1. At a Glance
Pennar Industries is like that overachiever who signs up for every club in college — steel, precision engineering, pre-engineered buildings, hydraulics, warehousing — and still manages to pass with decent grades. FY25 revenue came in at ₹3,227 crore, OPM at 10%, and net profit at ₹119 crore. Debt’s on the heavier side (₹812 crore borrowings), but they keep the lenders happy with a respectable ROCE of 16% and ROE of 12.7%. The market currently values it at ₹2,987 crore with a P/E of ~25 — not dirt-cheap, not Pidilite-expensive. Dividend? Forget it. Promoters own just 39.67%, leaving the float wide open for market theatrics.
2. Introduction
In a country obsessed with IT, FMCG, and chemicals, Pennar Industries sits quietly in the corner making the stuff that actually builds India — literally. Pre-engineered building systems? Check. Railway components? Check. Hydraulics for industrial machinery? Check.
The Hyderabad-headquartered company has grown sales at a 13% CAGR over the last 3 years, but the 10-year number (9%) shows it’s been a slow-burn story. Margins hover in the high single digits, but management’s diversification playbook means they’re not relying on one cyclical segment to keep the lights on. The problem? Capital-intensive businesses plus modest pricing power equals longer gestation periods for returns.
3. Business Model (WTF Do They Even Do?)
Pennar runs a multi-product industrial manufacturing empire across:
- Steel Products: Cold rolled steel
- strips, electrostatic precipitator parts, sheet metal.
- Pre-Engineered Building Systems (PEBS): Industrial buildings, warehouses, factories — plug-and-play metal structures for corporates.
- Hydraulics & Engineering: Cylinders, presses, custom hydraulic solutions.
- Railway Products: Components for wagons, coaches, and locomotives.
The core model is B2B manufacturing with diversified industrial clients — meaning no dependence on retail whims, but also vulnerability to industrial capex cycles.
4. Financials Overview
Let’s calculate the fresh P/E:
- Mar 2025 EPS: ₹2.64 → Annualized = ₹10.56.
- CMP ₹221 → P/E = ~20.94 (vs 25 on TTM basis).
FY25 Snapshot:
- Revenue: ₹3,227 Cr (3% YoY growth)
- EBITDA: ₹310 Cr (9.6% margin)
- PAT: ₹119 Cr (7% margin)
- ROCE: 16% | ROE: 12.7%
Commentary: Sales growth slowed to a crawl in FY25 after strong prior years. Debt remains high at ₹812 Cr, keeping interest costs elevated at ₹120 Cr. The business is profitable, but margins are capped by competition and input cost pass-through limitations.
5. Valuation
Method 1:
