Pitti Engg.

Pitti Engineering delivered robust financial results for FY26, with revenue growing 12.05% year-on-year to INR1,953 crores from INR1,743 crores in FY25. Adjusted EBITDA increased by 19.85% to INR326 crores in FY26, leading to an improvement in the adjusted EBITDA margin from 15.9% in FY25 to 17% in FY26. This growth was supported by a strategic shift towards higher value-added assemblies, which grew faster than loose laminations, reflecting an improving product mix and enhanced profitability.

The company announced a significant new greenfield facility for casting and machine components, involving a planned investment of INR290 crores. This expansion aims to increase casting capacity by 11,400 metric tons, more than doubling the current capacity to 36,000 metric tons by Q1 FY30. Additionally, machine hour capacity will increase from 7.2 lakh to 10.8 lakh hours. This capex is strategically focused on high-growth areas like mining, locomotive, data center, and power generation applications, with an expected asset turn of 1.2x and EBITDA margin of 25-28%.

Q4 FY26 experienced temporary softness, particularly in exports, with approximately INR20 crores of sales impacted by issues related to petroleum products and shipping constraints. Gross margins were also affected by a 100 basis points drop due to a sharp, un-pass-through increase in energy costs during the quarter, described as a 'Black Swan^🌐 event'. Management anticipates a 'slight slog' in Q1 FY27 as the energy situation remains volatile and not fully normalized, but expects recovery thereafter.

As of FY26 end, total borrowing stood at INR698 crores, with a net debt of INR570 crores and an average cost of debt between 7% and 7.5%. The company expects a release of INR125 crores from working capital, which should reduce net debt to INR470 crores. Furthermore, if no additional capex is undertaken on the lamination side beyond FY28, net debt is projected to decrease to approximately INR250 crores, demonstrating a clear focus on financial deleveraging and efficient capital utilization.

Pitti Engineering's revenue mix in FY26 was diversified, with traction motor & railway components contributing 33%, power generation 15%, and industrial & commercial motors 13%. The company is actively developing new products and adding customers in high-growth segments like data centers and for global clients such as Caterpillar. Commercial revenues from these new data center and Caterpillar products are expected to commence by Q3 FY27, further strengthening the company's market position and reducing dependence on any single segment.

The company emphasized its strategy of moving up the value chain from basic electrical steel laminations to integrated engineering solutions. Loose laminations are considered a commodity with lower margins, while high value-added assemblies and machined castings command significantly higher EBITDA margins. For instance, raw castings yield an EBITDA of INR30,000-INR35,000 per ton, whereas machined castings can generate INR80,000-INR1 lakh per ton, underscoring the profitability benefits of its value-added approach and the strategic importance of its new capex.