Axis Securities initiates coverage on smallcap stock with ‘buy’ rating, sees 40% upside; do you own?
Pitti Engineering Ltd Share Price: Shares of Pitti Engineering Limited (PEL) have soared more than 2000 per cent in the last three years, showing a strong uptrend over the company's increasing capacity and global footprint along with a robust order book. Domestic brokerage firm Axis Securities has initiated coverage on PEL with a ‘buy’ rating, setting a target price of ₹915.
The brokerage sees a 40 per cent upside on the stock from the current levels with a previous closing price of ₹658.95. ‘’We initiate coverage on PEL with a BUY recommendation.
Our recommendation is supported by a) The company’s increasing capacity b) Its increasing share of value-added products, and c) Its expanding global footprints,'' said Axis Securities in its latest report. Also Read: Pitti Engineering stock soared over 2000% in last three years; is there more upside left? The brokerage expects the company’s revenue to grow at a compound annual growth rate (CAGR) of 13 per cent to ₹1,588 crore by FY26 (factoring similar raw material price trend as of H1FY24 backed by volume CAGR of 16 per cent by FY26E).
On the operational front, PEL's earnings before interest, tax, depreciation, and amortization (EBITDA) is expected to grow at 13 per cent CAGR to ₹258 crore by FY26E, led by an increase in value-added products, resulting in operating margin expansion (by 240bps to 16.2 per cent by FY26). A combined strategic operation will further support in improving the company’s return on equity (ROE) and return on capital employed (ROCE) to 25.8 per cent and 26.7 per cent respectively by FY26E.
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