💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue from operations grew 13.8% YoY in H1FY26 to INR 934.3 Cr. Subsidiary revenue grew 60% in Q2FY26 due to production optimization and shifting legacy business from the parent to Bangalore and Aurangabad units. Lamination volumes reached 17,722 tons in Q2FY26, though loose lamination and low value-added assemblies (11,801 tons) declined 2% YoY.

Geographic Revenue Split

Not explicitly disclosed by percentage, but the company is actively expanding its machine components business in Europe to capitalize on the closure of local foundries, while domestic operations are centered in Hyderabad, Aurangabad, and Bangalore.

Profitability Margins

Gross Profit Margin improved from 38.0% in FY24 to 40.4% in FY25. PAT Margin stood at 6.7% in H1FY26 compared to 7.0% in H1FY25. The slight decline in PAT margin is attributed to higher depreciation (up 38.9% YoY to INR 51.4 Cr) and finance costs (up 12.1% YoY to INR 39.9 Cr) following recent capacity expansions.

EBITDA Margin

EBITDA Margin improved by 130 bps YoY to 16.4% in H1FY26. Q2FY26 EBITDA margin was 16.3%, reflecting strong operating leverage. The company targets margin protection through a pass-through mechanism for raw materials and renegotiating overheads every 3-5 years.

Capital Expenditure

Net cash used in investing activities was INR 536.1 Cr in FY25, a significant increase from INR 247.0 Cr in FY24. This includes INR 309.99 Cr for the purchase of Property, Plant, and Equipment and intangibles to support the ramp-up to a target of 80,000-83,000 tons by FY27.

Credit Rating & Borrowing

Total borrowings stood at INR 297.2 Cr as of March 2025. Finance costs increased to INR 67.9 Cr in FY25 from INR 51.5 Cr in FY24 (a 31.8% increase), reflecting higher debt utilization for acquisitions and expansion.

⚙️ Operational Drivers

Raw Materials

Steel (for laminations) and scrap/pig iron (for foundry castings) represent the primary inputs. Cost of Goods Sold (COGS) was INR 1,016.5 Cr in FY25, accounting for 58.3% of total income.

Import Sources

Not explicitly disclosed; however, manufacturing is concentrated in Hyderabad, Aurangabad, and Bangalore, suggesting domestic sourcing for bulk inputs.

Capacity Expansion

Current lamination volume is approximately 17,722 tons per quarter. The company is targeting a capacity ramp-up to 80,000-83,000 tons by FY27 and further expansion by FY28. New capacities in Bangalore are expected to ramp up production starting January 2026.

Raw Material Costs

Raw material costs are managed through a 100% pass-through contract with customers, mitigating price volatility. COGS as a percentage of revenue decreased from 62.0% in FY24 to 59.6% in FY25, aiding gross margin expansion.

Manufacturing Efficiency

EBITDA growth of 23.3% in H1FY26 outpaced revenue growth of 13.8%, indicating improved manufacturing efficiency and operating leverage as new capacities stabilize.

Logistics & Distribution

The company is optimizing production by transferring legacy business to subsidiaries located closer to specific customer clusters to reduce distribution lead times and costs.

📈 Strategic Growth

Expected Growth Rate

15-20%

Growth Strategy

Growth will be driven by a shift toward high value-added machine components and assemblies, which help offset lower margins in loose laminations. The company is also targeting the European market for castings as local foundries close. Capacity is being expanded to reach 80,000+ tons by FY27.

Products & Services

Laminations, high value-added assemblies, machine components, and raw castings for motors, generators, and other industrial applications.

Brand Portfolio

Pitti Engineering, Dakshin Foundry, Pitti Industries.

New Products/Services

Expansion into Forging and further growth in machine components for the European market are the primary new growth vectors, with production ramp-ups in Bangalore starting Q4FY26.

Market Expansion

Targeting Europe for machine components and castings. Domestically, optimizing the footprint across Hyderabad, Aurangabad, and Bangalore.

Strategic Alliances

Amalgamation with Pitti Castings Private Limited was approved to streamline the foundry and engineering business.

🌍 External Factors

Industry Trends

The industry is shifting toward integrated 'ready-to-assemble' components rather than loose laminations. Pitti is positioning itself as a high-value integrated player to capture this 15-20% industry growth trend.

Competitive Landscape

Competes with domestic and international foundries and lamination manufacturers; however, the exit of European players is reducing competitive intensity in high-end segments.

Competitive Moat

Moat is built on long-term customer relationships, integrated manufacturing (foundry + machining + lamination), and a transparent pricing model that protects margins from raw material volatility.

Macro Economic Sensitivity

Sensitive to global industrial CAPEX cycles, particularly in the power generation and transportation sectors which drive demand for laminations and castings.

Consumer Behavior

Industrial customers are increasingly demanding sub-assemblies and finished machine components rather than raw parts to simplify their own supply chains.

Geopolitical Risks

The closure of foundries in Europe due to energy costs and environmental regulations presents a strategic entry point for Pitti's machine components.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to the Companies (Indian Accounting Standards) Rules, 2015 and Section 133 of the Companies Act. The company recently completed a QIP of INR 360 Cr in July 2024 following SEBI regulations.

Environmental Compliance

Not explicitly disclosed, but the company maintains various 'Awards & Certifications' related to manufacturing standards.

Taxation Policy Impact

Effective tax rate was approximately 24.3% in FY25 (INR 39.3 Cr tax on INR 161.6 Cr PBT).

Legal Contingencies

The company discloses the impact of pending litigations in Note 25.2 of the Consolidated Financial Statements; however, the specific INR value of these contingencies is not provided in the snippets.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the timing of the ramp-up for new capacities in Bangalore and the successful stabilization of the balance sheet before committing to the capital-intensive forging expansion.

Geographic Concentration Risk

Manufacturing is concentrated in India (Hyderabad, Aurangabad, Bangalore), making it sensitive to domestic industrial policy and power costs.

Third Party Dependencies

Dependency on specialized steel suppliers for lamination grade materials, though costs are passed through to customers.

Technology Obsolescence Risk

The shift from loose laminations to complex assemblies requires continuous investment in high-end machining centers to avoid obsolescence.

Credit & Counterparty Risk

Trade receivables of INR 260.3 Cr (as of Sep-25) represent a significant portion of current assets; however, the company maintains a credit risk allowance (INR 4.12 lakhs in FY25) to manage exposure.