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Subscribe to Craftsman Automation: ICICI Direct

ICICI Direct has come out with its report on Craftsman Automation. The research firm has recommended to ''Subscribe'' the ipo in its research report as on March 12, 2021.

March 14, 2021 / 12:00 AM IST
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ICICI Direct IPO report on Craftsman Automation

Craftsman Automation, founded in 1986, is a Coimbatore, Tamil Nadu, based, diversified engineering company involved in manufacturing key components for automobile and industrial sectors. It owns and operates 12 plants pan India, strategically located close to its customers. The company is promoted by first generation entrepreneur Srinivasan Ravi, a technocrat. As of FY20, its sales were at | 1,492 crore with EBITDA at | 398 crore (margins of 27%) and PAT at | 41 crore. Its sales can be subdivided into three main segments; (i) automotive- powertrain and others (48% of sales in FY20, 36% EBITDA margins) (ii) automotive - aluminium products (17% of sales, 17% margins) and (iii) industrial & engineering segment (35% of sales, 25% margins). Direct exports forms <10% of its annual sales (FY20).

Valuation and Outlook

Craftsman Automation is a play on revival in automotive industry, especially M&HCV space. With lumpy capex cycle behind it & focus on debt reduction, it is well poised to clock healthy returns ratios in FY22-23E. At IPO price, it is offered at reasonable forward valuations. We recommend SUBSCRIBE.

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