Comments
Target: ₹5,082
CMP: ₹3,924.35
Post recent correction, Craftsman Automation Ltd (CAL) looks quite attractive to us given all the fundamental drivers remaining intact. This correction provides a great opportunity for investors to enter into quality auto ancillary names like CAL which is a market leader in machining Powertrains and Auto Aluminium products. Considering its synergic DRA acquisition and the benefits to be derived out of it, CAL gives us comfort.
Mainly on valuations, the stock is now trading at 15.2 x FY26E earnings which we believe is quite attractive.
We believe the Power train business will be driven by expected pick up in Replacement cycle for HCVs in the medium term and also fresh demand rising by movement in the investment capex cycle of the country by second half of FY25 and more in FY26. Dieselisation demand from all over the world and localisation of diesel vehicle demand should lead to strong demand for Power trains.
Rising infrastructure growth, construction, mining, agri-commodities transportation, increasing freight rates etc will all lead to a very strong growth in the CV industry post the near to mid-term lull. We therefore believe that the real demand growth may come in FY26 only as FY24 and FY25 may see soft growth. New order from a global CV player also should aid growth in FY26.
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