Kirloskar Oil Engines (KOEL) is the flagship company of the Kirloskar group, one
of Indias largest engineering conglomerates. It is one of the worlds largest
generating set (genset) manufacturers, operating at a capacity utilization level of
55%, manufacturing both air-cooled and water-cooled engines and diesel gensets
across a wide range of power output from 5kVA to 3000kVA. With capacity
already in place and minimum capex requirement in near future, we expect that
once the operating leverage starts paying off, it will directly shoot up the bottomline
of the company. On account of positive long term growth outlook and
attractive valuation, we initiate coverage on the company with a Buy
recommendation and target price of Rs244.

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