Axis Securities has initiated coverage on Pitti Engineering with a target price of Rs 1,250, citing robust capacity expansion and an improved product mix. The brokerage expects the company's focus on high-margin integrated assemblies to drive EBITDA margins to 18.5% by FY27.
Axis Securities Initiates Coverage on Pitti Engineering
Target Price: Rs 1,250
Rating: BUY
Reader Takeaway: Capacity expansion and shift to high-margin assemblies drive bullish outlook for Pitti Engineering.
What just happened
Axis Securities has initiated coverage on Pitti Engineering Ltd with a 'BUY' rating, setting a target price of Rs 1,250 per share. The brokerage report emphasizes the company's aggressive capital expenditure strategy as a primary growth catalyst.
Why this matters
The company has successfully commissioned Rs 150 crore in capital expenditure, spanning sheet metal, machining, and casting segments. This investment is central to their growth, particularly with a new greenfield casting facility in Hyderabad. This facility is projected to double the company's casting capacity to 36,000 MT by the first quarter of FY29.
Growth and Financial Outlook
Management has raised its FY27 volume targets, aiming for 82,000 tonnes in laminations and 17,000 tonnes in castings. The firm is pivoting toward high-margin integrated assemblies. Analysts anticipate this shift will improve EBITDA margins to the 18.0–18.5% range over the next three years. Revenue projections suggest growth to Rs 2,296 crore by FY27 and Rs 2,667 crore by FY28, with net profit forecasted to hit Rs 230 crore by FY28.
What to track next
Investors should monitor the scaling of the Hyderabad facility and the actual conversion of volume growth into the projected EBITDA margin expansion. Changes in the product mix toward higher-value assemblies remain a key indicator of margin health.