Date: 10 Oct 2023
Craftsman Automation Ltd (CAL), established in 1986, is a diversified engineering company primarily engaged in three segments, namely Automotive Powertrain, Automotive Aluminum and Industrial Engineering. They are the largest player involved in the machining of cylinder blocks and cylinder heads in the intermediate, medium and heavy commercial vehicles segment as well as the construction equipment industry. They are also among the top 3-4 players in machining of cylinder blocks for the tractor segment in India. They have a diversified client base which reduces portfolio concentration risk.
Total revenue is expected to grow at a CAGR of 14.6% over FY20-23 to Rs. 2243 cr. EBITDA over the same period is expected to grow at 12.7% CAGR to Rs 570 cr with margin contraction of 130bps to 25.4% in FY23 and PAT is expected to grow at 76.0% to Rs 224 cr with margin expansion of 720bps to 10.0% over FY20-23. ROE in FY23 is forecasted to be 17.0% and ROCE to be 16.7%.
At the higher price band of Rs 1490 per share, Craftsman Automation Ltd is valued at 11.5X FY23 earnings. We recommend a subscribe.