Good afternoon, everyone, and thank you for joining us for the Q3 and 9-month FY26 earnings call of Pitti Engineering Limited. Along with me are the senior management team from Pitti Engineering and SGA, our investor relations partners.

We have uploaded our results and related documents on the stock exchanges and the company's website, and I hope everyone had an opportunity to go through the same. The past few quarters have been about laying the groundwork for the next phase of growth.

We have been focused on improving execution and steadily increasing the share of value-added and integrated products in our portfolio. This reflects continued progress on that journey, with improving mix, better visibility from customers, and disciplined capital deployment.

Let me now briefly touch upon the overall business environment. Demand during the quarter remained steady, supported largely by indirect exports and a gradual shift in global sourcing towards India.

Cost pressures in other manufacturing regions have continued to make India a competitive destination, and we are seeing this translate into sustained inquiry across multiple end markets. While some domestic segments are showing high growth, the remaining are stable.

Our export-linked businesses continue to provide incremental momentum. Tariff developments have recently turned more favorable, with reduction in US tariff on India improving visibility for export-oriented businesses such as ours, and supporting customer confidence across key markets.

Over the past few years, we have steadily strengthened our capabilities in machine components and integrated products, and this is the continued focus of the company, which is now translating into better customer traction and stronger market position. As a result, we are seeing encouraging engagement across segments, which gives us confidence about sustainability of the demand moving ahead.

Moving to industry and segment performance, we continue to witness strong, broad-based demand across key end-user segments, including railways, power generation, data centers, industrial motors, renewables, and mining. This robust demand, coupled with consistent execution, has enabled healthy capacity utilizations.

Railways remain a key focus area and major growth driver for the company, both through domestic and international supply chains. During the quarter, traction motors and railway components contributed 31.9% of total revenues, reaffirming its strategic importance.

Power generation delivered a strong performance, contributing 14.4% of revenues, while industrial and commercial applications accounted for 13.9%. Data center segment showed particularly encouraging momentum, with revenue contribution increasing from 2.7% the previous quarter to 3.7% in Q3 FY26.

This reinforces our confidence in the segment's potential to grow faster than the broader industry over the medium term. On the volumes front, for Q3 FY26, total lamination volumes grew by 21.1% on a YoY basis to 16,823 tonnes, up from 13,891 tonnes in Q3 FY25.

Total machined components volumes increased 7.7% on a YoY basis to 2,967 tonnes. By-products, including trade sales and steel coils, recorded a volume of 17,155 tonnes.

For the nine-month ended, total lamination volumes rose 11% to 48,155 tonnes, while total machined components volume grew 18.6% on a YoY basis to 8,042 tonnes. For detailed bifurcation of volumes, please refer to our investor presentation, slide number 19.

On the financial perspective, we remain focused on improving margins through higher share of machine and integrated products—shaft-integrated products. Lamination margins remained steady, while machining and value-added assemblies continue to deliver meaningfully higher profitability.

As the mix improves, we expect overall margins to trend upwards in the medium term. As regards to capacity expansion and outlook, our capital expenditure plans are progressing as scheduled and are closely aligned with anticipated demand.

The approved ₹150 crore capex is being executed in phases and expected to be fully operational by FY27, with incremental revenues commencing in the same year. In addition, we have structured the capex pipeline over the next three years to support medium-term growth and further enhance our value-added capabilities.

With strong customer forecasts and visibility extending up to two years, we remain confident that our current planned investments are well positioned to support sustained growth. Now on to the financial performance.

Total income for the quarter grew by 15% on a YoY to ₹484.3 crore, compared to ₹421.0 crore in Q3 FY25. For nine-month period, revenue from operations increased by 13.9% to ₹1,447 crore, up from ₹1,271 crore in the nine-month FY25.

Adjusted EBITDA for Q3 FY26 stood at ₹83.3 crore, registering a growth of 24.5%. Adjusted EBITDA margins expanded to 17.5%, compared to 16.1% in Q3 FY25.

For nine-month ended FY26, adjusted EBITDA increased by 26.6% to ₹241.8 crore, with adjusted EBITDA margins improving to 17.1%. Adjusted PAT, after accounting for ESOP expenses and net of tax, stood at ₹30.0 crore for Q3 and ₹97.1 crore for nine-month FY26, reflecting a YoY growth of 4.4% in Q3 FY26 and 12.7% for the nine-month period.

Finance costs were higher during the period as we continuously maintained elevated inventory levels, given the continued uncertainty around the availability of BIS-certified steel from import sources. This approach helped us ensure uninterrupted execution of customer orders amid challenging global environments.

Going forward, we have secured tie-up of BIS-approved steel from mills in Korea and Japan. With these arrangements now in place, we have started liquidating the excess inventory and factoring receivables.

This is expected to release significant working capital and lead to a reduction in finance cost. Domestic revenues contributed 72% of total revenues during the nine-month period, while exports remained stable at 28% of revenues, despite global uncertainties and geopolitical challenges.

Looking ahead, we remain confident about our growth trajectory. Over the next few years, we see a clear path to scale revenues while improving profitability, supported by capacity expansion and deeper customer engagement.

Our focus remains on disciplined execution, capital efficiency, and building long-term partnership with our customers. With that, I would like to open the floor for questions and answers session.

Hi. Just on these quarterly results, I think the exports are down on a YoY basis.

What drove that, and what is the outlook over here? See,

quarter three normally is slightly slower. We had very strong quarter one and quarter two.

Quarter three, I think, is just about the customer balancing their inventories. Quarter four again looks to be strong.

There's nothing specifically contributing to it. It's mostly supply chain realignments.

Got it. I think for your exports to Mexico, I think there is a certain amount of tariff which has been discussed to be levied on non-FTA countries.

What are the discussions happening over there?

Mexico has the same tariff that US had imposed under Section 232 for their free-trade region, and that continues to be in effect as of date. On terms of engagement with the customer, I don't think that has any meaningful impact on our sales performance to that region.

We had a small discount that we had given last quarter to secure those supplies, and I think the same will continue to be in force over the next few years.

Okay. Over there, for the supplies to Mexico, who would be the competitor for our products?

It would be, again, China, Vietnam, and all these countries.

Okay. The third question is, I think last time, I think you had mentioned that, to grow the business for your exports business, I think you are in discussion with customers to share some pain because of the tariff, etc.

How would those discussions now change, if at all, and are there any developments over there?

See, even the pain that we had discussed taking was mostly symbolic as I had mentioned the last call, given the scope of tariff, it was huge. Even now, with the lower tariff with America, it's something that a company like us cannot afford.

We are into contract manufacturing at the end of the day. Whatever we were doing was mostly symbolic in terms of sharing the pain.

A more viable strategy was to ensure that we bring out a supply chain which is more competitive at a net-cost basis. By increasing value add and integrating more products, and therefore, reducing the amount of value add that happens in US, which is already a higher-cost country, we would be able to reduce the cost of the total product to the customer, the way the customer uses it.

That is the strategy that we are continuously engaging with the customer to ensure that we maintain and grow our market share.

Okay. Got it.

Okay. I think can you help us understand also more on the new orders for the exports in US and Europe?

In US and Mexico, basically North America, the order pipeline from our largest customer in the region remains strong. In terms of new customers acquisition, we had two customers acquired in the Mexico and US region in the last two quarters, and another two customers are in active engagement to get the orders.

I think with the current tariff situation in US, those discussions should pick up more steam. As far as Europe is concerned, that region is continuing to grow steadily for us.

I think it's already contributing about 4% to 5% of the revenue. Going forward, I think it should be a significant contributor to our machine components business.

Okay. Understood.

Thank you.

Good afternoon, sir. Thank you so much for opportunities.

Sir, on the export side, nearly 70% of our business, railway business, coming from international side. Just want to understand is there any customers are deferring is there any delay in dispatchments in this Q3?

I think India-US the tariffs also get reduced 50% to 18%. How we are getting inquiries, and how we look at incoming quarters?

We are not seeing any deferment of orders. Like I said, it is a normal alignment of their supply chain, depending on the lead time that is available and the current shipping time that it's taking.

There's no deferment in quarter three specifically. As far as the benefit coming out of the trade deal, I think it's very recent for us to quantify it.

I think going forward, like I said, the two customers which were on the fence in the US region, the improved tariff situation with US would help us hasten those customer acquisitions. In the mid to long term, I think it's a very good deal for the country and for us specifically.

Right, there indication from the customers. Some challenges were there in terms of customer concentration, project timing, like competitive pressures.

I just want to understand how this industry is shaping up and how this recent budget also supportive for data center side. How we are going to contribute in upcoming data center story?

Data centers continue to remain an extremely fast-growing market for us. It continues to surprise us quarter on quarter.

I think Q3 we had 3.7% revenue coming from this segment, and by all indications from our clients over the next 12 to 18 months, we should look at at least 25% to 30% growth in this segment. Data centers continue to remain strong.

That's all I can say about this segment.

Sir. Sir, out of that ₹150 crore capex, how much is planned for FY26 and FY27, how the capacity is progressively gradually added?

If you could share more clarities.

We have already expended close to ₹80 crore in terms of capex. Most of the capacities shall be coming in the next financial year, and by end of FY27, all of the capacity should be commissioned progressively.

Sir. Sir, if you could share, I think you mentioned about railways, power, and renewables in your commentary.

If you could share about appliances and consumer durables, automotive, pumps, and special purpose motors, and mining and oil and gas side. How this Q3 was done well, which are that segments we are getting traction?

These segments that you mentioned continue to remain stable. The segments which I had highlighted in my speech are segments which have outperformed the market, to speak.

Pumps, appliances, automotive, especially EVs, continue to grow steadily, not significant growth. Power generation and data centers have demonstrated significant growth.

Got it, sir. Thank you.

Hi, sir. Good afternoon.

My first question is on this elevated inventory levels. Like you said, you have maintained this inventory levels over the nine-month period because it was more of a strategic decision to mitigate supply chain risks regarding BIS and all.

Sir, given that, could you quantify what is the current inventory days, and since you are also in the process of liquidation of those excess inventory because of Korean-Japan tie-ups, could you quantify where do you see inventory days going from the current levels?

Yeah. As of 31st December, we had approximately ₹500 crore worth of inventory, and we expect this inventory to go down to our historic levels of about ₹300 crore worth of inventory.

About a ₹200 crore reduction in raw materials is what we are looking at over the next three months.

Sir, again, since the finance cost has risen because of excess working capital due to inventory levels, and from the current level of finance costs, where do you see finance cost in the entire next year FY27?

Net of the capex that we are expected to incur in the next financial year, I think we estimate a ₹15 crore reduction in finance cost for next year.

Akshay sir. Akshay sir, basically, 15% growth this quarter is phenomenal given the geopolitical risks and BIS supply chain risks we are facing in the last nine months.

We had this guidance of ₹1,900 to ₹2,000 crore of revenue in the entire year. I know the nine-month a lot of things have happened, but how confident are you to touch that guidance level in the Q4 of FY26?

Please, you are, yeah.

Yeah. If you see nine months, we've already done about ₹1,447 crore of revenue.

Even if you maintain the current run rate, we are estimated to hit somewhere around 1,950, which is the midpoint of our guided value. We are very, very confident of hitting that guidance.

You are saying Q4 will have a phenomenal growth of about 25%, based on the back calculation. Sir, the US tariff of 18%, when do you see Mexico reducing the tariff for India?

Just coming back to that, I'm saying if we did about ₹484 crore of revenue in Q3, even if we expect the same revenue in Q4, we are hitting our target. I'm not saying the 25% growth in next quarter, just to clarify.

Just answering your next question on the Mexico tariff, I think that's something I would not want to speculate, but logically, if they were the ones who were led into the tariff by US, I think now that India and US has struck a deal, it is only logical that in the near future India and Mexico will sign a similar deal. As far as a repeal on Section 232 tariff is concerned, I think that's a longer-term discussion.

I don't think anything will happen on that in the near term.

Sir. Thank you.

All the best for future.

Yeah. Thank you, Mohit.

Am I audible now?

Yeah. Query again for data center business.

I just wanted to understand where are we present in terms of data center value chain, products, etc. Who are the main competitors here in the domestic market?

Oh sorry, I was on mute. I was saying we make basically stators and rotors for our customer, which is used in their DG sets in data centers.

Our main customer here is Cummins Generator Technologies, and in terms of competition, we have about 90%-plus market share in this product with them.

Sorry, I missed what are the main products?

Stator and rotor, which go into their generating sets, electricity generation sets.

Understood. Second, any update on or progress on our entry into forging business?

Those are very longer-term strategies. I think right now we are still focused on growing the existing business.

We will look at it once we have critical scale in terms of our consumption of forgings. Today, we consume roughly about 250 to 300 tonnes of forgings in a month.

Once we get to a critical scale where we feel we can do this captively, we shall explore it at that stage.

Okay. Thanks.

Those were my questions.

Hi. This Mexico situation, by any means are you right now, let's say, that Mexico-India tariff which is there, are you disadvantaged compared to other countries who are alternative to you, China, Vietnam, you mentioned?

How are their tariffs did relative to India with Mexico?

This is covered under the Section 232 tariff. No other country in the world has an exemption on this other than UK.

Okay. Mexico has just also made those 232 tariffs with all other countries, which US already had?

Right?

Yes. I'm not even sure whether Mexico has exempted UK from it.

I only know that US has exempted UK from the Section 232.

Got it. Which products of yours are getting covered in this Section 232 with Mexico?

Under Section 232 with Mexico, any, or even with US, any steel product on the extent of steel component of the cost of product will be taxed at 50%. The value add shall be taxed at the reciprocal rate for the country.

Everyone has the same disadvantage or advantage when it comes to 232. In terms of regular tariffs, I think India is still at an advantage when compared to China and Vietnam.

Correct. At 50% like that other tariff, reciprocal tariff, we were at a disadvantage.

Now with this 18%, you should be equal or better than rest of the alternative sources, right?

Correct.

Okay. Mexico is no longer a hurdle for you.

The discount you gave, you may keep it or roll it back. Will you try to roll it back now?

I wouldn't want to think or comment on that because we haven't had a discussion with our customer on that point.

Okay. Got it.

Now coming to your export opportunity in general, these two customers here in Mexico, US, two more in the pipeline, whatever visibility you have, if your, let's say, largest customer in export which you have in US, if that guy is 100 in terms of value you are getting exporting to him, how big these four can be in a one-year, two-year, three-year time frame relative to that 100?

See, in terms of their business, one of the customers is a direct competitor to our existing customer. In terms of potential, it is huge.

As with any relationship, it's a process. To scale it in the next 2, 3 years, I would venture to say that it may add about $10 to $15 million of revenue in the next two to three years from export side.

Beyond that time frame, I think the opportunity is really, really huge. Like I said, they are the direct competitor to our existing customer.

On the other opportunities, it's related to the NEMA motors, basically the US energy efficiency standard motors. That's a huge market, and that's a market that we are currently not participating in.

Again, in terms of potential, it is huge. How it progresses over the next couple of years, we need to see how it plays out.

Got it. This $10 to $15 million across four customers you are anticipating, or?

From the entire export opportunity.

$10 to $15 across these four customers, and there is a new opportunity which if it clicks could be even a larger number than this. Is that what you're trying to say?

Yeah. In terms of potential, it is even more than this.

We are still trying to develop more customers.

Okay. This UK FTA, which is going to come this year, and EU FTA next year, do you anticipate some of the products you are already supplying can get uplabbed or was that duties were anyway a hindrance to you earlier or they were not necessarily the hindrance, other parts like getting customer qualifications and all is one of the main reason you are not so big in Europe?

In terms of the FTA coming one by one, the UK FTA, I don't think will have any significant benefit. As it is, this industry is very small if not existent in UK.

In terms of Europe, yes, it will bring us a better access to market. Apart from the access, I think the cost advantage of buying from India will be even more.

Today, as it is, if you see most of the European manufacturers, they are trying to derisk their supply chains from China, which is how the opportunities started coming to us. Additionally, the cost of these goods manufactured in Europe was significantly higher because of their cost of steel.

In terms of access for Indian origin steel, under the FTA, will give us a better access and cost in terms of the tariffs. The customers that we currently have in Europe are quite encouraged with this prospect, and more and more inquiries are also coming out of the region.

Got it. In terms of your guidance, you articulated on top line revenues.

How would you articulate on EBITDA level for this year or next year?

EBITDA margin would remain steady around the current levels, plus-minus 50 bps. That is our expectation, because that is largely dependent on product mix, which determines the sales realization.

If you see, for example, the current quarter, the product mix was more oriented towards higher-value-added assemblies and laminations, which typically take more expensive steels. Your revenue is higher, and therefore, your margin was slightly lower in terms of gross margins.

Right. EBITDA level should be looked at like absolute rupees per tonne kind of a number, or?

No, I would say around 17% as a midpoint.

17%. What is the top line you would range-wise look at next year, '27, with whatever visibility you have right now?

For FY27, we are looking at something about ₹2,250 crore of consolidated top

line. Margin range, EBITDA margin?

Around 17% as a midpoint. For the full year it should be around 17%.

17%. Your depreciation charge, which is running at current levels, should it change for any reason or should remain similar going for next year?

I think for FY27 there should be a slight increase in depreciation. By FY27, I think cumulative nearly about ₹150 crore will move to our fixed asset, and therefore, that depreciation would come in from full effect from FY28 onwards.

Fiscal '27 during the year it will flow into the depreciation, that ₹150 crore capex you are doing, right?

Yes, by FY28, the entire 150 will move to fixed asset and will start depreciating it. Partially in FY27, I can't give you an exact number because of the commissioning dates.

Typically, what is the depreciation rate you take, like it's a 10-year, 20-years on this ₹150 crore, one can reckon roughly?

We take about 15 years on an average.

15 years, okay. Great.

Thank you, and wish you very best.

Thank you.

Hello. Thank you for the opportunity.

Sir, what is the end capacity you are looking at in the three segments, like in sheet metal, machine hours, and casting for this year, year end? FY27, you already mentioned.

What is the end capacity you are looking at? What is the utilization you are looking at in these three segments?

For the year end, we shall look at the capacity as the same as of December. The capacity increases will start from Q1 or maybe even Q2 onwards and get fully implemented by year end '27.

Okay. What is the utilization you are looking at in terms of capacity utilization?

For this year, we are looking at about 68 and a half to 69,000 as our total sales in lamination, including the child parts that go into its assemblies. In terms of machine components, we are looking at something around 11,000 tonnes of total sales, machine components and castings put together.

As far as next year is concerned, we are targeting somewhere around 78,000 tonnes for lamination and the assembly components that go into it, and about 14,000 tonnes on machine components and castings.

Okay. You have mentioned the presentation, the sheet metal, machine hours, and casting, can you give the utilization in these three segments for this year and next year?

In percentage terms, one second, 78,000 over 1,08,000, whatever that percentage comes to. In terms of casting, it would be 14,000 over 18,600 metric tonnes, that would be about 72%.

In terms of machine hours, I think we'd be closer to 85% to 90%.

Okay. You just briefly touched upon this gross margin thing, because if I see your presentation, we have witnessed a significant better increase in our value-added products, like this high-value-added assemblies and star-frame assemblies, all these things are 31%, 44% we have.

Also, there is an increase in scrap, 50%, 40%, but despite that, the gross margin is decreased YoY. Can you please explain that?

If you see

by-products and scrap, it also includes trade sales related to coils that we do. We buy this large steel coils, which are standard sizes, say, for example, 1,000 or 1,200.

Our utilization of that would be, say, 700, 800. What we call as a side strip for us, which is the off-cut, is a by-product.

We have sold roughly about ₹8 to ₹10 crore worth of those products, which would obviously not have any margin on it. That is one reason.

The second reason is, as you rightly noticed, high-value items have shown a significant growth. Now, those also use a more expensive raw material.

Our margins on a fixed margin basis, the gross margins are slightly lower.

Understood.

If you see at the EBITDA level, we are still kind of better off. The gross margins will vary depending on the materials that we are using and also the amount of off-cut that we'll have to sell.

Typically, these high-value-added assemblies are larger diameter products, 700, 800, and they require us to generate more of this off-cut materials, which are 200, 300 in size. Kind of correlated with each other.

Again, this export front, you discussed a lot about in the previous participants' discussions about the exports. If you remember, in the past, you were actually reducing your exports because of the high working capital.

What is the working capital intensity of your exports from now onwards? How do you synthesize this working capital going ahead for exports?

We are reducing our intensity on working capital required for exports by doing factoring, which I mentioned in my speech. The idea is to sell our receivables and take this off our books.

It will cost us maybe half a percentage in terms of cost, since factoring will be more expensive than traditional bill discounting. We see that having a net effect on our balance sheet, which is far better than the cost.

Okay. What is the debt level right now?

I think the net debt is around ₹550 crore.

Okay. Thank you.

Yeah.

Hi, sir. Thanks for the opportunity.

Can you quantify on the inventory levels for the quarter and where do you see them in the coming months, as you mentioned that inventory would be reduced? If you can quantify.

As I mentioned earlier, I think the current inventory is about ₹500 crore, and we see that going down to about ₹300 crore by April.

By April, within three months.

Yes.

Okay. Also, if you can quantify the capacity utilization for the machine components during the quarter.

Capacity utilization for the machined components, I think it's there in the PPT if you see, it's about 74%. No, it's 80, one second, 84%.

Slide 17. Okay.

Got it. Thank you.

Thanks for taking my question. Two questions on the data center part.

Just to understand the lead procurement from the main customer. Suppose whatever sales they would have done in Q3, they would have procured it how many months ahead?

Just one second. See, from what I'm being told right now, again, I need to just dive a little deeper into this.

It takes about 45 days to 60 days for them to make a generator post us supplying our product to them. Now, when do they sell it is something we are not aware of.

I can only tell you how long it takes for them to convert it into a generator.

Understood. That's helpful.

Second is

about About 45 days approximately.

Okay. If we look at their commentary, I think around ₹260, ₹270 crore of domestic power gen sales is targeting or domestic data center, and I'm guessing another ₹50, ₹100 crore would be exports.

Out of this ₹300, ₹310 crore of quarterly volumes that they are doing for power gen for data centers, we as of now in this quarter can see ₹17, ₹18 crore for Pitti. You mentioned 90%, but just curious, are we reading it right as in if they do ₹300 crore, ₹17, ₹18 crore is something that you can sort of capture, is that the TAM, how to look at it?

See, from what we are understanding from our customer, we should be looking at doing roughly about 150 units a month on an average with a average sale value, because there are multiple different products in this category, with the average sale value of about ₹4.5 to ₹5 lakh a unit. We are looking at an opportunity of about ₹100, ₹120 crore in a year on an upper-end basis.

Understood. Thanks.

Last question is that they would be catering because these are bulky products, they're very clear, they would cater to India and probably Southeast Asia and the region around it. The part that the demand for US and all will be catered by their parent largely.

We are sort of supplying to them as well, as in to the parent entity as well, or we are supplying only to the?

See, mostly whatever we supply to the European and US market is through the customer in India itself.

Understood. Got it, great.

Thanks for answering, and wish you all the best. Thanks.

Thank you.

Thank you, everyone. I hope we have been able to answer all your queries.

In case you have any additional queries after the call, please reach out to our investor relation partners SGA Advisors, and we'll get your answer as soon as possible. Thank you.