Stock watch: Pitti Laminations

Pitti Laminations (PLL), a company primarily engaged in the manufacture of electrical steel stampings and laminations, that forms a critical part in all types of motors, alternators, pump sets and DG sets, is the largest organised player in this segment with sales of Rs 44.9 crore in FY05.

The company also manufactures diecast rotors, tools, jigs, fixtures and moulds. The company's products enjoy a sustained upward demand since the Capital Goods sector is on a roll. It is increasing its focus on exports due to the immense potential that this segment offers.

The company's exports has gone up to 13 per cent of its sales in FY05, and is expected to be 54 per cent of sales in the year ahead, according to the valuations by a domestic brokerage. The company is expanding its capacity from current 6,000 mt to 25,000 mt, anticipating this growth.

"Post capex, the capacity utilization would be 60 per cent in FY07E, rising to 80 per cent in FY08E and 100 per cent by FY10E, " said Sidharth Agrawal, Fortis Securities Limited.

The company has set up a dedicated plant of 4000 mt to cater to the requirements of conglomerates like GE. Its customer list includes Alstom, ABB, Bharat Bijlee, Crompton Greaves, Siemens, General Electricals, KSB Pumps, Otis Elevator Company, Bharat Heavy Electricals and Kirloskar Electric Co.

At the current market price of Rs 98, the stock trades at 12x and 9.8x earnings for FY06E and FY07E respectively.