Pitti Engineering Limited — Q3 FY26 earnings call

Call held 6 Feb 2026

Management summary

Pitti Engineering delivered a strong Q3 FY26, marked by robust revenue and EBITDA growth, driven by consistent execution and a favorable product mix. The Data Center segment showed significant momentum, and the company resolved prior supply chain uncertainties for BIS-certified steel. While exports saw a slight dip in Q3, the outlook remains positive with new customer acquisitions and favorable tariff dynamics. Elevated inventory led to higher finance costs, but management has a clear plan for reduction and continued capacity expansion.

Highlights

  • Total income for Q3 FY26 grew 15% YoY to INR484.3 crores, up from INR421 crores in Q3 FY25.

  • Adjusted EBITDA for Q3 FY26 stood at INR83.3 crores, registering a growth of 24.5% YoY, with margins expanding to 17.5% compared to 16.1% in Q3 FY25.

  • The Data Center segment showed strong momentum, with revenue contribution increasing from 2.7% in the previous quarter to 3.7% in Q3 FY26, and is expected to grow 25-30% over the next 12-18 months.

  • Total lamination volumes grew by 21.1% YoY to 16,823 tons in Q3 FY26.

  • Tie-ups for BIS approved steel from Korea and Japan have been secured, which is expected to release significant working capital and reduce finance costs.

Concerns

  • Exports were slightly down YoY in Q3 due to customer inventory balancing and supply chain realignments, though Q4 is expected to be strong.

  • Finance costs were higher during the period due to elevated inventory levels, which stood at INR500 crores as of December 31, 2025, though a reduction to INR300 crores is targeted by April 2026.

  • Gross margins were slightly lower in Q3 due to a product mix shift towards higher value-added assemblies and laminations using more expensive raw materials, and trade sales of no-margin byproducts.

Key financials

2 periods

Headline

  • Total Income
    ₹484.3 Cr
    YoY +15%
  • Adjusted EBITDA
    ₹83.3 Cr
    YoY +24.5%
  • Adjusted EBITDA Margin
    17.5%
  • Adjusted PAT
    ₹30 Cr
    YoY +4.4%

9M

  • Revenue from Operations
    ₹1,447 Cr
    YoY +13.9%
  • Adjusted EBITDA
    ₹241.8 Cr
    YoY +26.6%

What they filed

Q1 FY27: revenue up 15.7%, net profit up 16.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue379 364 422 382 396 +4%422 +16%390 −8%442 +16%
EBITDA59 61 71 67 69 +17%70 +15%75 +6%73 +9%
Net profit34 24 30 18 36 +6%22 −8%23 −23%21 +17%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Traction Motors and Railway Components
    31.9% Revenue Contribution
  • Power Generation
    14.4% Revenue Contribution
  • Industrial and Commercial
    13.9% Revenue Contribution
  • Data Center
    3.7% Revenue Contribution2.7% Previous Quarter Contribution

Order book

medium confidence

Execution

strong customer forecast and visibility extending up to 2 years

Pipeline

deal pipeline tcv

2 new customers acquired in Mexico and US, 2 more in active engagement. Strong pipeline from largest customer.

Management expressed confidence in growth trajectory supported by capacity expansion and deeper customer engagement, with strong customer forecasts and visibility extending up to 2 years.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹150 Cr
    • Capacity expansion
    The approved INR150 crores capex has been executed in phases and expected to be fully operational by FY '27, with incremental revenues coming in the same year.
  • Debt Net ₹550 Cr
    I think the net debt is around INR550 crores.
  • Liquidity Liquidity disclosed Company is liquidating excess inventory and factoring receivables to release significant working capital.
    With these arrangements now in place, we have started liquidating the excess inventory and factoring receivables. This is expected to release significant working capital and lead to a reduction in finance cost.

Guidance & targets

Revenue

  • FY26 Revenue Revenue · FY26 · High confidence INR1,950 crores
    So, if you see 9 months, we've already done about INR1,447 crores of revenue. And even if you maintain the current run rate, we are estimated to hit somewhere around INR1,950 crores, which is the midpoint of our guided value. So we are very, very confident of hitting that guidance.

    — Akshay Pitti, Managing Director and Chief Executive Officer

  • FY27 Incremental Top Line Revenue · FY27 · Medium confidence INR20-50 crores
    For FY '27, we are looking at something about INR20 crores to INR50 crores of consolidated top line.

    — Akshay Pitti, Managing Director and Chief Executive Officer

  • Data Center Annual Opportunity Revenue · annual · Medium confidence INR100-120 crores
    We are looking at an opportunity of about INR100 crores, INR120 crores in a year on an upper end basis.

    — Akshay Pitti, Managing Director and Chief Executive Officer

  • New Export Revenue Revenue · next 2-3 years · Medium confidence $10-15 million
    So to scale it in the next 2, 3 years, I would venture to say that it may add about 10 million to 15 million of revenue in the next 2 to 3 years from export side.

    — Akshay Pitti, Managing Director and Chief Executive Officer

Profitability

  • FY26 EBITDA Margin Profitability · FY26 · High confidence 17%
    No, I would say around 17% as a midpoint.

    — Akshay Pitti, Managing Director and Chief Executive Officer

  • FY27 EBITDA Margin Profitability · FY27 · High confidence 17%
    Around 17% as a midpoint. For the full year, it should be around 17%.

    — Akshay Pitti, Managing Director and Chief Executive Officer

Growth

  • Data Center Segment Growth Growth · next 12-18 months · High confidence 25-30%
    I think Q3, we had 3.7% revenue coming from this segment. And by all indications from our clients over the next 12 to 18 months, we should look at least a 25% to 30% growth in this segment.

    — Akshay Pitti, Managing Director and Chief Executive Officer

Inventory

  • Inventory Reduction Inventory · by April 2026 · High confidence INR300 crores

    From INR500 crores today

    So as of 31st December, we had approximately INR500 crores worth of inventory, and we expect this inventory to go down to our historic levels of about INR300 crores worth of inventory. So, about a INR200 crores reduction in raw material is what we are looking at over the next 3 months.

    — Akshay Pitti, Managing Director and Chief Executive Officer

Debt

  • Finance Cost Reduction Debt · next year (FY27) · High confidence INR15 crores
    So net of the capex that we are expected to incur in the next financial year, I think we estimate a INR15 crores reduction in finance cost for next year.

    — Akshay Pitti, Managing Director and Chief Executive Officer

Volume

  • FY27 Lamination Sales Volume · FY27 · High confidence 78,000 tons
    As far as next year is concerned, we are targeting somewhere around 78,000 tons for lamination and the assembly components that go into it

    — Akshay Pitti, Managing Director and Chief Executive Officer

  • FY27 Machine Components and Castings Sales Volume · FY27 · High confidence 14,000 tons
    and about 14,000 tons on machine components and castings.

    — Akshay Pitti, Managing Director and Chief Executive Officer

What to watch in Q4 FY26

Inventory Reduction Target

by April 2026
Current INR500 crores (as of Dec 31, 2025)
Target INR300 crores

Why it matters

Successful inventory reduction will free up working capital and reduce finance costs, directly impacting profitability.

So as of 31st December, we had approximately INR500 crores worth of inventory, and we expect this inventory to go down to our historic levels of about INR300 crores worth of inventory. So, about a INR200 crores reduction in raw material is what we are looking at over the next 3 months.

Risks & concerns

  • Elevated Inventory and Associated Finance Costs

    medium

    Elevated inventory levels (INR500 crores as of Dec 31, 2025) led to higher finance costs, though a plan is in place to reduce inventory by INR200 crores by April 2026.

    Management acknowledged

  • Global Uncertainties and Geopolitical Challenges

    low

    These factors were mentioned as influencing export stability, though the company's exports remained stable at 28% of revenue for the 9M period.

    Management acknowledged

  • Product Mix Impact on Gross Margins

    low

    A shift towards higher value-added products using more expensive raw materials and sales of no-margin byproducts can lead to slightly lower gross margins, though EBITDA margins are maintained.

    Management acknowledged

Q&A highlights

7 direct
Exports performance and outlook for Q3 FY26 Direct
So, Q3 normally is slightly slower. We had very strong Q1 and Q2. Q 3, I think, is just about the customer balancing the inventories. Q 4 again looks to be strong. So, there's nothing specifically contributing to it. It's mostly supply chain realignments.

Clarifies the reasons for a YoY dip in exports for the quarter and provides an outlook for the next quarter.

Asked by Rahul Kumar, Vaikarya Fund

Mexico tariffs and competitive landscape for exports Direct
So Mexico has the same tariff that the US had imposed under Section 232 for their free trade region, and that continues to be in effect as of date. On terms of engagement with the customer, I don't think that has any meaningful impact on our sales performance to that region. We had a small discount that we had given last quarter to secure those supplies. And I think the same will continue to be enforced over the next few years.

Addresses concerns about tariffs impacting exports to Mexico and identifies key competitors (China, Vietnam).

Asked by Rahul Kumar, Vaikarya Fund

Data Center segment growth and future potential Direct
So data centers continue to remain an extremely fast-growing market for us. It continues to surprise us quarter-on-quarter. I think Q3, we had 3.7% revenue coming from this segment. And by all indications from our clients over the next 12 to 18 months, we should look at least a 25% to 30% growth in this segment.

Highlights the strong growth trajectory and significant future potential of the data center segment for the company.

Asked by Balasubramanian, Arihant Capital

Capex plan and timeline for capacity operationalization Direct
So, we have already expended close to INR80 crores in terms of capex. Most of the capacities shall be coming in the next financial year. And by end of FY '27, all of the capacities will be commissioned progressively.

Provides clarity on the progress and timeline for the INR150 crores capex, indicating when new capacities will contribute to revenue.

Asked by Balasubramanian, Arihant Capital

Elevated inventory levels and impact on finance costs Direct
So as of 31st December, we had approximately INR500 crores worth of inventory, and we expect this inventory to go down to our historic levels of about INR300 crores worth of inventory. So, about a INR200 crores reduction in raw material is what we are looking at over the next 3 months.

Explains the reason for high inventory, quantifies the current level, and outlines a clear plan for reduction and its expected positive impact on finance costs.

Asked by Mohit Jain, DR Choksey Finserv

New export opportunities and potential revenue from new customers Direct
So to scale it in the next 2, 3 years, I would venture to say that it may add about 10 million to 15 million of revenue in the next 2 to 3 years from export side. Beyond that time frame, I think the opportunity is really, really huge. Like I said, they are a direct competitor to our existing customer.

Quantifies the potential revenue contribution from new export customers and highlights the long-term market opportunity in segments like NEMA Motors.

Asked by Avnish Tiwari, Vaikarya Change LLP

Discrepancy between gross margin and EBITDA margin trends Direct
So, we have sold roughly about INR8 crores to INR10 crores worth of those products, which would obviously not have any margin on it. So that is one reason. And the second reason is, as you rightly noted, high-value items have shown a significant growth. Now those also use a more expensive raw material. So, our margins are on a fixed margin basis. So, the gross margins are slightly lower.

Clarifies the factors influencing gross margins, including no-margin byproduct sales and higher raw material costs for value-added products, while reassuring about overall EBITDA margins.

Asked by Ravidrnath Naik, Sunidhi Securities

FY27 Top Line Guidance Partial
For FY '27, we are looking at something about INR20 crores to INR50 crores of consolidated top line.

Management provided a seemingly low figure for FY27 top line, which likely refers to incremental revenue from new capacities rather than total revenue, indicating new growth avenues.

Asked by Avnish Tiwari, Vaikarya Change LLP

3 min read 6 chapters

Detailed narrative

Robust Q3 FY26 Performance Driven by Strong Execution

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.

Strategic Focus on Value-Added Products and Key Segments

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.

Capacity Expansion Underway to Support Future Growth

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.

Addressing Working Capital and Finance Cost Challenges

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.

Favorable Export Dynamics and New Market Opportunities

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.

Volume Growth Across Key Product Categories

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%.

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