the company, and Mr. Sachin Kejriwal, Chief Financial Officer of the company. I would hand over the call to Ms. Gauri Kirloskar for the opening remarks, post which we can open the floor for Q&A. Over to you, ma'am.
Um. Yeah, thank you very very much Amit for that introduction. Good evening everyone and thank you for joining us today. Before we start the call, I'll just reintroduce my team because there are a couple of more people here. So Rahul Sahai, CEO at KOEL , Sachin Kejriwal who is the CFO at KOEL , Kiran who is CHRO, Farah Irani who is the Company Secretary. And from ARCA we have Riddhi Gangar who is the CFO. As is customary, I will begin with business and operational updates. Sachin will then provide a brief overview of the financial performance following which we will open the floor for Q&A. Q2 has been a strong quarter for KOEL with net sales crossing the INR 1,500 crore mark for the first time. I would like to congratulate the entire KOEL team on achieving this new milestone.
This also takes our H1 net sales to INR 3,027 crore. Marking another significant achievement as we cross the INR 3,000 crore milestone for the first half. Overall, the year-on-year growth numbers are encouraging. Though they come back of a relatively muted Q2 performance last year. Nonetheless, we have also delivered double-digit growth on a quarter-on-quarter basis. Which makes this performance particularly satisfying. On October 10th, we announced the restructuring of our B2C business. The board approved the transfer of B2C business within KOEL standalone by way of slump sale as a going concern to its wholly owned subsidiary LGM. From Q3 onwards you will see this change taking place in the reporting. The key objective is to maintain dedicated focus on each segment and drive greater efficiency through structures best suited to their respective customer needs.
As we align these businesses, we are adopting new nomenclatures. Following the restructuring, the B2C business is now referred to as Fluid Dynamics. Accordingly, if I use this term in my speech, please interpret it as the B2C business. Also, our international business comprises a mix of B2B and B2C exports. Therefore, on certain parts of my speech, the numbers may appear regrouped under this classification. Please feel free to reach out to our team if you require any clarification on these bifurcations. Now coming to business performance, looking at the standalone sales breakup, the B2B business witnessed 35% growth year-on-year with all subsegments recording a double-digit growth. The B2C segment grew 28% year-on-year with WMS sales recording 22% growth year-on-year, and international B2C business witnessing a 77% growth year-on-year in terms of geographic mix.
Sorry, in terms of mix across both B2B and B2C segments, domestic sales stood at INR 1,406 crore, registering a growth of 35% year-on-year. Export sales stood at INR 187 crore reflecting a similar 35% growth year-on-year. EBITDA for the quarter stood at INR 214 crore reflecting a margin of 13.4% versus 12.4% last year. Numbers for the previous period excluding reversal of provision for overdue receivables made for a customer towards sales made in earlier years. EBITDA margin for Q2 of FY 2025 at the standalone level, including reversal for overdue provisions. Overdue receivable provisions were 13.9% in the current period. There is no such reversal. Let me now take you through what drove this performance. The Power Generation business unit anchored the company's performance, delivering a strong 41% year-on-year growth in sales and achieving its highest ever quarterly revenue of INR 678 crore.
This robust performance further strengthens our market leadership. We are seeing encouraging momentum in the Optiprime initiative and the business secured several notable commercial wins including multiple 1500 KVA orders, 2000 KVA - 2500 KVA orders, underscoring the depth of customer confidence in our offerings. Looking ahead, we remain focused on the planned rollout of our products in Q3 FY 2026, which we expect will further enhance our competitive position across the domestic Power Generation business. Moving to the industrial business, the industrial business unit also delivered a strong performance with 40% year-on-year sales growth. This was driven by healthy traction in both defense and railways where demand remained robust. Our defense business continued its positive trajectory supported by emergency procurement orders and steady progress on key strategic programs. Notably, we completed and submitted the detailed design for the Indian Navy's prestigious Make One initiative.
We have new product launches in the railway segment for the 400 HP engine for a rail maintenance application for utility track vehicles. Now coming to Distribution and Aftermarket, the Distribution and Aftermarket business unit reported a 13% year-on-year growth, reflecting the benefits of ongoing organizational strengthening. During the quarter, we implemented a revised field structure with an increased focus on key account management and advanced service offerings. Our extensive service network continued to be a key differentiator, with service requests reaching an all-time high of approximately 92,000, demonstrating both the scale of our installed base as well as our commitment to customer support across the life cycle. Moving on to Fluid Dynamics, the Fluid Dynamics business delivered a 28% year-on-year growth, supported by its highest ever monthly billing in September following the appointment of new leadership and a structural realignment of the business.
However, on a sequential basis, the segment experienced a decline versus the immediately preceding quarter. This quarter-on-quarter degrowth was primarily due to lower sales volumes, which impacted fixed cost absorption. Addressing these factors remains a priority as we work towards strengthening our performance in coming quarters. Lastly, international b usiness continued to demonstrate strong diversification and strategic progress. Overall, the international B2B sales grew by 39% year-on-year, while B2C sales registered an impressive 74.7% year-over-year increase. Exports for the first half of the year exceeded INR 320 crore, reflecting broad-based trends across markets. The Middle East and North Africa region remained our largest international contributor, accounting for approximately 60% of the international sales mix, and it continues to progress well.
Since we are talking about business segments, I'll also give a quick update on our LDFC business ARCA. At ARCA, in the beginning of the year we had outlined a strategy to build out a granular retail book to complement the stable ROA accretive wholesale book that we have built out previously. This plan needs a very strong on-ground team and a widespread network of branches to increase our reach across seven states that we have selected in the country. In Q1 we built the risk management frameworks and credit assessment guardrails for granular secured retail lending, for wheels financing as well as LAP financing. We also prepared the tech stack for the loan origination to happen in a fully digital environment which promotes superior credit decisions in a timely manner. In Q2 we started pivoting our business model from wholesale to retail.
As the business started in July, a new leadership team is now fully in place to manage governance, operations, and distribution. My recent visit to Rajasthan branch openings gave me first hand experience to witness the retail distribution model which is fundamentally different from the previous approach. In the last four months ending October, the granular retail AUM has now touched INR 140 crore with monthly disbursements of INR 60 crores. We have opened 85 branches in the last six months and as we speak there are 1,400 employees who are working at ARCA which is an increase of 900 employees in the last six months. Our incremental cost of borrowing has also come down to 8.3% in Q2 from a 9.76% exit in fiscal year 2025.
ARCA Q2 audited financials are reflective of the investments made in new granular lead detail financing journey that has started without compromising on the focus of the existing wholesale and SME book performance. With the business updates done, let us look at the overall consolidated performance. Net sales from continuing operations for the quarter were at INR 1,933 crore registering a 30% year-on-year growth. Net profit from continuing operations for the quarter was at INR 159 crore, which is a 51% increase year-on-year. Please note that numbers for the previous period are excluding exceptional items and reversals of provision for overdue receivables. Net profit for Q2 FY 2025 excluding exceptional items and excluding reversal for overdue receivable provisions was INR 125 crore. In the current period there are no such exceptional items and reversals.
Last quarter I spoke about our focus on new product introductions and our plans to enter emerging areas, particularly in non- internal combustion engine technologies. To accelerate our progress, I would like to assure you that we are taking measured and deliberate steps on this journey. The recent restructuring of our B2C business is one such step and we expect to share further developments in the coming quarters. Our objective is to keep the business aligned with evolving market landscape while leveraging our strong technology and talent base. These initiatives are expected to position the company for steady and sustainable growth over the long term. With that, I'll now hand over to Sachin who will walk you through the financial performance in detail. Thank you.
Good evening everyone and thanks Gauri for the update. I will give a quick update of the financial performance for standalone and consolidated business. The results and the presentation for today's call has already been uploaded on Exchange and our website as mentioned by Gauri earlier. KOEL delivered a strong performance in the second quarter of FY 2026 reflecting steady progress in the company's operational and financial journey. We crossed INR 1,500 crore mark first time ever, registering a 35% net sales growth year-on-year and 11% quarter-on-quarter. Net profit for the quarter was at INR 141 crore, registering a 44% growth year-on-year and 15% quarter-on-quarter. Coming to a quick overview of financial performance, I will start with standalone performance first for the quarter. Net sales at INR 1,593 crore for Q2 FY 2026 versus INR 1,184 crore for Q2 FY 2025 that is 35% increase year-on-year.
EBITDA at INR 214 crore Q2 FY 2026 vs. INR 148 crore for Q2 FY 2025, 45% increase year-on-year. EBITDA margin is at 13.4% Q2 FY 2026 vs. 12.4% for Q2 FY 2025. Net profit at INR 141 crore Q2 FY 2026 vs. INR 98 crore for Q2 FY 2025, 44% increase year-on-year. Cash and cash equivalents of INR 475 crore. Please note that cash position is net of debt and includes treasury investments. Number for the previous period, i.e. Q2 FY 2025, is excluding reversal of provision for overdue receivables made for a customer towards sales made in earlier years. In the current period, Q2 FY 2026, there is no such reversal. EBITDA margin at standalone level for Q2 FY 2025 including reversal for overdue receivable provision was 13.9% with payable at 71 days and receivables around 40 days. We are maintaining healthy working capital levels. Inventory is slightly higher at 62 days to cater the business growth.
Here is a further breakdown of standalone sales for the quarter. The B2B sales were at INR 1,449 crore, that is 35% growth year-on-year. We registered a double-digit growth across all the business units, so within B2B, Power Gen was at INR 678 crore, which was a 41% increase year-on-year. Industrial at INR 373 crore, that is a 40% increase year-on-year. Distribution and aftermarket was at INR 227 crore, 13% increase year-on-year, and international business of B2B was at INR 171 crore, that is a 39% increase year-on-year. The B2C sales were at INR 144 crore, registering a 28% increase year-on-year, and within B2C, WMS was at INR 120 crore, that is 22% growth year-on-year. International business of B2C was INR 24 crore, that is a 77% increase year-on-year.
Please note, on October 10th we announced transfer of our B2C business into LGM via slump sale as a going concern. From next quarter onwards you would see that accounting changes reflecting in our books. Now looking at the consolidated performance for the quarter, revenue from continuing operation at INR 1,948 crore Q2 FY 2026 versus INR 1,499 crore for Q2 FY 2025 which is 30% increase year-on-year. Net profit for continuing operation at INR 159 crore Q2 FY 2026 versus INR 106 crore for Q2 FY 2025 which is 51% increase year-on-year. Numbers for the previous period, i.e. Q2 FY 2025, are excluding exceptional items and reversal of provision for overdue receivables made for a customer towards sales made in earlier years. In the current period, Q2 FY 2026, there are no such exceptional items and reversals. Net profit for Q2 FY 2025 excluding exceptional items and including reversals for overdue receivables provision was INR 125 crore.
Let us have a look at consolidated segment performance for the quarter now. B2B segment revenue for the quarter was at INR 1,457 crore which is 34% growth year-on-year. The segment PBIT was at INR 163 crore reflecting approximately 27% increase year-on-year. PBIT for the previous period, i.e., Q2 FY 2025 excluding reversal for overdue receivable provision, was INR 111 crore which is 47% growth year-on-year and in the current period there is no such reversal. B2C segment revenue for the quarter was at INR 258 crore which is 23% growth year-on-year. The segment PBIT was INR 18 crore against PBIT loss of around INR 1 crore for the same quarter last year. Financial service segment revenue for the quarter is at INR 233 crore reflecting 72% year-on-year growth. The segment PBIT before exceptional item was at INR 34 crore that is 9% increase year-on-year.
Please note, numbers discussed here represent continuing operation only and after reclassification of our RSMS business into B2B from B2C business, the PBIT and PBT numbers are before exceptional items. In closing, I would say it's been a strong quarter for us and steady progress during the year with strong H1 performance backed by healthy market demand and encouraging results across our key product segments. Our new product launches are being well received and we are steadily moving ahead on time outlined in our 2B 2B vision. We remain optimistic about the coming quarters and as Gauri mentioned, you will be hearing more from us on strategic initiative outlined in our five year plan. With that, I will open the floor for Q&A session. Thank you.
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on the attached telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Jason from IDBI Capital, please go ahead.
Yeah team, thank you so much for taking my questions and first of all, congratulations on a very strong set of numbers. Sir, first, my question actually pertains to, just wanted to understand in the Power Gen segment, which sectors is growth emanating from? Is it more broad based or do you see some strength in certain business verticals or does the growth continue to stay broad based?
Thank you. To answer your question, the growth continues to stay broad based and we're seeing demand across all of our segments, all of our customer segments in Power Gen.
Sure.
Just from an ongoing business perspective, I mean, you know, this upcycle has lasted for some time now. Just from an ongoing business perspective, I just wanted your sense on how sustainable do you see this upcycle continuing for.
What we're seeing so far is that at least in the domestic market the demand is sustaining and internationally I would say that we have very negligible market share. A lot of what is going on macro and economically outside has not really affected us as a company. We're cautiously optimistic because obviously there has to be caution given the current environment we're in. We do see this demand sustaining for some time.
My next question just pertains to Optiprime. Now you did mention that you have backed several high orders like 1500 KVA- 2000 KVA as well. Now just wanted to understand, you know, which sectors is the growth coming from? How do you see the traction from the data centers, whatever you can share.
You know, from a.
From the high horsepower perspective and the Optiprime series.
Just wanted to know something.
Yeah, so it's a great question. I think as we've talked on previous calls as well, high horsepower is not just about having the product but also how we sell it. It's a technical sale. I think having these wins demonstrates that we're able to prove to the customer that product is worthy and can also compete in that space. It's pretty big wins for us. If we look at where we get it from, where we're getting these orders from, it's across mostly, I'd say, infrastructure, and what I mean by infrastructure is large real estate, large real estate projects, whether it's commercial or residential real estate projects.
Okay, sure, ma'am.
I have further questions but I'll.
Come back in the queue.
Thank you so much for answering my question.
Thank you. Thank you. I request each participant to ask two questions only. The next question is from the line of Mohit from ICICI Securities. Please go ahead.
Yes, good evening and thanks for the opportunity.
My first question is what are the HHP sales in H1 and Q2? Is it possible to quantify or give some, give the contribution in the quarter.
We're not giving that breakup.
Sorry, broad number, Ma'am.
No.
Is it possible to?
Last year, full year, I think we did INR 1 billion.
Right.
100 crore.
Right.
Is it fair to assume that we have done better than the full year number of last year in H1?
I won't be able to give you a number. What we do track is how we're incrementally moving up in terms of market share node by node. What I can tell you is that we are incrementally moving up node by node in the high horsepower segment.
Understood. My second question on the industrial, I think industrial. The construction has been down, the mining is down. I think in this quarter we have sold most of the defense and railways.
Right.
How do we see this business in the, from the H2 perspective or let's say medium term? I thought this business will be really weak in the Q2. I don't figure out the sustainance of this.
Yeah, yeah, I got your question. I'd say we remain optimistic. On the industrial segment, do we see this momentum continuing?
It's mostly defense led or railway. Or do you think it will get more broad based as you progress in the.
In the future?
More broad based. Not only defense and railways but from construction and mining as well.
Understood. Lastly, on the export, can you just talk about the North America market, how it is taking off and how are the growth in the sustainance of the growth?
The North America market is not taking off for us. That is what I would say in the sense that the North American market is a market which we have just invested in and just entered. Although it is the largest genset market in the world, it will take some time and we do see the returns on that only coming over the medium to long term. The reason I say this is because it is not only about getting the right partner in that market, but it is also about building distribution, building out our entire product portfolio. Although we have products, the products have to be certified so all of this takes time. The U.S. market for us is a market that is important.
It is a market that we will continue to invest in and focus on, but we will not see the uptick in volume and value for some time.
Understood. Thank you and all the best.
Thank you.
Thank you.
Thank you. The next question is from the line of Tina from Motilal Oswal. Please go ahead.
Hi, thanks for taking my question and congrats for a great set of numbers. My question is more on the Power Gen side. On the Power Gen, the growth of 40%—will it be possible to quantify, like is it entirely volume driven increase or is there some kind of pricing impact or maybe some kind of, let's say, a higher share of HHP? Like you mentioned that HHP is gaining traction, but 40% growth, I mean, how is it broken down between demand, pricing, and HHP? A broad indication.
Thanks, Tina, for your question. The growth is broken down between volume as well as HHP. No, no pricing difference.
Okay.
HHP, the way you have been taking initiatives, has it started reflecting in the numbers for the company?
Yeah. Yes, I would say that.
Okay.
On the industrial business side you mentioned that you had done certain emergency procurement orders also and railway orders also. Is that emergency procurement order over in second quarter or will it continue in the coming month?
Two quarters?
Also just wanted to understand the trend in the industrial business because this quarter has been phenomenally well as compared to the industry players.
Yes, it can continue, Tina. It's not a one time thing.
It's not a one time thing. The NPCL order has started contributing or that will take some time to contribute to the numbers in the industrial business.
Yeah. Tina, we are in the execution of that NPCL order. The revenue for those NPCL orders will start getting recognized from the next financial year.
Okay.
Okay, understood. I have more questions but I'll come.
Back in the queue [crosstalk].
Thank you. The next question is from the line of Suraj Malu from Catamaran. Please go ahead.
Thank you for this. Can you please help understand what was?
The industry volume growth in this quarter.
Across LHP, MHP and HHP?
I'm not able to answer that question. I don't know.
Got it, got it.
Okay.
How big would be Africa and Middle East opportunity for you?
It's sizable. The Africa and Middle East markets are very important to us. As I mentioned in my opening notes, it's also the largest contributor to our international business being 60% in this quarter.
So.
It is not that we have significant market shares in these regions. They are very important areas of focus for us.
You got it?
Okay. Thank you.
Thank you.
Thank you. The next question is from the line of Jeetu Punjabi from EM Investco. Please go ahead.
Hi.
Hi. Gauri and Rahul and team, you know, great going. Two pointed questions. One, you know, your exports, the Middle East and Africa side, can you give us color whether, you know, whatever bump we went through a couple of quarters ago, whether that's normalized and now growth rates you expect over the next 6-12 months should be more normal or you expect this, the heavy growth rates to continue. Two, on ARCA, can you give us little more details on where are we on the goals that we set out and was the fundraising plan that was in the works, if that is on schedule and how do we see the next 12 months there?
Hi Jeetu, thanks for your question. The first question on the Middle East and Africa and whether that has stabilized and the sort of ups and downs we went through some time ago, the big thing that happened there for us, and the reason you're seeing these kinds of numbers is because the genset OEM who we talked about earlier that we had appointed there, we had made a business model change in the Middle East, if you remember, which is that we had gone from directly going to distributors there to actually appointing a genset OEM in the Middle East. What has happened is that genset OEM has stabilized, which is why we are seeing the traction coming in. I think now going forward we will continue to see that traction because they've essentially set up well in that area.
As you can imagine, putting in that change did have its difficulties, whether it was with realigning distributors to a third party or whether it was with finding talent, retaining talent, etc. That hard work and challenging work is actually complete. We are quite optimistic now about the growth that we will see from that region. That is on your first question. On your second question, which was on ARCA, yes, the plans are, you know, they are going as we have planned. I cannot say too much on a call until there is an update to give you. I would say that what is important is that in defining a new strategy, it is always very important to see the execution of that strategy get traction.
We had talked about pivoting to a retail book, and the reason I gave a little bit more color on either the new leadership team that's in place or the traction that we're seeing in terms of the branch openings, the people who have come on board, and the kind of disposals that we're making. It's extremely important, especially as we look at fundraising, because we can't just be selling a story. There has to be some numbers demonstrated behind that. I'd say that I'm happy with the progress that we've made in this area. When there is an update to.
Give you, we will give it.
Okay, super good wishes as always. Thank you.
Thank you.
Thank you. The next question is from the line of Umesh Raut from Nomura. Please go ahead.
Yeah.
Hi team. Good evening and congrats for very good set of numbers.
Sir, can you please be a little louder? We can't hear you properly.
Is it audible now?
Yeah, yeah, we can hear you.
Okay, thank you.
Congrats for a very good set of numbers. My first question pertains to price hike that industry has taken, especially after CPCB4+ norms, given that now transitioning is fully completed. Where exactly those price hikes have now settled in? In the industry?
Yeah, the price hikes have settled down and there was a price, as mentioned. Sorry, my voice is echoing for some reason, so if you could go on mute. Yeah, what I was saying is that there was a price hike with CPCB4+ which was between 25%-40% depending on the node, and that price stabilization has occurred and, you know, the prices have stabilized going forward.
Any particular level at which those have stabilized or it is broadly in the range of 25%-40% for different notes?
Yeah, it's broadly in the range of 25%-40 %for different nodes.
Got it. Considering that key raw material prices, especially in the last few months, are kind of moving up now, especially related to, say, copper or iron prices, how do you think pricing action going forward? Do you think given the steady demand, which is more broad based now in this cycle, especially, price hike would be easier to take than the last cycle?
We will assess the situation. If the prices move going forward, we will take a calculated decision and think of a price increase.
Understood. My second question is pertaining to industrial segment where I want to kind of get a breakup in between say demand from existing products as a part of industrial product offering and demand which has been there on the account of new product launches and any color over here in terms of how inherent demand is there, especially in the railway market. Considering that post electrification also we have seen very good growth from railway business.
Hi.
It's a combination of both, but I would say largely the demand continues for our core products. We have a whole bunch of new products either already launched or in process and we are seeing traction there. To answer your question, largely from our core traditional product.
Understood. On the railway business side, how do you see it, especially post electrification now that it is continuously doing well for us? How do you see outlook in railways, whether this momentum will continue, say beyond FY 2026 into next couple of years as well?
Yeah.
We remain committed to supporting the railways with their requirements, and whether it is through existing applications that we are in or developing new ones, such as what Gauri mentioned, the 400 HP product that we recently launched, we will continue to support our customer and endeavor to grow that business.
Understood. Thank you. Thank you so much. I'll join back with you.
All the best.
Thank you. The next question is from the line of Prolin Nandu from Edselweiss Public Alternatives. Please go ahead.
Yeah.
Hi. Thank you so much for giving me the opportunity. My question, Gauri, is to understand, you know, how are things shaping out for us in data center because when we do some channel checks with, let's say, a solution provider for data centers or people selling some other equipment to data centers, KOEL's name does not come across as, you know, one of the contenders there. Could you help us understand where are we in the journey where, you know, we have some significant wins in data center as a category.
Hi.
Look, data centers is one of the segments that we look at and we've had a few wins in data centers. As you will appreciate, the data center market is also very, I would say, closely spec and controlled market driven by U.S. specifications. I understand what you're saying. There are times where you might not find our name. What you will also see is plenty of times, and more so as you move along, you will start seeing our name.
Just, I mean, is it like.
You start with, let's say, edge data centers and you move up. How do we get into that specification kind of a thing? Right. As you mentioned, it's a U.S.-driven specification. Does it start with, you know, edge data centers before we move to—just want to understand our strategy.
Right.
How do we, you know, I understand it's a tougher market, but is it just the case of, you know, our DG sensors being used in some data centers, the performance being monitored, or are there any other strategies that we are adopting, right, to penetrate this market?
Sure.
I think you've kind of laid out exactly what we are also thinking. The non spec customers, and there are plenty of them as well, we are targeting them and we're trying.
To work closely with them.
Thank you so much [crosstalk].
Yeah, I was just saying not just edge data centers.
Okay, thank you so much.
Thank you. The next question is from the line of Abhijeet Singh from Systematix. Please go ahead.
Yeah, thank you for the opportunity, ma'am.
Am, and great to see.
The.
Question is on the Power Gen segment.
We can't hear you very well. Could you speak into your mic please?
Am I audible now?
Yes.
Yeah.
Ma'am, my question is on the Power Gen business in the domestic segment and as we are moving up the value chain and trying to gain more and more market share in the higher nodes and there we have, you know, the competition is pretty intense. We have well-entrenched players there, big players, big brands.
What are the key challenges we.
Are facing in trying to gain market share from them and what is our strategy to?
In order to be able to do that?
Yeah, so what I would say is that even we are a reasonably strong brand and we've been entrenched into the domestic Power Gen market and if you look at the numbers that we are doing, it would give you an idea that once we commit to a particular node and we have the product, we are able to figure out a way to grow our share of wallet and market presence. Beyond that, I think this is not. I will not be able to say more in this conversation, but we remain committed to growing our market share.
Sure.
Thanks for answering. I'll get back in queue.
Thank you.
Thank you. The next question is from the line of Anupam Goswami from SUD Life. Please go ahead.
Hi ma'am. How do we look at the HHP sales growth from here? I mean, if you can give some color, how do we take out our numbers and what leads to your margin expectations being stable and sustainable at this level?
The first part of the question about HHP, you said something. The second part was on margins and growth being sustainable. What did you say on HHP?
Ma'am, how do we look at the HHP numbers from here? What sort of growth should we take and how are we building our story in the market?
Yeah, so look, we have some very exciting products that we are currently working with and launching. We remain focused and I think if you look at our track performance along with the way our last quarter has been, our HSP performance is something that we are clearly focusing on. I think beyond that it's going to be hard to say on margins. I'll let Sachin answer.
If you see our margin improvement over the last three and a half years, we have improved by more than 400 basis points. Going forward, also with the product mix changes we are aiming for as well as the exports growth we are aiming for, we do think there is a headroom for margin and we can improve thereon.
Hello?
Yeah, hello.
Okay, got it sir. I'll turn back in the queue. Thank you.
Thank you. The next question is from the line of Parikshit from HDFC Securities. Please go ahead.
My team, congratulations on a great quarter. My first question is this growth of Power Generation. This was a transition quarter last year. Just want to understand how much was.
The volume growth in this.
Yeah, we don't get that out.
Because.
What I understand large part of pre.
Buy happened and because of that the growth looks too high. On an adjusted basis if I have to ask what to be the.
Core Power Gen growth in this quarter.
YoY?
This is the core Power Gen growth.
I mean, last year we.
Had this volume which was not 100 basis points, right? Because of the pre buy it was tracking below 100. So there was this recovery to 100 basis points and then the growth on top of it.
So.
All I can tell you that volumes have come back and have normalized. It's difficult for me to tell you, you know what to adjust that number.
For you
because of that. There has been, because of that number [crosstalk].
I can't hear you. There's a lot of, sorry, there's a lot of static on your line. I can't hear you very clearly [crosstalk]. I'm sorry, I just can't understand what you're saying. It's very jumbled.
I can't hear you properly. May I request you to rejoin the queue?
Yeah, sure.
Thank you. The next question is on the line of Mehul Joshi from BCG. Please go ahead.
Yes, so I wanted to just understand the outlook or performance of the firefighting engines business, QoQ and Yui and how.
Is the outlook looking forward for that business?
Yeah, so for firefighting, I mean if you look at our, it's not a reported segment differently, so we don't give out a number separately, but we are looking at product enhancements and growing that portfolio. So firefighting segment is quite exciting for us.
Thank you.
Thank you. The next question is from the line of Jason Soans from IDBI Capital. Please go ahead.
Yeah, thanks for taking my question again.
Just wanted to understand, I mean, we.
Do hear about increasing competitive intensity in every, you know, every segment in terms of the LHP or the NHP or HHP, more players getting ready with more nodes. Just wanted to understand from that perspective, you know, in terms of how do you see the pricing intensity going in the market just as of now, how do you see the picture on the ground?
As of now.
We see pricing fairly stable.
We don't see drastic variations in pricing. If anything, we see things as having stabilized.
Okay.
In light of the same, do.
You think the demand is enough to take care of this kind of?
I mean for the near to midterm.
The demand seems fairly reasonable at this point in time and we remain optimistic.
Okay, yeah, sure.
Thanks.
Thanks for that.
Thank you. The next question is from the line of Parikshit from HDFC Securities. Please go ahead.
Hello.
Hello [crosstalk].
Thank you. The next question is from the line of Anupam Goswami from SUD Life. Please go ahead.
Hi, just one more question. How ready are we with our HHP products in terms of nodes and competitiveness in this?
We are already executing several HP orders, so availability is not really as much of a problem.
Are we currently present in all the nodes that is there in the market?
[Crosstalk] Yeah, we have a.
We have a fairly large portfolio now. We are also putting orders of 6 MW Gensets. So we have a pretty big portfolio.
Just one. If I need to clarify, how do I see the competitive intensity if our product prices are a little lower than the competitive peers? How is it hard to break into that HHP? What's the challenge that is coming?
I think there is, you know, it's a question of a lot of. It's a specification-driven market. It's a more technical market and requires a particular type of customer support and.
Pre sales to be created.
I think from a, if you ask what is a challenge, a challenge should be creating the right ecosystem to drive that business. Of course, this is on the basic assumption that the product is ready. In our case, we are working on both areas. We have product readiness, we have capabilities that are developed, and we are seeing the wind. All of that is already happening.
Is it a market through distributors and channel partners or somewhere? I mean, how is it if you can give some color?
It could involve channel partners. However, heavy engagement from R&D is needed for front ending.
Okay, thank you sir.
Thank you. The next question is from the line of Tina from Motilal Oswal. Please go ahead.
Yeah, thanks for taking a follow on question from my side. One thing I wanted to check on the market share. Market share of KOEL which got impacted last year in the second half of 2025. Has KOEL regained the market share which got impacted? Because when we compare the revenue numbers, KOEL has grown by 40% in the second quarter. And Cummins similar portfolio has grown by 20% in the second quarter. There could be some base impact also.
For both the companies.
Even adjusted with that, it seems that KOEL has grown much better. That basically indicates that market share would have been gained byKOEL. What would be your comment on the same and if you have gained, whether it is sustainable given the competition that is standing out?
I think you know our business pretty well and we are completely aligned with the comment you made on the market share. That would be our assessment too. We will watch the competition intensity. We are keeping a close eye on it and we will. take the actions that we need to.
Okay,
okay.
Last year, same quarter, third quarter, when we compare the performance, the demand was impacted across the industry and to an extent KOEL's numbers were also impacted. What is the general traction that you are witnessing so far in 3Q in the month of October and so far in the month of November versus what you would have seen, let's say in the last October and last till mid November?
Yeah, Tina.
I mean, you know that the focus we will have for this conversation will be Q2. I can't really give out anything on Q3 at this point.
No, just a general sense on the market demand. I mean nothing specific to company. The overall demand scenario, nothing specific to company.
I think it'll be hard for me to comment right now, but yeah, maybe once the quarter is closed.
Sure, sure.
Thank you.
Thank you. The next question is from the line of Mohit Pandey from Citigroup. Please go ahead.
Yeah, thank you for the opportunity and congratulations on a great set of numbers. First question is on the railway offerings. If you could please give some more color on what has been driving growth here for KOEL .
Yeah, so I think it's a lot of effort that we've put in as far as our sales and audit board generation is concerned along with execution. Heavy execution ended up happening in this quarter, which has helped from a sales standpoint.
Okay, so any specific offerings you'd like to call out, which has stood out for you?
Yeah. So amongst our existing products, power cars have really stood out. They are the ones that are driving a lot of the growth from an application standpoint.
Understood.
The second question was on the higher HP nodes. So 1500 KVA- 2000 KVA that you mentioned earlier.
At this point of time, are they more concentrated in particular end markets?
I think real estate was mentioned once.
For you.
Yeah.
In terms of the wins or.
Or.
Yeah.
How is it playing out [crosstalk]?
Yeah, I mean, real estate is an important market for us. We are seeing early wins there as well. The segments vary. Real estate definitely would be an important market.
Okay.
On the current hours and upcycle, in your view, what would be the biggest risk yet to this ongoing upcycle? To the demand?
Yeah.
Are you.
Can you ask me the same question in another way? I do not quite understand it.
Okay, so what could precipitate a slowdown? We have been seeing an upcycle for quite some time now in Power Gen demand.
Yeah.
What could be, you know, what could.
Lead to a slowdown, in your view?
The biggest risk?
Yeah.
I think the biggest risk probably will be geopolitical at this point given the volatility that we see. But as long as there is enough consumption in the economy, we feel fairly optimistic from a domestic standpoint.
Okay, thank you so much and wish.
You all the best. Thank you.
Thank you. The next question is from the line of Sourabh Arya from Oaklane Capital. Please go ahead.
Yeah.
Hi. Hi everyone. Congrats. This set of numbers. Just a couple of questions. The first is this B2C. So we have done this restructuring and obviously named it Fluid Dynamics. So something changes with this name. The focus, etc. of the business or it would. It's just a nomenclature.
Yeah. The reason we've done the restructuring is for efficiencies in the business because it was essentially very similar businesses. We just wanted to consolidate them together so that we can drive the business more effectively.
Okay.
It will efficiencies would mean then margin improvement there or the TAM et cetera of the business also that won't change, right?
Efficiency, eventually the idea is to improve our performance both in terms of business growth as well as our margin profile.
Okay, that is fine. Second is obviously we all are trying to understand what has happened in this quarter. Is it sustainable or not? Maybe related question is like three years back, the last three years maybe we are doing this product improvement, launching new products, etc. Can you divide that, let's say standing today versus three years back, how our new products have contributed till now and what should one think about that new product contribution? [crosstalk]
It's going to be very hard to answer that question over this call. Maybe I can answer it in another way. Three years ago our presence beyond 500 KVA odd was very limited. Today we have a very large product portfolio and we are making reasonable presence in almost every node and you see the results that you are seeing. Maybe that would be a good triangulation point.
Okay, this is the point we are all trying to understand. Is it just getting started or are all these the result of that is what obviously everybody is trying to look at? This is helpful. Lastly, on the distribution side, obviously we have seen momentum in sales in industrial export as well as Power Gen. When does this cross lead to distribution revenues catching up?
The distribution business? If you look at last few.
Years, see each business operates a little differently.
The distribution and the aftermarket business has.
Been stable double digit growth performer and we continue to have that expectation of consistency from our aftermarket business. I think from a double digit growth performance they've done fairly well and I honestly don't see it as a challenge.
Yeah.
Okay.
Okay, fine.
Thank you.
All the best.
Thank you.
Thank you. Due to time constraints we will take that as a last question for today. I now hand the conference over to the management for closing comments.
Thank you very much everyone for joining the call today and thanks for your interest in the company.
On behalf of Antique Stockbroking, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.