Shares of Pitti Engineering surged up over 7% today to hit a new 52-week high of ₹504.30. Analysts at KRChoksey think that the company’s improving margins and debt reductions are signs of positive growth going forward.

The Pitti Engineering Analyst: Abhishek Agarwal for KRChoksey assigned a ‘buy’ rating to the stock with a price target of ₹754, indicating an over 50% upside from the stock’s current market price of around ₹500.

The Pitti Engineering Thesis: The brokerage firm said that the small-cap company is a leading supplier to major motor manufacturers in India. As per the analysts, Pitti’s client list includes names such as ABB, Siemens, BHEL, Cummins, and CG Power.

The firm in its latest note highlighted that the company also has a strong export business with exports contributing approximately 33% of its total revenues.

The firm added that the positive drivers for the company include the company’s efforts to expand its capacity and placing a strong emphasis on developing value-added products to enhance its EBITDA per ton.

Moreover, they are well-positioned to benefit from government initiatives promoting infrastructure development, such as Railways and Metro rails, as well as investments in green energy technologies like electric vehicles, hydrogen pumps, and wind energy, the brokerage added.

The firm further added that the company currently trades at an attractive valuation of 14.4x and 11.0x projected earnings for FY24 and FY25, respectively. Despite factoring in the debt in the book and the
partially commodity-driven nature of the lamination business, the stock’s valuation remains significantly lower when compared to its peers.

Price Action: Pitti Engineering shares were up 6.27% to trade at ₹499.40 in the early hours of trading on Tuesday.

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