Pitti Engineering to ride on perk up demand in Data centres, Indian railway & Power sector under Atmanirbhar Bharat

With the gradual easing of the lockdown, orders flow for engineering products has been progressing well since July 2020, led by sectors like data centers, irrigation, roadways, railways and power equipment. Moreover, orders from emerging segments like electric vehicles (EV) from the international market and Data Centres are also rising for engineering and manufacturing companies.

Pitti Engineering’s strength comes from its more than three decades of presence in manufacturing critical and precision engineering products coupled with working with all leading capital goods OEMs in the world. For some of the projects like supplying components to diesel and electric locomotives projects of the Indian Railways, the company has been the preferred supplier to Wabtec (the erstwhile GE).

Company has already delivered Rs. 200 crore worth of orders to Wabtec for manufacturing of diesel locomotives and is expected to deliver the remaining Rs. 500 crore order in the next seven years.

Diversification of global supply chains would reduce disproportionate manufacturing dependence on a particular country or geography like China. It would also unveil many new global manufacturing hubs and centres like India.

The world would need speedy development and loads of it to bridge the divide between the developed and the developing and the emerging markets. To ensure this, mass access to energy, transportation, irrigation, consumer appliances and data security ought to be ensured. It has to be delivered in a manner that is efficient, affordable and eco-friendly.

Akshay Pitti, Managing Director says that, “engineering products catering to user industries like diesel and electric locomotives, data farms, consumer durables and renewable energy formed a large portion of our residual order book. It is encouraging to see emerging segments like power systems for data farms, propulsion systems for electric vehicles, various sub-assemblies for intercity passenger and freight movement, components for mass urban transit systems, and components and assemblies for

renewable energy segments starting to make sizeable contributions to our order book now”

Capital goods OEMs operate mostly on just in time inventories, the supply chain disruptions caused by Covid 19 have depleted inventories. The pent up demand shall help manufacturing companies like Pitti Engineering to ramp up production to pre-Covid levels.

Some of the recent orders received in the power segment is very encouraging for the company. Some of the orders include 2.1 MW and 3.4 MW Wind generator stator and rotor assemblies with shafts from Siemens Gamesa, ready to use directly in generators, development of large MV Motor stator and rotor assemblies with shaft and copper additions for Siemens. Development of 9MW (10 Ton weight) HT Motor stator assemblies, ready to use for direct assembly for TMEIC (a Japanese company).

Pitti Engineering has been registered as an approved supplier for supplying laminations, machined castings and related assemblies to Indian Railways.

Some of the major developments favouring the company in Railways are 109 private trains to run in FY24, 11000 km single-line tracks to be doubled by 2024, dedicated freight corridors to be operationalized by December 2021 or latest by March 2022, 11000 km high-density network to have trains running at 130 kmph by March 2021.

Indian Railways is targeting to triple its freight traffic to 3.3 billion tonnes by 2030 from 1.1 billion tonnes in 2017. 800 high power electric locomotives are being manufactured under Make in India programme with increasing localization of various inputs.

Indian Railways is fast progressing towards localizing 100% of its input procurement, giving a massive boost to the domestic Heavy Engineering and Capital Goods sector, which is going to drive the revenues of the company.

From fast growing domestic data consumption and digital economy to increasing data localization and cloud migration to big data and IoT acceleration along 5G deployment to pandemic induced work from anywhere in the ecosystem, a number of factors are aiding to exponential growth of data centers in India.

India’s current share in the global data center of about 2-3% is projected to double very fast. About $10 billion is projected to be invested in India-based data centers over the next

six year, $3 billion out of which is going to be the Capex towards building data centres.

Pitti Engineering has developed and produced ionized 5 MW Generator stator and rotor assemblies used for data storage and cloud computing applications. Company has been a leader in producing gen sets used in data centres and has remained as sole supplier to Cummins in India.

The company has recently added a new export customer, Indar- USA, operating in the Wind Generator segment with initial orders. The Company’s own set of long-term contracts with global OEMs of repute coupled with many breakthroughs in newer emerging sectors such as electric vehicles and data farms are the biggest growth drivers in the next three years. The share exports in the company revenues stands at 40%.

The biggest strength of the company is its well diversified user industries like Passenger Rail, Freight Rail, Mass Urban Transport, Lift Irrigation, Construction, Cement, Sugar, Steel, Windmill, Mining, Hydro & Thermal generation, Oil and gas, medical equipment and appliances. This helps the company to navigate well even if there is any slowdown in one or two sectors.

The company had commissioned one mega facility at Aurangabad, Maharashtra in 2018, after which Pitti has been able to add more processes and manufacture more components which were previously outsourced from other vendors.

Pitti Engineering boasts of customers like ABB, Cummins, GE, L&T, BHEL, Wabtec, Siemens Gamesa and Indian Railways.

Pitti Engineering’s revenues for FY20 stands at Rs. 525 crore and the stock price was at Rs. 39.90.

Pitti Engineering’s net profit has gone up by 43.94% during Q2 FY21 to Rs. 10.09 crore from Rs. 7.01 crore in Q2 FY20.

The revenues from operations during the same period was at Rs. 134.95 crore.

EBITDA margin has improved to 17.81% in Q2 FY21 from 14.31% in Q2FY20.

Source : https://economictimes.indiatimes.com/industry/indl-goods/svs/engineering/pitti-engineering-to-ride-on-perk-up-demand-in-data-centres-indian-railway-and-power-sector-under-atmanirbhar-bharat/articleshow/79041819.cms

Date : Nov 04, 2020

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