Pitti Engineering - Improving Profitability One Motor At A Time: Axis Securities Initiates Coverage With 'Buy'

Axis Securities Report

We initiate coverage on Pitti Engineering Ltd. with a 'Buy' recommendation. Our recommendation is supported by-

1. The company’s increasing capacity,

2. Its increasing share of value-added products, and

3. Its expanding global footprints.

We expect Pitti Engineering’s revenue to grow at a compound annual growth rate of 13% to Rs 1,588 crore by FY26 (factoring similar raw material price trend as of H1 FY24 backed by volume CAGR of 16% by FY26E).

On the operational front, its Ebitda is expected to grow at 13% CAGR to Rs 258 crore by FY26E, led by an increase in value-added products, resulting in operating margin expansion (by 240 basis points to 16.2% by FY26).

We believe these factors will cumulatively boost the company’s profitability at a CAGR of 38% by FY26E to Rs 154 crore.

A combined strategic operation will further support in improving the company’s return on equity and return on capital employed to 25.8% and 26.7% respectively by FY26E.

We thus value Pitti Engineering at 19 times on FY26 earnings to arrive at a target price of Rs 915/share, implying an upside of 40% from the current levels.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.