Buy Pitti Engineering; target of Rs 1552: KR Choksey

BUY

KR Choksey's research report on Pitti Engineering

Pitti Engineering Ltd (PEL) reported robust top-line and bottom-line growth on YoY basis. Revenue increased by 32.1% YoY (+16.7% QoQ) to INR 3,828 Mn, driven by strong volume growth. EBITDA grew by 32.8% YoY (+15.9% QoQ) to INR 564 Mn, on the back of robust revenue growth leading to an EBITDA margin of 14.7% (+8bps YoY/ -11bps QoQ). Adjusted PAT grew 47.1% YoY (-49.1% QoQ) to INR 205 Mn. The QoQ decline in Adj. PAT is due to the cyclical nature of other income wherein most non-operating income is realized in Q4 of any fiscal year. We increase our FY26E P/E multiple to 25.0x (earlier 24.0x), on the back of a) higher capacity addition from acquired entities, b) increased capacity utilization, c) robust demand, and d) stronger growth opportunities.

Outlook

We increase our FY26E EPS to INR 62.1 (earlier: INR 57.5) on the back of strong volume growth anticpated in coming quarters. Accordingly, we raise our target price to INR 1,552 (earlier: INR 1,379) and retain our “BUY” rating on the shares of Pitti Engineering Ltd.

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Pitti Engineering - 210824 - kr