Motilal Oswal's research report on Craftsman Automation
CRATFSMA has recently acquired 76% stake in DR Axion India Pvt Ltd (DRAIPL) against cash consideration of INR3.75b. DRAIPL manufactures aluminium (Al) cylinder heads and blocks for PV OEMs. The acquisition is complementary for CRAFTSMA as a) limited overlap w.r.t technology and customers, b) increases share of PV segment, and c) adds Korean OEMs viz Hyundai/Kia. We expect this acquisition to be EPS accretive, resulting in upgrades in our FY24E/FY25E consol EPS by 14%/11% to factor in for consolidation of DRAIPL and associated acquisition debt. We now estimate consol revenue/EBITDA/PAT to grow ~30%/28%/44% CAGR over FY23E-25E.
However, we now lower our target PE multiple for CRAFTSMA to 18x of FY25E EPS (vs 20x earlier) as we now consolidate for DRAIPL. Maintain BUY with TP of INR3,925.
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