­Long operational track record and strong customer base
KEL has a long track record of more than three decades in the industry and has built healthy relationships with its customers and suppliers, ranging from 5 to 30 years. The strong relationships with customers, who have a very strong credit profile, ensure regular orders and low counterparty credit risk. Further, in February 2024, KEL acquired 100 per cent of the equity share capital of MEEPL. This acquisition is expected to augment the organizational prowess, as MEEPL specializes in the production of thermal engineering and heat recovery systems, which are expected to complement Kilburn Engineering’s existing drying systems. Furthermore, on January 28, 2025, KEL acquired 100% of the equity share capital of Monga Strayfield Private Limited, which is engaged in radio frequency drying and heating technologies and specializes in sheet metal fabrication. This acquisition is expected to further strengthen Kilburn’s market position and expand its offerings in key industrial sectors. The synergy of both acquisitions is expected to help tap into the existing client bases of all three entities, while also providing a bundled solution.

Revenue growth and improvement in the profitability
The group’s operating income stood at Rs. 424.46 crore in FY2025 as against Rs. 329.48 crore in FY2024. The group’s EBITDA margin improved marginally to 24 per cent in FY2025 as against 23.37 per cent in FY 2024. Further, in H1FY2026, the group reported operating income of Rs. 288.99 crore and EBITDA of Rs. 79.23 crore as against Rs. 190.40 crore and Rs. 42.72 crore in H1FY2025. Further, the PAT margin stood at 14. 70 per cent in FY2025 as against 15.34 per cent in FY2024. The improvement in the overall performance of the group is primarily on account of acquisition of MEEPL (acquired in February 2024) and Monga Strayfield Private Limited (acquired in January 2025). The group has an unexecuted order book position of around Rs. 492.03 crore as of September 2025, of which Rs. 340.72 crore pertains to KEL. The group’s order book position remains moderate, providing revenue visibility for the near to medium term. Acuité believes that the revenue of the group is expected to improve further due to the healthy order book position and its execution on the back of expansion plans.

Healthy financial risk profile
The group’s financial risk is healthy, with a healthy net worth, below-unity gearing, and comfortable debt protection metrics. The tangible net worth increased to Rs. 351.14 crore as of March 31, 2025, reflecting sustained profitability and an increase from Rs. 175.93 Cr. as of March 31, 2024 due to accretion of profits to reserves and conversion of equity share warrants to equity share capital. The group's gearing is comfortable at 0.25 times as of March 31, 2025 as against 0.48 times as of March 31, 2024. The comfortable coverage debt protection metrics are reflected by the Interest Coverage Ratio (ICR), which stood at 7.05 times and the Debt Service Coverage Ratio (DSCR), which stood at 4.29 times as of March 31, 2025 as against 8.14 times and 6.48 times as of March 31, 2024 respectively. Total outside Liabilities/Total Net Worth (TOL/TNW) improved to 0.74 times as on 31st March 2025 as against 1.27 times as on 31st March 2024 while the Debt/EBITDA improved to 0.84 times as on 31st March 2025 as against at 1.06 times as on 31st March 2024. KG is undertaking a brownfield expansion at Saravali involving a capital outlay of ~Rs. 30 crore and a Phase 2 expansion at subsidiary MEEPL with an indicative capex requirement of Rs. 7-12 crore funded by internal accruals to meet growing captive demand from increasing order inflows. Acuite believes, the financial risk profile of the group will continue to remain healthy over the medium term due to steady cash accruals.

­Working capital intensive nature of operations
The working capital-intensive nature of the group’s operations is marked by high and increased Gross Current Assets (GCA) to 361 days as of March 31, 2025 as against 326 days as on March 31, 2024, primarily due to unbilled revenue of Rs. 199.09 crore as of March 31, 2025. The inventory days stood at 54 days, and debtor’s collection period stood at 91 days in FY2025 as against 45 days and 87 days in FY2024 respectively. Due to the time taken to execute the orders, the operating cycle takes between 2 to 6 months, resulting in a large working capital requirement and staggered deliverables. Acuité believes that the working capital operations of the group will remain intensive due to the nature of business.

Susceptibility of profitability to volatility in raw material prices and cyclicality in end user industry
The group’s major raw material is steel, making its profit margins susceptible to fluctuations in raw material prices. However, since steel purchases are spread over a period of time, the impact of price volatility is mitigated to some extent through averaging. Further, demand for the group’s products is driven by the capital expenditure plans of end-user industries, which are inherently cyclical.