Craftsman Automation Ltd

- 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).

- 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.

- 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.

- 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.

- 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.