Buy Craftsman Automation; target of Rs 5965: Motilal Oswal

Motilal Oswal's research report on Craftsman Automation

Craftsman Automation (CRAFTSMA) reported a weak 1Q performance, as PAT of INR532m came in significantly below our est. of INR801m, mainly due to a weak performance in the aluminum division. Aluminum segment margins were impacted by weak demand in PVs and a sharp rise in input costs, which the company would pass on with a quarter lag.To factor in the near-term slowdown in CVs and rising input cost pressure, we cut FY25E/FY26E EPS by ~20%/10%. FY25 is likely to be a moderate growth year when Craftsman is expected to get its capabilities on track. We expect the company to deliver a much stronger growth momentum from FY26 onward as its new facilities ramp up and acquisitions are integrated. We reiterate our BUY rating with a TP of INR5,965 (25x Jun-26E EPS).

Outlook

We estimate a CAGR of 14%/15%/31% in consolidated revenue/EBITDA/PAT over FY24-26E. At CMP, the stock appears attractively valued at ~37x/24x FY25E/FY26E consolidated EPS. Hence, we reiterate our BUY rating on the stock with a TP of INR5,965 (valued at 25x Jun’26E EPS).