Incorporated in 1986, Craftsman Automation Ltd is a leading engineering organization that is engaged in manufacturing precision components. The company designs, develops and manufactures a range of engineering products. It is one of the leading players in the machining of cylinder blocks for the tractor segment.
The business operates 3 key segments namely Automotive-Powertrain and others, Automotive-Aluminium Products, and Industrial and Engineering division that is engaged in manufacturing material handling equipment i.e. hoists, industrial gears, marine engines, crane kits, gearboxes, locomotive equipment, storage solutions, etc.
The company owns 12 state-of-the-art manufacturing facilities across 7 cities of India. Its customer base includes Tata Motors, Daimler India, Tata Cummins, Mahindra & Mahindra, Royal Enfield, Siemens, Escorts, Ashok Leyland, VE Commercial Vehicles, TAFE Motors & Tractors, etc.
Furthermore, it has two wholly-owned overseas subsidiaries, namely Craftsman Marine B.V. and Craftsman Automation Singapore Pte Limited. Craftsman Marine B.V. is engaged in the marketing, sales, and servicing of marine engines, engineering products and accessories for propulsion, manoeuvring and steering parts, storage, electronic instruments, deck equipment and spare parts for all the engines and other equipment used in yachts.
These products are manufactured and assembled by us in India and sold under the name “Craftsman Marine” by our subsidiary. Craftsman Automation Singapore Pte Limited, also set up in 2008 in Singapore, is its strategic sourcing centre for overseas procurement, primarily for procurement of aluminum ingots, which is one of its key raw materials.
Product Portfolio:
The company has three business segments :
Automotive – Powertrain and Others
Automotive – Powertrain and Others segment include engine parts such as cylinder block and cylinder head, camshafts, transmission parts, gear box housings, turbo charges and bearing caps.
Automotive – Aluminium Products
The Aluminium Products segment include crank case and cylinder blocks for two-wheelers, engine and structural parts for passenger vehicles and gearbox housing for a heavy commercial vehicle.
Industrial & Engineering Segment
This segment can be divided into two sub-segments, namely, High-End Sub-Assembly, Contract Manufacturing & Others and Storage Solution & Material Handling.
Strength of the Company
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- Leading engineering product manufacturer.
- Strategically located and vertically integrated manufacturing facilities.
- Strong product design capabilities.
- Robust financial performance.
RISKS RELATING TO BUSINESS
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- Company’s Inability to meet obligations under debt financing arrangements could adversely affect business.
- Group Companies have incurred losses in the last three Fiscals.
- The company do not have long term contracts with any of our supplier which could adversely affect their business.
- The company is subject to risks arising from interest rate fluctuations, which could adversely affect its results.
- The company has been unable to locate certain of its corporate records.
IPO Details:
| IPO Date | March 15th, 2021 to March 17th, 2021 |
| Issue Type | Book Built Issue IPO |
| Issue Size | 5528161 Eq Shares of ₹5 (aggregating up to ₹823.70 Cr) |
| Fresh Issue | 1,006,711 Eq Shares of ₹5 (aggregating up to ₹150.00 Cr) |
| Offer for Sale | 4,521,450 Eq Shares of ₹5 (aggregating up to ₹673.70 Cr) |
| Face Value | Rs.5 per equity share |
| IPO Price | Rs.1488 to Rs.1490 equity share |
| Min Order Quantity | 10 |
| Listing At | BSE, NSE |
IPO Objective:
The company purposes to utilize funds towards the following objectives;
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- To make repayment/pre-payment of company’s borrowing fully or partially.
- To meet general corporate purposes.
Financial Performance:
| Craftsman Automation’s financial performance (in INR crore) | ||||
| FY2018 | FY2019 | FY2020 | H1 FY2021 | |
| Revenue | 1,522.9 | 1,831.6 | 1,501.1 | 536.5 |
| Expenses | 1,479.6 | 1,692.1 | 1,437.9 | 526.1 |
| Net income | 25.6 | 87.8 | 41.7 | 5.6 |
| Net margin: (%) | 1.7 | 4.8 | 2.8 | 1.0 |
Tentative Time Table:
- IPO Opens on 15 March 2021
- IPO Closes on 17 March 2021
- Basis of Allotment Date: Mar 22, 2021
- Initiation of Refunds: Mar 23, 2021
- The credit of Shares to Demat Account: Mar 24, 2021
- IPO Listing Date: Mar 25, 2021
Outlook:
Craftsman Automation commenced its operations in 1986 in Coimbatore, in the State of Tamil Nadu, India. It is a diversified engineering company with vertically integrated manufacturing capabilities.
It is the largest player involved in the machining of cylinder blocks and cylinder heads in the medium and heavy commercial vehicles category. Craftsman owns and operates 11 strategically located manufacturing facilities across seven cities in India, with a total built-up area of over 1.5 million sq. ft.
The revenues of the company have been in a declining mode over the last three years. However, the key point to note is that over the last five years the auto sector has not done pretty well and we are seeing a turnaround in the industry after the lockdown and Craftsman automation is doing well since then.
Craftsman is the top 3-4 component manufacturers with respect to cylinder block matching in the case of the tractor industry, which is a very positive thing for the company and we expect things to do better form year.
At the upper price band of Rs. 1490 and 3 years average EPS of Rs. 28.95 the PE works out to be 51x as while current the PE of the industry is 60.7x. The valuations of the company look attractive at the current level and as the auto industry is expected to do well in the near future we may expect that company should do well too.
