KR Choksey is bullish on Pitti Engineering has recommended buy rating on the stock with a target price of Rs 1343 in its research report dated February 17, 2025.
Revenue increased by 37.5% YoY (-3.4% QoQ) to INR 4,150 Mn, driven by strong volume growth. EBITDA grew by 30.0% YoY (+1.3% QoQ) to INR 669 Mn, on the back of robust revenue growth; EBITDA margin stood at 16.1% (-92bps YoY/ +74bps QoQ). PAT stood at INR 288 Mn, up 83.1% (-24.4% QoQ); PAT margin stood at 6.9% (+173bps YoY/-193bps QoQ). The YoY expansion in PAT was primarily driven by robust operational performance, with interest costs remaining stable. The QoQ decline was largely due to a sharp drop in other income, which fell to INR 60 Mn in Q3FY25 (INR 259 Mn in Q2FY25), as PLI incentives were recognized in Q2FY25. PBT (excl. other income) stood at INR 326 Mn as against 273 Mn in Q2FY25 (INR 219 Mn in Q3FY24), highlighting strong underlying operational momentum. We reduce our FY26E/FY27E EPS by 8.6%/6.4% to INR 56.8/67.1, primarily due to the impact of CPCB Bharat 6 emission norms and volatility in the small LV motors market.
Outlook
We rollover our valuation to FY27E and assign a P.E of 20.0x, to arrive at a target price of 1,343 (previously: INR 1,552). However, Pitti Engineering’s medium to long term outlook remains positive, supported by robust demand for machined components, expansion into high-margin segments, and rising contributions from value-added assemblies, strengthening its long-term growth trajectory. Accordingly,we maintain our “BUY” rating on PITTIENG.
