Weak 4Q, gradual recovery likely from 1Q onwards

Company
30 Apr 2024
5 Min read 
  • Craftsman Automation reported weak 4QFY24 results, leading to a lower Revenue/PAT than estimated.
  •  The company expects gradual recovery from 1Q onwards with encouraging traction in Aluminum and Industrial Engineering segments.
  •  Estimate changes include a cut in FY25E/26E EPS by 6%/5% due to near-term slowdown in CVs and tractors.
  •  The company's consolidated revenue/EBITDA/PAT is expected to grow at a CAGR of 15%/17%/27% over FY24-26E.
  •  The powertrain segment saw margin pressure due to lower-than-expected demand in CVs and tractors.
  •  The Aluminum product division continues to perform well with a 28% YoY growth.
  •  The company plans to raise funds for an aggregate amount not exceeding INR12b by issuing equity shares or debt.
  •  Management expects the powertrain segment to deliver high-single-digit or low-double-digit growth in FY25.
  •  The Aluminum casting business is expected to grow 15%+ in FY25, driven by healthy growth in both standalone and DRAIPL.
  •  The storage solutions business is expected to pick up in FY25, driven by a strong opening order backlog.
  •  The company has invested INR5.8b in capex in FY24 and is expected to invest another INR5b+ in FY25.
  •  The company's valuation at 19x FY26E EPS appears attractive, leading to a reiteration of a BUY rating with a TP of INR5,305.
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