Any current/future new fundraising through debt or equity?

The company recently completed a Qualified Institutional Placement (QIP) for fundraising, which was successful and supported by investors (Page 18). Some part of the QIP proceeds (~INR 650 Crore) has been used for debt reduction, repaying around INR 900 Crore of debt recently (Page 13). Management has not committed to future debt levels at the end of FY '25 due to uncertainty around ongoing acquisitions (e.g., Sunbeam) and CAPEX plans (Page 13). Future investments and fundraising will depend heavily on how the "China plus One" manufacturing shift unfolds and customer orders materialize (Page 1

Any current/future capex/capital investment/strategic investment?

Capex for FY '25 is approximately INR 200 Crore, focused on actual customer requirements. Two Greenfield plants under construction: - Kothavadi plant: Phase-1 ahead of schedule, expected trial production in Q4 FY '24; targets wind sector initially and heavy engines in Phase-2. - Bhiwadi plant: Phase-1 expected completion in 15 months, with trial production starting in Q4 FY '24; focused on structural parts for two-wheelers and passenger vehicles. Acquisition of German foundry (Fronberg) for EUR 6 million (~INR 60 Crore), with an additional INR 60 Crore planned over 15 months for working ca

Future growth expectations in sales/revenue/volumes?

Powertrain segment expects strong growth from FY '27 onwards, with momentum starting Q4 FY '26, driven by new engine developments and emission norms. Aluminum segment is targeting 14%-15% growth, with increased aluminum content in vehicles and expansion into structural parts for passenger vehicles. Export market expansion is a key focus, especially leveraging acquisitions like Sunbeam with 15%-20% export exposure. The company aims to scale from small to medium scale globally, particularly in Powertrain and aluminum to capture China plus One manufacturing shift. Capacity build-up is pla

Future growth expectations in earnings/operating earnings/profits/EPS?

Powertrain business expects growth from Q4 FY '26 onwards, driven by industrial engine segment and commercial vehicle pickup. Aluminum segment shows 14-15% growth potential; margins expected to stabilize after commodity price adjustments. German acquisition (Fronberg) adds INR 250 Crore revenue with potential high single-digit EBITDA, aimed at medium-scale global expansion. New engine developments due to emission norms and flexi-fuel engines are expected to boost Powertrain demand. Overall, Craftsman anticipates long-term strong growth with increasing capacity build-up driven by China plus One

Current/ Expected Orderbook/ Pending Orders?

The order book for customers related to industrial engines, especially driven by the data center and AI growth, is fully booked for many years. There is a strong expectation of double-digit growth for these industrial engines due to new engine developments (flexi-fuel, hydrogen, vegetable oil, LNG, CNG, diesel, gasoline). The global shift (China plus One strategy) is creating a significant opportunity for Indian manufacturing to replace capacity from Europe and America. However, there is currently a lack of Indian suppliers with sufficient capacity to meet global demand. Craftsman aims to leap

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Craftsman Automation LtdQ2 FY24Auto Components

Craftsman Automation Ltd Q2 FY24 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹9,252P/E: 51.3Market Cap: ₹20.2K CrSector: Auto Components

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

Yes

Order

Yes

Capex

Yes

3 of 5 growth signals are positive.

Full analysis

Revenue guidance

Category 3

→Powertrain segment expects strong growth from FY '27 onwards, with momentum starting Q4 FY '26, driven by new engine developments and emission norms.
→Aluminum segment is targeting 14%-15% growth, with increased aluminum content in vehicles and expansion into structural parts for passenger vehicles.
→Export market expansion is a key focus, especially leveraging acquisitions like Sunbeam with 15%-20% export exposure.
→The company aims to scale from small to medium scale globally, particularly in Powertrain and aluminum to capture China plus One manufacturing shift.
→Capacity build-up is planned cautiously, aligning CAPEX with actual customer demands and considering industry cycles.
→Long-term prospects for Powertrain are strong, despite a current lull linked to commercial vehicle sales and economic factors.
→Strategic acquisitions in Germany and Korea aim to triple or more revenue potential and broaden global customer reach.

Margin guidance

Category 3

→Powertrain business expects growth from Q4 FY '26 onwards, driven by industrial engine segment and commercial vehicle pickup.
→Aluminum segment shows 14-15% growth potential; margins expected to stabilize after commodity price adjustments.
→German acquisition (Fronberg) adds INR 250 Crore revenue with potential high single-digit EBITDA, aimed at medium-scale global expansion.
→New engine developments due to emission norms and flexi-fuel engines are expected to boost Powertrain demand.
→Overall, Craftsman anticipates long-term strong growth with increasing capacity build-up driven by China plus One strategy.
→Earnings impacted short-term by higher depreciation, operational costs, and commodity prices; however, strategic investments and acquisitions forecast improved profitability and EPS over coming years.
→Q4 FY '24 and FY '25 full year revenues expected to reflect these growth initiatives positively.

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Fundraise plans

Yes

→The company recently completed a Qualified Institutional Placement (QIP) for fundraising, which was successful and supported by investors (Page 18).
→Some part of the QIP proceeds (~INR 650 Crore) has been used for debt reduction, repaying around INR 900 Crore of debt recently (Page 13).
→Management has not committed to future debt levels at the end of FY '25 due to uncertainty around ongoing acquisitions (e.g., Sunbeam) and CAPEX plans (Page 13).
→Future investments and fundraising will depend heavily on how the "China plus One" manufacturing shift unfolds and customer orders materialize (Page 13).
→No clear indication of new equity or debt fundraising specifically planned beyond current acquisitions and CAPEX deployment as of this call (Page 13 and 18).

Order book

Yes

→The order book for customers related to industrial engines, especially driven by the data center and AI growth, is fully booked for many years.
→There is a strong expectation of double-digit growth for these industrial engines due to new engine developments (flexi-fuel, hydrogen, vegetable oil, LNG, CNG, diesel, gasoline).
→The global shift (China plus One strategy) is creating a significant opportunity for Indian manufacturing to replace capacity from Europe and America.
→However, there is currently a lack of Indian suppliers with sufficient capacity to meet global demand.
→Craftsman aims to leapfrog competition and build medium-scale capacity to capture this growing global demand.
→New customer orders are in development and expected to start production in the coming quarters, especially related to exports.
→The German acquisition is also expected to add to order flow with revenues around INR 250 Crore and high single-digit EBITDA, signaling growth potential.

Capex plans

Yes

→Capex for FY '25 is approximately INR 200 Crore, focused on actual customer requirements.
→Two Greenfield plants under construction:
→ - Kothavadi plant: Phase-1 ahead of schedule, expected trial production in Q4 FY '24; targets wind sector initially and heavy engines in Phase-2.
→ - Bhiwadi plant: Phase-1 expected completion in 15 months, with trial production starting in Q4 FY '24; focused on structural parts for two-wheelers and passenger vehicles.
→Acquisition of German foundry (Fronberg) for EUR 6 million (~INR 60 Crore), with an additional INR 60 Crore planned over 15 months for working capital and minor CAPEX.
→Strategic acquisitions underway including:
→ - DR Axion acquisition complete, steady cash flows, minor maintenance CAPEX.
→ - MoU signed for a second aluminium business acquisition, currently not profitable, plans to leverage synergies.
→Company is cautious with CAPEX and acquisitions, prioritizing financial prudence and readiness for potential "China plus One" strategy opportunities.

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