Pitti Engg.

Pitti Engineering reported a robust Q2 FY25 with consolidated revenue of ₹455 crores, marking a 48.27% year-on-year growth, and a PAT of ₹38 crores, up 72.74% YoY. For the first half of FY25, consolidated revenue grew 37.1% to ₹850 crores, with EBITDA increasing 59.83% to ₹124 crores and PAT more than doubling by 105% to ₹57.38 crores. Standalone performance also showed significant growth, with Q2 revenue at ₹404.97 crores (up 28.44%) and PAT at ₹34.05 crores (up 54.7%).

The company is in the midst of significant capacity expansion and integration efforts. Consolidated lamination capacity is projected to reach 90,000 tons, with the Aurangabad facility contributing 72,000 tons and expected to be commissioned by December 2024. Casting capacity will expand to 18,600 tons, and machining capacity is set to increase from 547,000 to 650,000 machine hours by the end of March 2025. These expansions are bolstered by the recent acquisitions of Bagadia Chaitra Industries and Dakshin Foundries, and the merger of Pitti Castings.

Management provided a clear long-term vision for FY27, targeting consolidated lamination sales of 72,000 tons and machine components sales of 15,000-16,000 tons. The revenue projection on a constant raw material basis for this operating level is estimated to be in the vicinity of ₹2,300-2,400 crores. Furthermore, the company expects its EBITDA margin to be around 15-16% of revenue by FY27, indicating confidence in sustained profitability improvements.

For the full year FY25, Pitti Engineering expects consolidated lamination sales volume to be between 62,000-64,000 tons. Revenue, including contributions from Dakshin Foundries and the demerger, is projected to be ₹1,900-2,000 crores, assuming stable raw material prices. The full-year EBITDA margin is guided at approximately 15.5%. The company also aims to significantly reduce its consolidated net debt from ₹330 crores as of September 30, 2024, to about ₹200 crores by the end of FY25, driven by cash accruals and inventory reduction.

The company is eligible for an annual incentive income of ₹30 crores up to FY26, with ₹25 crores already accounted for. A new incentive claim for Phase 2 of the Aurangabad project, starting from FY27 for 9 years, is estimated to be approximately ₹40 crores per year. Strategically, Pitti Engineering plans a capex of ₹40-50 crores over the next two years specifically to strengthen its tool room, highlighting continued investment in enhancing value-added capabilities.

Pitti Engineering is experiencing strong demand across several key segments, including data centers, which are projected to grow at least 2x further in the coming years, as well as renewable energy, mining, and locomotives. However, the low-voltage motor segment is facing intense price competition and increased imports from China, causing its contribution to consolidated revenue to shrink from 13.5% in Q2 last year to 11.5% in Q2 this year. Management noted that growth in other diversified segments is effectively offsetting this pressure.