Craftsman Automation shares have risen 18 percent over the last month. Stake sale by a member of the promoter group last week has not dampened sentiment. That’s because the block was picked up by a clutch of institutional investors like Goldman Sachs Asia Equity Portfolio, Axis Mutual Fund, and Tata Emerging Asia Liquid Fund, among others.
Motilal Oswal has increased the target multiple for Craftsman Automation to 20x from 18x to factor in the continued strong growth momentum as well as capital efficiencies. The domestic broking firm has reiterated a buy call on the stock with a target price of Rs 4750.
Motilal Oswal is positive on the stock as Craftsman Automation is making its Electric Vehicle (EV) game stronger. It has received orders from domestic electric two-wheelers for its aluminium business, said Motilal Oswal in a report dated June 27.
“The Aluminium segment grew 34 percent year-on-year in FY23 driven by increasing wallet share with existing clients and improving the proportion of value-added products in the sales mix,” said Motilal Oswal.
The company has received multiple orders from the tractor, off-highway and Passenger Vehicle (PV) segments. The automobile parts company has gained traction in the tractor segment after receiving orders from a global OEM to develop engine programs, said Motilal Oswal. Craftsman Automation has received orders from global and Indian players to develop cylinder blocks for cars. Cylindrical blocks in a car are components necessary for the operation of the engine in a vehicle.
Also read | Craftsman Auto inches up after group promoter sells stake
Diversifying business
Craftsman Automation aims to reduce its import dependence on gear and gearboxes, said the domestic broking firm. In India, 35 percent of the gear and gear box products are imported. The company will focus on its sub-assembly business so that it can manufacture these products, reduce imports and gain a considerable portion of the domestic market share.
Craftsman Automation is also developing parts for diverse sectors like furniture, elevator, escalator and white goods.
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