Pitti Engineering Ltd (PITTIENG) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: We welcome you all to the Q2 and H1 FY27 earnings conference call of Pitti Engineering Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements do not guarantee the future performance of the company and may involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Akshay S Pitti, Managing Director and Chief Executive Officer from Pitti Engineering Limited. Thank you, and over to you, sir.
Akshay S Pitti (Pitti Engineering Limited): Good afternoon, everyone, and thank you for joining the Q2 H1 FY27 earnings conference call of Pitti Engineering Limited. Along with me are members of the senior management team and our Investor Relations Partners from SGA. Our financial results and investor presentation and related docu disclosures are available on the stock ex-
Akshay S Pitti (Pitti Engineering Limited): and on the company's website. I hope you have had the opportunity to go through the same. The global economy continued to face inflationary pressures and supply chain disruptions amidst the ongoing conflict in the Middle East with geopolitical uncertainties likely to persist. We are also in witnessing price increases across our raw materials. Despite these challenges, demand remains robust. India's investment-led growth and rising demand for value-added engineering solutions continue to provide a favorable long-term outlook for our business. At Pitti Engineering, we have evolved from a manufacturer of electrical laminations into a broader engineering solutions company with capabilities across laminations, castings, machining, and other value-added components. This evolution has been driven by our focus on focus on understanding customer needs, expanding our manufacturing capabilities, and building long-term relations with leading global OEMs. Looking ahead, we believe three structural forces are shaping the demand for engineering industry and creating opportunities for us. First, the sustained investment in infrastructure and manufacturing. Ongoing public and private investment in railway, power, and manufacturing is expanding the installed base of rotating electrical equipment. As infrastructure and industrial activity grow, so does the need for motors, generators, and precision-engineered components that go into them. This creates opportunities for us to support customer across wider range of applications. Second, the growing electrification and digitalization of economy. Driven by AI data centers and infrastructure, the shift towards a more electrified and digital economy is increasing the need for efficient motors, generators, and reliable engineering components. As these applications evolve and customers are looking for products that deliver greater efficiency, precision, and performance, our expanding capabilities across lamination, casting, and machining positions us to address this broad range of requirements. Third, the consolidation of global sourcing. International OEMs are increasingly looking to work with manufacturing partners that can offer scale, consistent quality, reliable execution, and wide range of capabilities. This creates an opportunity for integrated companies like us to deepen existing customer relationships and increase our share of business and participate in new platforms. Together, these trends provide a favorable long-term demand for our business. Our focus on converting these opportunities into sustainable growth by expanding capacity in a phased manner, strengthening our engineering capabilities, and continuing to deliver on customer expectations. A few months ago, we had announced the first of our major capacity expansion for a greenfield facility in Hyderabad covering the casting and machining. The project was to be commissioned in a phased manner through FY '30. This investment was backed by strong order visibility from marquee customers across high growth sectors such as data centers, mining, off-highway vehicles, and railways. Building on this, now we have announcing a new capacity expansion in lamination and machining. The objective is to consolidate our lamination operations in Bangalore and progressively increase our sheet metal capacity to 160,000 metric tons per annum and machining capacity to 1.31 million hours by FY '31. This expansion will strengthen our ability to serve existing customers, pursue new opportunities, and support long-term growth. The total planned capex for this project is 450 crores, comprising approximately 125 crores towards land procurement and the remaining 325 crores towards infrastructure, plant, and equipment. The new greenfield facility will provide a platform for consolidating the Bangalore operations and creating capacity for the next phase of growth. The entire investment will be incurred in a phased manner till FY '31 with capital deployment linked to project milestones and capacity requirements. This approach will allow us to align investments with business needs, while ensuring that capacity comes on stream in a timely manner. The project will be funded through a combination of internal accruals and debt. Coming to the operational and financial performance. In terms of segment-wise revenue, Q2 FY '27, traction motor and railway components continued to contribute the highest share of the revenue at 27%. Power generation accounted for 16%, followed by industrial and commercial applications at 12%, mining, oil and gas at 10%, special purpose motors at 8%, and data centers at 7%. This diversified mix reflects the range of applications we serve and multiple demand drivers supporting our business. Among these segments, data centers have emerged as a strong near-term growth opportunity. As we have highlighted on multiple occasions before, the demand remains robust, driven by significant growth in AI applications and cloud computing. Both in India and globally, data centers investments are accelerating, creating a surging demand
Akshay S Pitti (Pitti Engineering Limited): growth requirements of AI-led data center infrastructure. The need for reliable primary and backup power generation, we are seeing strong demand from customers such as Cummins, Marathon and Nidec in this segment. We are also developing new opportunities with few additional marquee customers in the same segment. Beyond data centers, we continue to see strong demand visibility across railways, metros, mining, off-highway equipment and specialised industrial applications. In railways, the modernisation of North American infrastructure along with investments in rail networks and mobility solutions is supporting demand for our products. Similarly, increasing mining activity and demand for off-highway equipment are creating opportunities for our machine component segment. Overall, our diversified end-market presence allows us to participate in multiple growth opportunities. On the volumes front, total lamination and assembly volumes for the quarter stood at 21,600 tonnes, a growth of 26% YoY. H1 lamination volumes increased to 41,000 tonnes, up by 22% compared to H1 FY '26. Total raw casting and machined components volume for Q2 FY '27 was 3,086 tonnes growing by 6% and 6,054 tonnes for H1 with a growth of 1.6%. Coming to our financial performance. Before discussing the numbers, I would like to highlight that in September 2026, the company merged its two subsidiaries, Pitti Industries Private Limited and Dakshin Foundries Private Limited, with the parent entity, Pitti Engineering. Accordingly, the financial results for Q2 and H1 have been reported on a standalone basis with previous numbers restated to ensure comparability. For Q2 FY '27, our total income stood at ₹581 crores compared to ₹499 crores in Q2 FY '26, registering a growth of 16.3%. For the half year, revenue grew by approximately 15% to ₹1,110 crores compared to ₹963 crores in H1 FY '26. Adjusted EBITDA for the quarter stood at ₹91 crores compared to ₹80 crores in Q2 FY '26, a growth of 13%. The adjusted EBITDA margin stood at 15.8%, impacted by an increase in Forex loss, increase in consumable and packing cost, and along with increase in fuel and power costs. Adjusted PAT for the quarter stood at ₹36 crores compared to ₹43 crores in Q2 FY '26. It's important to note that in Q2 FY '26, we had ₹21 crores of other income from Maharashtra Government for the package scheme of incentives that we enjoy for our Aurangabad facility's investment. We have decided to defer this claim of incentives in the current year to the next financial year with the objective of maximising its cash flow. To conclude, we remain focused on strengthening our market positioning and building capacities to support long-term growth. Our diversified end-market presence and strong customer relations provide a solid foundation for future opportunities. We continue to remain focused on operational efficiency, cost management and disciplined capital allocation with our ongoing expansion plans. We remain confident in our ability to deliver sustainable growth over the coming years. Thank you, and now we can open the floor for the Q&A session.
Moderator: Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press "*" and "1" on their touchtone telephone. If you wish to remove yourself from the question queue, you may press "*" and "2". Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Pranay Roop Chatterjee from Burman Capital Management. Please go ahead.
Pranay Roop Chatterjee (Burman Capital Management): Hello. Good afternoon, sir. Am I audible?
Moderator: Yes, sir, you're
Akshay S Pitti (Pitti Engineering Limited): Yes, you are audible.
Pranay Roop Chatterjee (Burman Capital Management): Yeah. My first question was obviously on the margins. You mentioned three things, FX, packing and consumable inflation and fuel and power cost inflation. Will you be able to quantify how much was the FX loss portion, and how much was the same loss or gain recorded in the previous quarter?
Akshay S Pitti (Pitti Engineering Limited): Just 1 second on that. Apart from these, also the raw material prices have gone up that would have anyways, you know, reflected in a lower EBITDA margin as a percentage. So there actually also on the RM front. The forex loss, in the quarter,
Akshay S Pitti (Pitti Engineering Limited): 61 crores.
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