Neutral Craftsman Automation; target of Rs 6542: Motilal Oswal

Motilal Oswal's research report on Craftsman Automation

Craftsman’s 2QFY26 consol PAT of INR912m was ahead of our estimate of INR863m, aided by better-than-expected revenue growth, especially in the aluminum segment. Aluminum business should remain a key growth driver going forward on the back of a ramp-up of its alloy wheel facilities in Bhiwadi and Hosur, steady order visibility from both domestic and export customers, and benefits of restructuring of Sunbeam to be visible from FY27E. However, powertrain margins are likely to remain under pressure at least in the near term as Craftsman looks to develop products for data center applications, which are significantly high-gestation projects (3-4 years for SOP). After the recent run-up in the stock, most of the positives seem factored in at 42.7x FY26E and at 29.1x FY27E consolidated EPS. We maintain Neutral with a TP of INR6,542 (valued at 24x Sep’27E EPS).

Outlook

Which are significantly high gestation projects (3-4 years for SOP). After the recent run-up in the stock, most of the positives seem factored in at 42.7x FY26E and at 29.1x FY27E consolidated EPS. We maintain Neutral with a TP of INR6,542 (valued at 24x Sep’27E EPS).