Pitti Laminations: Deep Discount: Indirect Power Play

Pitti Laminations:
CMP: 34 Listed on: BSE/NSE
Market Cap: 32.22Cr Sales: 267Cr (March 2009) Pitti Home Page

Pitti Laminations manufactures electric grade steel stampings and laminations up to a diameter of 1300 mm (51”) for application in Industrial motors, DC Machines, Alternators, Traction Motors, Pumps, Train lighting generators, Aeronautics, Medical diagnostics equipments, Windmill generators, Laminations for specialised applications, Die-Cast Rotors, Assembled Stators and Built-up Rotors.
Company has increased its manufacturing capacity from 10,000MT to 25,000MT.
It has a large customer base in India and abroad like ABB, BHEL, Siemens, Crompton Greaves, Areva T&D, VATECH, Bharat Bijlee, Kirloskar Brothers, Suzlon, GE(US), KSB Pumps, Otis Elevator Company, Toyo Denki Power Systems, Welco Technologies(US), DOL Motors Private Limited, PILLER Power Systems, Wittur, DK Rewinds.
Pitti Laminations has also set up value added facbricated steel Stator Body capacity of 3000 Nos per annum.

 Current Market cap is 0.11 times its March 2009 sales. Pitti laminations however has been impacted by the economic slowdown and sales for the Twelve Trailing Months (TTM) is close to 201.22Cr which is a drop of 20%+  in topline and bottomline of 4.6Cr (25% drop). The stock however seems to have bottomed out and is available close to its 200Day EMA. Divident payout is 10% but the avg divident payout for the past 5 years is 17% (Rs 1.7 per share) which is 5% divident payout for CMP.

Recommendations:  Strong buy at these levels since Pitti Laminations is an indirect play on the power infrastructure story of India. Divident return is also a healthy 2.9% (10% divident) but long term divident return is 5% which is great.

Strategy: Buy now at these levels and with improved fundamentals in next year we can expect it to be a multibagger.