The Engine Room Just Posted Record Numbers. Nobody’s Bored Anymore.

The Company That Makes Diesel Cool Again

Let’s be honest. When most people hear “diesel engine company,” they imagine a greasy factory floor, a Tier-2 city distributor yelling into a Nokia phone, and a product lineup that hasn’t changed since Y2K. Kirloskar Oil Engines Limited — KOEL — would like a word.

KOEL is one of India’s oldest and most established industrial engineering companies, part of the legendary Kirloskar Group, and has been selling diesel engines and gensets since before most of your fund managers were born. The company makes engines for agriculture, power generation, industrial use, marine, defence, and now — wait for it — data centres. Yes, the same company that powered your grandfather’s pump set is now gunning for contracts at hyperscaler data campuses. The audacity is genuinely inspiring.

Q3 FY26 delivered the highest-ever quarterly B2B revenue in the company’s history. The concall confirmed management isn’t just describing growth — they’re restructuring the entire business architecture. The B2C segment has been carved into a subsidiary. A dedicated entity for defence and railways systems work has been incorporated. The financial services arm (Arka Fincap) is granularising its loan book. And the team is training salespeople to sell 3,000 kVA engines to consultants who previously thought “high horsepower” meant a sports car.

The stock has returned 130% in one year, 65% in three, and 54% over five. P/E is 40x, which sounds alarming until you notice the PAT is growing at 23% CAGR over five years. Whether that multiple is a bargain or a trap depends almost entirely on whether HHP and data centre growth lands as management claims. Strap in — or rev up, as the case may be.

They Make Engines. Big Ones. Small Ones. Nuclear Ones.

The business model is deceptively straightforward: KOEL designs, manufactures, and services diesel engines and diesel generator sets. The engines power farms, factories, hospitals, data centres, nuclear power plants (no, seriously), ships, and defence equipment. Manufacturing happens across Pune, Kagal, and Nashik, with eight facilities total including subsidiaries.

The B2B business — now the entire focus of KOEL standalone post the B2C transfer — is split into four revenue-generating units: Power Generation (domestic gensets, the single biggest chunk), Industrial (defence, nuclear, marine, construction), Distribution & Aftermarket (spares, service, AMCs), and International (exports and overseas entities). In Q3 FY26, all four units grew double digits. Power Generation grew 44% YoY. Industrial grew 41%. D&A hit its highest-ever quarter. International grew 26%. This is not a company having a good quarter in one segment — it’s a company having a good quarter in every segment simultaneously.

The real story, though, is High Horsepower. KOEL launched its OptiPrime HHP platform (up to 3,000 kVA) in H1 FY24, and it has since become the growth engine (pun intended) of the entire standalone business. HHP revenue grew 235% YoY in Q3 FY26 and 132% in 9M FY26. Management refuses to disclose absolute HHP revenues — which is the industrial equivalent of a restaurant hiding its bestselling dish from the menu because the kitchen can’t keep up.

Q3 FY26: The Highest-Ever Quarter (In Case You Missed It)