Pitti Engineering - Aurangabad Facility Expansion Progressing As Planned: DRChoksey

Deven Choksey Report

We recently conducted a visit to the Aurangabad facility of Pitti Engineering Ltd. This facility encompasses 26 acres of freehold land, currently featuring a built-up area of over 16,500+ square meters.

Following the planned expansion, the built-up area is expected to increase to over 38,600 plus square meters.

Pitti is presently involved in the manufacturing of iron and steel products, which include electrical steel laminations, sub-assemblies for motor and generator cores, die-cast rotors, as well as machined cast and fabricated parts and shafts, thereby contributing significantly to the value chain of motor manufacturing.

The Aurangabad facility possesses capabilities in lamination, machining, assembling, shafting, tooling, etc. while most of the casting and machining happen at the Hyderabad plant.

The underlying expansion of the Aurangabad facility is focused on lamination, moving deeper into the value chain, sub-assemblies, and manufacturing of larger shafts that are suitable for more powerful motors.

The Aurangabad facility is also equipped with slitting capabilities which enables Pitti to slit the coil into specified length and width as per requirement. It also helps in cost optimization.

The ongoing expansion will help Pitti Engineering move deeper into the value chain by manufacturing larger shafts for more powerful motors and integrating more sub-assemblies. This is part of their strategic shift towards increased lamination capabilities.

We expect revenue/ Ebitda/ PAT to grow at a CAGR of 35.3%/ 37.9%/ 56.2% over FY24-FY26E.

We retain our FY26E EPS to Rs 62.1 and FY26E P/E multiple to 25.0 times, reflecting our confidence in Pitti Engineering’s growth prospects driven by:

1. the expansion of its Aurangabad facility,

2. enhanced capacity from recent acquisitions - Bagadia Chaitra Industries Private Ltd. and Dakshin Foundry Private Limited (DCFL),

3. its involvement in high-growth sectors such as renewables and railways,

4. the planned entry into copper windings. These factors should strengthen Pitti’s market position and allow it to contribute more to the entire value chain in motor manufacturing.

Consequently, we maintain our target price of Rs 1,552 and uphold our “Buy” rating on Pitti Engineering.

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