Multibagger PTC Industries shares jump 11% to a 3-month high on robust Q4 earnings. Good time to buy?

Shares of PTC Industries, a manufacturer of high-quality, high-precision metal components and materials for various critical and supercritical applications, soared 11% in today's intraday trade, reaching a 3-month high of ₹8,665 per share. This surge followed the company's strong performance in the March-ending quarter and the full fiscal year FY24.

The company reported a total income of ₹765.0 million in Q4FY24, up 22.0% year-on-year from ₹626.9 million in Q4FY23. For FY24, total income was ₹2,702.6 million, a 19.2% increase from ₹2,267.3 million in FY23.

EBITDA for Q4FY24 stood at ₹259.5 million, a 37.0% rise from ₹189.4 million in Q4FY23, with an EBITDA margin of 33.9%. For FY24, EBITDA was ₹860.5 million, a 30.1% increase from ₹661.1 million in FY23, with an EBITDA margin of 31.8%.

It posted a profit after tax of ₹147.2 million for Q4 FY24, reflecting 59.9% year-on-year growth from ₹92 million. For FY24, PAT was ₹422.2 million, a 63.5% increase from ₹258.2 million in FY23.

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PTC shared its approach towards environmentally sustainable practices in the production of titanium alloys with the use of EBCHR and PAM melting capabilities, allowing the company to manufacture aviation-grade titanium alloy ingots by remelting and utilising titanium scrap instead of having to only use fresh titanium sponge. 

This technology and investment are in alignment with the global civil and commercial aviation industry’s carbon-neutral and net-zero targets. Through this investment, PTC Industries is pioneering sustainable manufacturing in India by focusing on energy-efficient extraction and promoting titanium scrap recycling to support a circular economy.

Regarding the company's ongoing capex, it is setting up a world-class Strategic Materials Technology Complex in the Lucknow Node of the UP Defense Industrial Corridor. It has acquired key equipment for its aerospace and defence material manufacturing facility. 

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This includes a vacuum arc remelting furnace, an electron beam cold hearth remelting furnace, a plasma arc melting furnace, and a vacuum induction melting and vacuum precision induction casting furnace. 

These will help the company establish the largest single-site titanium recycling and remelting facility in the world, along with the capability to produce nickel and cobalt superalloys for aerospace and defence applications. 

PTC Industries has been a leading Indian manufacturer of precision metal components for critical applications for over 60 years. Through its wholly owned subsidiary, Aerolloy Technologies Limited, the company manufactures and supplies titanium and superalloy castings for aerospace and defence applications within India as well as for exports. 

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Emerging as India's Leading Manufacturer of Titanium

Domestic brokerage firm Antique Stock Broking has initiated coverage on the stock with a target price of ₹13,010 per share, highlighting the company's robust order pipeline. This target indicates an upside potential of 68% from its Thursday closing price.

The stock has already gained 233% in the last year and delivered a staggering return of 1,629% over the past five years. Despite this unprecedented surge, the brokerage's bullish outlook is based on the company's signed contracts and MoUs with leading OEMs, creating a significant order pipeline.

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The firm noted that the company is emerging as India's leading manufacturer of titanium and other super alloys-materials and castings, serving the aerospace and defence sectors comprehensively. The company boasts platform-independent technologies that are on par with the best globally. PTC is establishing titanium and super alloy mills using VAR and EBCHR technologies, with production set to commence in FY25.

Given the high growth visibility and significant value addition leading to over 50% EBITDA margins, PTC is well-positioned to post a profit of INR 10 billion in FY28 from a base of INR 0.42 billion in FY24, according to the brokerage's calculations.

Geopolitical situation extremely favourable to PTC

In 2020, Russia accounted for 13% and 12% of the global output and export of titanium sponge, respectively, and had a 9% export share by volume globally for unwrought titanium and powders. 

Furthermore, Russia is also among the leading manufacturers and exporters of titanium mill products worldwide. In 2020, the country accounted for 19% of the global export volume of mill products and titanium articles. Russia was also a substantial source of metal for aircraft manufacturing before the Russo-Ukrainian War. 

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The current geopolitical situation has opened up tremendous opportunities for emerging companies like PTC Industries.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.