Craftsman Automation Q1 Results Review - Weak Quarter; Gradual Recovery Expected Ahead: Motilal Oswal

Motilal Oswal Report

Craftsman Automation Ltd. reported a weak Q1 performance, as profit after tax of Rs 532 million came in significantly below our estimate of Rs 801 million, mainly due to a weak performance in the aluminum division. Aluminum segment margins were impacted by weak demand in PVs and a sharp rise in input costs, which the company would pass on with a quarter lag.

To factor in the near-term slowdown in CVs and rising input cost pressure, we cut FY25E/FY26E earning per share by ~20%/10%. FY25 is likely to be a moderate growth year when Craftsman is expected to get its capabilities on track.

We expect the company to deliver a much stronger growth momentum from FY26 onward as its new facilities ramp up and acquisitions are integrated.

We reiterate our 'Buy' rating with a target price of Rs 5,965 25 times June 26E earning per share.

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