Arihant Capital's research report on Pitti Engineering
Pitti Engineering Ltd (PEL) reported strong numbers, Q4FY22 revenue stood at INR 271cr (+59.3% YoY/+2.5% QoQ); beats our estimates of INR 236cr. Gross Profit stood at INR 72Cr (+22% YoY/-23.4% QoQ), Gross margins contracted by 808 bps to 26.4% vs 34.5% in Q4FY21. The margin contraction mainly because of raw material cost increase in terms of sales. The raw material cost in terms of sales stood at 73.6% vs 65.5% in Q4FY21. EBITDA stood at INR 35cr (+32.3% YoY/3.2% QoQ); beats our estimates of INR 30cr. EBITDA margin contracted by 266 bps to 13% vs 15.7% in Q4FY21. PAT stood at INR 20cr (-5.7% YoY/73.7% QoQ); below our estimates of INR 22cr. PAT Margin contracted by 508 bps to 7% vs 11.9% in Q4FY22.
Outlook
The company has integrated manufacturing plants with cutting edge technology, differentiated product offerings, marquee clients, diversified end industries with higher demand would lead the growth going forward. Based on DCF, we have a “BUY” rating with a Target Price of INR 436 per share; an upside of 78.9%.
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