Arihant Capital has given Buy recommendation for Pitti Engineering with a target price of Rs. 447 in its research report issued on Aug 17, 2022
Arihant Capital’s research report on Pitti Engineering
Pitti Engineering Ltd (PEL) reported strong numbers, Q1FY23 revenue stood at INR 311cr (+77.1% YoY/+14.4% QoQ) vs our estimates of INR 315cr. Gross Profit stood at INR 79Cr (+31.3% YoY/+10.5% QoQ), Gross margins contracted by 889 bps to 25.5% vs 34.4% in Q1FY22. The margin contraction mainly because of raw material cost increase in terms of sales. The raw material cost in terms of sales stood at 74.5% vs 65.6% in Q1FY22. EBITDA stood at INR 35cr (+26.9% YoY/+0.3% QoQ); in line with our estimates of INR 35cr. EBITDA margin contracted by 452 bps to 11.4% vs 15.9% in Q1FY22. PAT stood at INR 12cr (+62.5% YoY/-38.8% QoQ); above our estimates of INR 10cr. PAT Margin contracted by 34 bps to 3.8% vs 4.1% in Q1FY22.
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 447 per share; an upside of 34.8%.