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Craftsman Automation Ltd

| Q2 & H1 FY26 Transcript of the Earnings Conference Call

BULLISH SENTIMENT

Report Source

⬤12th Nov 25

Summary : Craftsman Automation reported strong H1 FY26 results, driven by aluminum products and new plant ramp-ups, with significant CAPEX planned for future growth and debt reduction.

Management Perspective positive : It gives me immense pleasure in welcoming you all for the earnings call.Congrats for a strong set of numbers, strong top line margins.We are very confident about the revenue coming in.The opportunity for growth is quite phenomenal and we are getting very strong enquiries.We are very confident about the future of Craftsman.

Concall Report Analysis & Insights

Business Overview

  1. H1 FY26 consolidated sales reached INR 3,786 crores, up from INR 2,365 crores.
  2. Powertrain contributed INR 2,034 crores, Aluminum Products INR 2,275 crores.
  3. Industrial Engineering contributed INR 476 crores to H1 FY26 sales.
  4. Consolidated EBITDA stood at INR 582 crores, with margins around 15%.
  5. Net debt to EBITDA on a consolidated basis is 0.94.

Future Growth Prospects

  1. Kothavadi plant's Powertrain revenue from stationary engines will start in 2029.
  2. Secured $100 million order book for Kothavadi, with $50 million on paper.
  3. DR Axion is expanding capacity for existing customers, moving into cylinder blocks.
  4. Hosur plant started operations, expecting incremental aluminum revenue quarter-on-quarter.
  5. Aluminum products segment is growing multifold, with significant demand.

Management Insights

  1. Aluminum product margins are sustainable due to a larger base and operational efficiency.
  2. Sunbeam restructuring is complete, targeting double-digit EBITDA by FY27.
  3. Gurgaon plant land sale expected to reduce Sunbeam and group debt by mid-FY27.
  4. New CAPEX projects are vetted for a minimum 20% pre-tax Return on Capital Employed (ROCE).
  5. India is becoming a global manufacturing hub, attracting multinational investments.

Signs of Skepticism

  1. Management did not disclose specific costs related to Kothavadi development expenses.

Risk Factors

  1. Forward-looking statements involve inherent risks and uncertainties.
  2. New CAPEX temporarily impacts existing return on investment.
  3. Long lead times (3-4 years) from investment to peak revenue generation.
  4. Commercial vehicle segment showed a decline in contribution.
  5. Global economic uncertainties could affect future growth.

Good To Know

  1. Transcript covers earnings for Q2 and H1 ended 30th September 2025.
  2. Company will upload the transcript on its website for public access.
  3. Management will not address customer-specific queries due to confidentiality obligations.
  4. All participant lines are in listen-only mode during opening remarks.

Key Drivers

  1. New plant operations driving revenue.
  2. Aluminum segment growing multifold.
  3. India becoming global manufacturing hub.
  4. Strong order book ensures future growth.

Key Analyst Discussions

Competitive Environment

  1. Capacity utilization improved in the aluminum business.
  2. Customers are increasingly outsourcing in passenger vehicle and two-wheeler segments.
  3. German subsidiary's order book is full, catering to data center business.
  4. Company is engaged with three of the top four large engine block manufacturers.

Market Trends & Consumer Behavior

  1. Commercial vehicle segment declined to 46%, off-highway increased to 21%.
  2. Tractor segment increased to 19%, SUV segment remained flat at 14%.
  3. Anticipate sustained growth post $4,000 per capita GDP inflection point.
  4. Multinationals are expanding manufacturing bases in India for exports and domestic markets.

Financial Highlights

  1. Sunbeam targets double-digit EBITDA margin for FY27.
  2. Net debt expected to reduce from INR 2,800 crores to INR 2,200-2,300 crores by FY27.
  3. FY26 CAPEX guidance is around INR 1,000 crores for Craftsman standalone.
  4. New CAPEX projects require a minimum 20% pre-tax ROCE.
  5. Total sales expected to cross INR 9,000 crores by FY27.

Product Composition

  1. Powertrain segment break-up: CV 46%, off-highway 21%, tractor 19%, others (PV/SUV) 14%.
  2. Sunbeam's 2Q margins were around 6%.

Strategic Considerations

  1. Kothavadi plant's phase-I is for industrial engineering, phase-II for large engine blocks.
  2. DR Axion CAPEX of INR 280 crores is for existing customers and global demands.
  3. No large inorganic M&A planned for the next 18 months.
  4. Company is taking the growth path, confident in delivering to customers.
Craftsman Automation Ltd (CRAFTSMAN) Concall Report Analysis & Insights | Dhanarthi