This small-cap stock supplies specialised products to companies like Siemens, Cummins, ABB India and General Electric

The stock is trading at a PE multiple of just 19x.

Siemens Limited, ABB India Limited, Cummins India Limited, Wabtec Corporation, and General Electric are among the company’s key clientele. Due to a specialised product offering to these customers, the company enjoys repeat orders. The stock we are talking about is Pitti Engineering Ltd. 

On December 12, the shares of Pitti Engineering Ltd surged 4 per cent and closed trading at Rs 407.65. The stock opened at Rs 313.55 and made an intraday high and low of Rs 334.25 and Rs 313.55, respectively.  

Pitti Engineering Ltd is engaged in the manufacturing of electrical steel laminations, motor cores, sub-assemblies, die-cast rotors, press tools and machining of metal components. It has two manufacturing plants, one in Hyderabad and the other in Aurangabad. For the latest September 2022 quarter, exports contributed about 37 per cent to the total revenue, while 63 per cent came from domestic business. 

The company incurred capex of around Rs 50 crore during 1QFY23 to increase its production capacity to 50,200MT from 46,000 MT at its Aurangabad facility. For remaining of FY23, the company has planned Rs 50 crore capex to further enhance this capacity to 72,000MT. The management has also shared their ongoing discussion about the Rs 197 crore capex plan between FY24 and FY25. 

About the shareholding pattern, as per September quarterly filings, the promoters have 59.29 per cent ownership in the company, non-institutional investors hold 37.77 per cent, DII hold 2.9 per cent, while the rest 0.05 per cent is held by FIIs. 

The company is adding new capacity to catch up with increasing demand, especially from railways. They are focusing on improving their product mix, and shortening their working capital cycle, and hence, combined all these factors, the future looks bright for the company.