Shares of Kirloskar Oil Engines (KOEL) surged 11% intraday on the BSE to hit a more than four-year high of Rs 326.60 on Wednesday.

The stock has risen 14% over the past three sessions after the company reported a strong performance for the quarter ending September 2022 (the second quarter of fiscal 2023). It was trading at its highest level since August 2018.

KOEL is a leader in the manufacture of diesel engines, agricultural equipment and generator sets, with a considerable share of the international market.

The company’s net profit almost doubled to Rs 82.5 crore in Q2FY23 compared to Rs 41.7 crore in Q2FY22. Operating income rose 23% to Rs 1,228 crore from Rs 1,001 crore a year ago. EBITDA margin improved 500 basis points year-over-year and 20 basis points quarter-on-quarter to 14.7%.

The higher margin reflected better-than-expected profits in the core business, helped by higher prices and better export and customer support departments. A favourable Financial Services EBIT margin of 78.7% supported overall profitability. In a company update, Anand Rathi Share and Stock Broker said electric pumps and others (agricultural mechanisation and water management solutions) posted losses due to lower absorption costs.

The broker believes that strong demand across market segments, increased focus on exports, management push and efforts to strengthen operations bodes well for the next few years. New emission standards (CPCB4+, BSVI) will help boost its international appeal; it said and maintained a ‘buy’ call on the stock with a target price of Rs 374 per share.

Meanwhile, KOEL’s market price has risen 86% over the past three months, compared with a 3.6% rise for the S&P BSE Sensex. It hit an all-time high of Rs 450 on December 26, 2017.

The stock was up 9% at Rs 320.50 at 12:27 pm, compared with a 0.16% gain in the benchmark index. Average volume on the NSE and BSE nearly tripled, with a combined 2.4 million shares changing hands.