KOKirloskar Oil Engines533293Engineered power systems,

Kirloskar Oil Engines is pivoting towards AI data center theme after winning a 192 megawatt order from HyperNeXt, a hyperscale AI data center builder. Stock hit 30% upper circuit on the news

Kirloskar Oil Engines is pivoting towards AI data center theme after winning a 192 megawatt order from HyperNeXt, a hyperscale AI data center builder.

By ScoutQuest · Mon 28 Sep 2026, 9:46 AM IST · 10 min read

Heard on Live television at 09:46:27 IST.

[09:46:27] Which is that uh I heard you say at the opening answer that you are predominantly in the business of giving steam and nitrogen, but there are some optionalities uh that could come in. Could you talk a bit about that? Yeah, so we are working on uh five nines of nitrogen, lean locks, I mean liquid nitrogen, liquid oxygen. We're talking about oxygen gas right now, we are talking about instrument air. So we are evaluating all these things. We are talking lot of customers where we can supply such uh uh gases as well. leveraging this infrastructure that we have created just by adding new pipes to them. Also, we are looking at more and more of asset light business. So, for example, Himachal tender for us is also an asset light business where EPC is just a small business, but our ider use the asset for next 25 years. So, it adds to our asset light business. We are getting into more steam business. One agreement we already have in Halia uh in West Bengal. One more in Dahej SCZ we have recently. We're working with more companies. Hope we can get some more business on the asset light uh side again. So, these are the various options we'll have to more uh over and above the generation of uh the facilities uh steam by our facilities, investing in our facilities, uh looking for such more projects. Mr. Bodia, thank you so much for speaking with us and uh it's it's truly a different kind of a product selling steam. So that uh you know, companies don't have to set up uh boilers. But, of course, much more company then just steam and no smokes and mirrors there. We're looking forward to speaking Thank you. Thank you, Kamena. Thank you so much. Uh the company just pull up what it has been doing since its IPO, I think 30 odd percent up since its listing day on Steam House India. Yeah, 36% up. Now, let's talk about Kirloskar oil. Now, what we do over the next few days is quite interesting. You will recall that Goldman Sachs talked about at least 42 Indian companies that do have an AI trade and uh uh Neeraj that was something got us thinking, right? Which are these companies and what do they do? Yeah, most people thought of five or names 42 was a large list and within uh some of the basic businesses as well which on on paper or in the first glance may not appear to be AI enablers. There were some interesting names. We are trying to get one company every day from that list. Yeah, let's talk to Kirloskar Oil today. That's in focus as the company is betting big on the AI data center boom after bagging a 190 megawatt order from Hyper next. Before we speak to the company and understand what they are doing on the AI front, Parth is joining in for more details. Parth. Well, uh 5 year old in and Jenset's maker, but the big thing about this counter is that they are shifting towards that AI to towards capturing that AI data center theme. Now, on 19th of June they had won 192 megawatt data center order and on that news the stock closed at [09:49:27] oper circuit of 30%. The customer for that order was HyperneX, which is an AI ready hyper scale data builder. Uh this is a big opportunity for Kirloskar because data centers afford even seconds of power failure. And hence why the backup Gen sets form a core part of that data centers and they have a product in this space called OptiPrime system which packs multiple power into a single unit. So that saves the floor space for the data center developer at the high. The supply revenue for this order is expected within FY27 and the management further targets a revenue of over 16000 crores for the company by FY30. So that's the entire outlook on Kirloskar oil engines on the back of these tailwinds from the data center theme. Okay. Rahul Sahai CEO of Kirloskar Oil Engines joining in and that was some interesting perspective that Partha put in. It's a 75 year old company now being seen as possible AI. Mr. Sahai can you elaborate on that and thank you so much for joining us this morning. Thank you so much for having me here. Uh yeah I mean I think uh we've we've seen as a legacy manufacturer and uh we have found ourselves in an interesting spot where uh we specialize in engineered power systems. And uh and you know we've uh we are in this space where we truly understand the Indian customer and all profiles of customers. We see interest from a lot of local data centers as well as global data centers as well. So it's it's been an interesting transformation and theme over the last four years. Okay, let's talk about this latest order with Hyper-NeXt. What exactly will you be doing and what is the size and scope of that order? This was set the stage for many more similar orders. Um look, the we we knows that it's a 192 MW uh you know, diesel power system there. And uh we would be doing the full scope uh that is supply, testing, commissioning, along with a long-term uh operations, maintenance contract, and that's going to be a multi- engagement with the customer. Uh in my opinion, that's a start of uh things to come. I mean, we've been working pretty solidly from uh in for this segment. Uh teams. Uh so, certainly see that as a as a big opportunity for us. Rahul, good morning and Any and I'm just trying to understand you you and your opening answers saying there is this place that you suddenly found yourself in if you will. So some serendipity, some plan etc. Uh how much of this framing of you being a pix and shovel player on AI do you accept and what is that split if you will, if you were to say [09:52:27] let's say FY 27 or FY 28 as the first day when you see true revenues coming in. What is split between AI versus this uh industrial defense after market play stand. And where do you see it going ahead because you found this new uh avenue of growth. Yeah. Uh so I think it's not as straight forward. So we see data centers as a segment. Now data centers are going through their own journey. So not all data centers are. So uh there could be, you know, enterprise data centers, there could be other types uh PCs as well. So uh do we have a play with data centers? I believe so and have an opportunity uh globally at that. But uh it's hard to comment on the AI data center contribution because uh the industry itself is. Hm. Okay. Okay. So, okay, let's. So, it is an opportunity uh hard to frame. But within this construct as well and correct me if I'm wrong, but you've put out a billion dollar operating revenue by FY 30, have you? No, absolutely. And and we've stated that and formally to investors. Absolutely. And so how much of how much of target mix in uh revenues that comes in from AI/data center which you yourself are saying it's difficult to kind of completely comprehend as. What percentage? Yeah. Uh look, it's uh again, it's hard for me to comment on specifically what percentage, but what I can certainly say is it's a big opportunity and uh it's very hard to qualify because a lot of these opportunities are quite binary. Uh I understand why asking the question, but No. Actually, I'm I'm trying to think of it this way, okay, without enough clarity on how much contribution comes from AI and data centers, if you're confident of 2 billion by FY 30, Does that mean therefore 2 billion is the bare minimum that you will do? And if the AI thing plays out much better than the clarity that you have right now gives you, then you might actually exceed that quite comfortably. Um uh look, I think one is we will endeavor to do what we've stated and obviously look from our end we'd want to do more. Uh the AI opportunity and the data center opportunity is certainly a big one and we will continue to focus on that. What is the size of this hypernext order? Is there anything that you can share? Uh so we've not formally stated the value, but it's uh it's a 192 MW uh we've created our OptiPi power systems uh what was mentioned earlier. [09:55:27] which are specifically focused on these data centers. So it's a completely modular architecture that we are deploying across the world now. I saw the 192 megawatt value is not been publicly stated, which is why the question any any sort of ballpark number idea that you can give us just to get a sense of whether these lucrative orders, can you give us a sense of what the margins are typically in this kind of an order where you're using your technology and you're you know own innovations? Yeah. So from a margin standpoint, these are all composite contracts. So it's not supply service contracts that go along with it. So, uh, certainly from our uh, you know, just for us to be able to manage our margins, uh, it it it augers well for us. Having said that, I cannot give out specific value numbers right now, but when we are in a position to do that, we'll firmly state that in our investor calls. Now this OptiPrime uh, system that you have, which is what you're saying you know, puts you at an advantage is basically uh, the kind of energy storage which takes up less space. Understanding it in a basic and uh, simplistic fashion. Um, is high technological innovation? Can nobody else do it? Yeah, so um, so one is uh, so I'll just give some context. We've been focusing on creating intellectual property uh, as as a company and uh, it's important not just for as an organization, but also for India because uh, we see ourselves as an engineering company and there's a lot of work in core R&D that we do because everything is in-house. Uh, now our endeavor is to certainly create some technological modes. Uh, we compete with a lot of players. Uh, we have created patents for each of the technologies that we've worked on. In that sense, yes, it does give us some advantage. I think the larger advantage is for our customers because these are completely modular systems, they occupy lesser space, completely organized. So it's good for uh, it's good for the company, the country, and the shareholders. Okay. Rahul, I'm sorry, but I'm coming back. Kind of uh, uh, wanted to probe you a little. Now, let let me try, let me second guess this, right? From, from from FY 21 onwards or end FY 21 onwards, you've done something right because your revenues have moved up from whatever, 3,200 crores to 7,700 crores. And at that point of time, there was no data center, etc. Your margins have moved from 10% to 18 odd percent, right? So you've done a a few things very right and they've worked beautifully. My question therefore is,

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