Pitti Engg.

Pitti Engineering reported a strong Q3 FY26, with total income growing 15% YoY to INR484.3 crores and Adjusted EBITDA increasing 24.5% YoY to INR83.3 crores. This led to an expansion in Adjusted EBITDA margins to 17.5% from 16.1% in Q3 FY25, reflecting consistent execution and an improved product mix. For the 9M FY26, revenue from operations grew 13.9% to INR1,447 crores, with Adjusted EBITDA up 26.6% to INR241.8 crores, demonstrating sustained positive momentum.

The company continues to enhance its capabilities in machine components and integrated products, driving better customer traction and market position. Key growth drivers include Traction Motors and Railway Components, contributing 31.9% of Q3 revenue, and Power Generation at 14.4%. Notably, the Data Center segment showed significant momentum, with its revenue contribution rising from 2.7% in Q2 to 3.7% in Q3 FY26, and is anticipated to grow 25-30% over the next 12-18 months.

Pitti Engineering's approved INR150 crores capex plan is progressing as scheduled, with approximately INR80 crores already expended. Most new capacities are expected to come online in the next financial year, with full operationalization by the end of FY27, poised to generate incremental revenues. The company has also structured its capex pipeline over the next three years to support medium-term growth and further enhance its value-added capabilities, backed by strong customer forecasts extending up to two years.

Elevated inventory levels, primarily due to strategic stocking of BIS-certified steel amidst prior supply uncertainties, led to higher finance costs during the quarter. However, with new tie-ups for BIS-approved steel from Korea and Japan, the company has begun liquidating excess inventory and factoring receivables. This initiative is expected to reduce inventory from INR500 crores (as of Dec 31, 2025) to INR300 crores by April 2026, which is projected to reduce finance costs by INR15 crores in FY27.

While Q3 exports saw a slight YoY dip due to customer inventory adjustments, the overall outlook remains positive, supported by a gradual shift in global sourcing towards India. Recent reductions in US tariffs on India, coupled with India's tariff advantage over competitors like China and Vietnam, are expected to accelerate new customer acquisitions. The company is actively engaging with new customers in North America and Europe, targeting an additional $10-15 million in export revenue over the next 2-3 years, with significant long-term potential in segments like NEMA Motors.

In Q3 FY26, total lamination volumes grew 21.1% YoY to 16,823 tons, while total machine components volumes increased 7.7% YoY to 2,967 tons. For the 9M FY26, lamination volumes rose 11% to 48,155 tons, and machine components volumes grew 18.6% to 8,042 tons, demonstrating robust demand and execution capabilities. For FY27, the company targets 78,000 tons for lamination and assembly components, and 14,000 tons for machine components and castings, with utilization rates for lamination and casting projected at approximately 72-75%, and machine hours at 85-90%.