CRISIL said that the rating upgrade follows the healthy and sustained improvement in CAL's business performance in fiscal 2023, which is expected to continue in the near to medium term, due to steady demand for components, mainly from the commercial vehicle (CV) and passenger vehicle (PV) original equipment manufacturers (OEMs).

Besides, the company, by way of its established and superior operating efficiencies, and expertise in the machined components and die-cast component space continues to register operating profitability of atleast 20%, which along with healthy growth in revenues, is leading to strong annual cash accruals.

CAL's financial risk profile has also strengthened over time, driven by strong annual cash generation, equity proceeds received from its initial public offering which helped lower debt, and prudent funding of its capital expenditure.

Consequently, the company's debt metrics have strengthened over time, and are expected to remain at comfortable levels over the medium term as well.

The ratings continue to reflect the strong position of CAL in the auto-engineering contract-manufacturing sector, established customer relationships, healthy operating margin and improving financial risk profile.

These strengths are partially offset by large working capital requirement and capital intensive operations, and part vulnerability of performance to slowdown in the automotive sector.

Craftsman Automation manufactures several components and sub-assemblies on supply and job-work basis according to client specifications in the auto, industrial and engineering segments. The company also has a non-ferrous sand foundry catering to power transmission equipment manufacturers.

The company had reported PAT of Rs 251 crore and revenue of Rs 3,182 crore in FY23 as against PAT and revenue of Rs 163 crore and Rs 2,217 crore, respectively, in FY22.

The scrip rose 0.95% to currently trade at Rs 4626.90 on the BSE.