Craftsman Automation hosted a conference call on July 24, 2023. In the conference call, the company was represented by Mr. Srinivasan Ravi – Chairman and Managing Director.

Key takeaways of the call

Management expects auto sector to grow in FY24 driven by growing population, increasing investments in the road infrastructure, growing logistics industry, and increasing popularity of SUVs.

Company indicated that demand remained intact in PVs and 2Ws; however, there was some slowdown in demand for CVs and tractors.

In Q1 FY24, automotive powertrain was muted due to pre buying in Q4. Farm segment witnessed slowdown.

Going forward management expects CV business to pick up in Q3 FY24 and expects 15-20% growth in powertrain business as a whole in FY24.

Company expects Industrial & engineering segment growth to continue in Q2 FY24 driven by strong orders. In addition, company expects some stable growth in automotive aluminium segment.

Company will benefit from increased outsourcing by foreign players from India. Company did direct export sales of Rs 59 crore in Q1 FY24. Its medium term target is to grow exports.

In Q1 FY24, EBITDA Margin of auto powertrain business has come down; however, margin of automotive aluminium products has gone up on YoY basis driven by improvement in operating leverage.

In Q1 FY24, value addition part of automotive powertrain segment was approx. Rs 237 crore.

In automotive powertrain segment, CV contributed 58% to segment revenue, Off-Highway 19%, tractors 14% and PV 9% in Q1 FY24.

In Q1 FY24, value addition part of automotive aluminium products segment was approx. Rs 86 crore.

In Q1 FY24, value addition part of Industrial & engineering segment was approx. Rs 63 crore.

In Q1 FY24, value addition part of DR Axion was approx. Rs 104 crore.

In Q1 FY24, storage contributed Rs 78 crore to Industrial & engineering segment.

Despite being the latest entrant in the storage solutions business, Craftsman is one of the top three players in conventional storage segment and the fastest emerging indigenous end-to-end solutions provider in the advanced automated storage solution business.

Company is actively engaging with players in other automotive segments, namely tractors, construction equipment, and passenger vehicles. It has been successful in securing order wins from all three segments.

DRAIPL will help company meaningfully participate in the lightweight trend in passenger vehicles (electric variants) which is at the cusp of a take-off in India.

Capex stands at around Rs 81 crore for Q1 FY24. Management expects Capex of about Rs 320 crore in FY24.

In Q1 FY24, capacity utilization stood at 70% for automotive powertrain business.

Debt equity was 0.88 in Q1 FY24.

Crisil has upgraded the credit ratings of the company.