Please refer to important disclosures at the end of this report
1
Craftsman
Automation Limited (CAL
) was incorporated on July 18, 1986. The
company is led by Srinivasan Ravi a first generation entrepreneur with over 34
years of Industry experience. The company
is a diversified engineering company
with vertically integrated manufacturing capabilities, engaged in 3 business
segments, namely Automotive - Powertrain and Others, Automotive –
Aluminium
Products, and Industrial and Engineering. It is one of the leadin
g players in the
machining of cylinder blocks for the tractor segment.
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.
Positives: (a)
Diversified engineering company with a focus on providing
comprehensive solutions and manufacturing high quality, intricate and critical
products, components and parts; (b)
Long term and well established
relationships with marquee domestic and global OEMs
; (c) Experienced
promoters and management team with strong domain expertise.
Investment concerns: (a) CAL reported poor consolidated top-
line (CAGR of
~0.5% over FY2018-
20), hence growth concerns remain;(b) The company’s
more than ~70% revenue comes from the Automotive segment
(Slowdown in
automobile industries could impact the overall sales volume of the company).
Outlook & Valuation: In terms of valuations, the pre-
issue P/E works out to 73x
FY2020 earnings (at the upper end of the i
ssue price band), which is high
considering CAL’s historical two year CAGR top-line & bottom-
line growth.
Further, the company’s return ratios are also low compared
to its other peers.
Thus, we recommend NEUTRAL rating on the issue.
Key Financials
Y/E March (Rs cr) FY2018 FY2019 FY2020
9MFY21
Net Sales
1,479
1,818
1,492
1,023
% chg
-
22.9
(17.9)
Net Profit 32 97
41
51
% chg
-
195.8
(58.1)
OPM (%)
19.8
24.3
26.3
28.1
EPS (Rs)
15.7
48.4
20.4
25.2
P/E (x)
95.1
30.8
73.0
-
P/BV (x)
5.0
4.4
4.2
-
RoE (%)
5.6
14.4
5.7
-
RoCE (%)
10.0
16.0
11.2
-
EV/Sales (x)
2.6
2.2
2.7
-
EV/EBITDA (x)
12.9
8.9
10.1
-
Angel Research; Note: Valuation ratios based on pre-issue outstanding shares and at upper end
of the price band
Neutral
Issue Open: March 15, 2021
Issue Close: March 17, 2021
Offer for Sale: 45,21,450 shares
QIBs 50%
Non-Institutional 15%
Retail 35%
Promoters 59.8%
Others
40.2%
Post Issue Shareholding Pattern
Post Eq. Paid up Capital:
`
10.56cr
Issue size (amount):
`
823cr - **
`
824cr
Price Band: `1,488-1,490
Lot Size: 10 shares and in multiple thereafter
Post-issue mkt.cap: *`3,144–**3,148cr
Promoters holding Pre-Issue: 63.4%
Promoters holding Post-Issue: 59.8%
*Calculated on lower price band
** Calculated on upper price band
Book Building
Fresh issue: `150cr
Issue Details
Face Value: `5
Present Eq. Paid up Capital: `10.06cr
Amarjeet S Maurya
+022 39357600, Extn: 6831
amarjeet.maurya@angelbroking.com
Craftsman Automation Ltd
IPO Note |
Auto ancillary
March 12, 20
21
Craftsman Automation Ltd |
IPO Note
March 12, 2021
2
Company background
The promoter of the company is Srinivasan Ravi.Incorporated in 1986, Craftsman
Automation Ltd is a leading engineering organization that is engaged in
manufacturing precision components. The company designs, develop, 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.
Issue details
CAL is raising `150cr through fresh issue and Promoter & Individual investors are
selling ~45.2 lakhs equity shares through offer for sale in the price band of `1,488
-
1,490.
Exhibit 1: Pre and post IPO shareholding pattern
No of shares (Pre-issue) % No of shares (Post-issue) %
Promoters
1,27,57,500 63.4 1,26,26,860 59.8
Others
73,64,100 36.6 85,01,451 40.2
Total
2,01,21,600 100.0
2,11,28,311 100.0
Source: Source: RHP, Note: Calculated on upper price band
Objectives of the Offer
Repayment/pre-payment, in full or part, of certain borrowings availed
of by the company (~`120cr).
General corporate purposes.
Craftsman Automation Ltd |
IPO Note
March 12, 2021
3
Exhibit 2: Consolidated Income Statement
Y/E March (` cr)
FY2018
FY2019
FY2020
Net Sales
1,479
1,818
1,492
% chg
22.9
(17.9)
Total Expenditure
1,186
1,375
1,100
Raw Material
576
703
587
Personnel
199
217
171
Others Expenses
411
455
343
EBITDA
294
443
392
% chg
50.8
(11.4)
(% of Net Sales)
19.8
24.3
26.3
Depreciation& Amortisation
149
176
195
EBIT
144
267
197
% chg
84.5
(26.0)
(% of Net Sales)
9.8
14.7
13.2
Interest & other Charges
112
141
148
Other Income
12
14
9
(% of PBT)
26.6
10.0
15.0
Recurring PBT
44
140
57
% chg
221.5
(59.0)
Tax
12
43
16
(% of PBT)
27.6
30.4
28.4
PAT (reported)
32
97
41
% chg
195.8
(58.1)
(% of Net Sales)
2.2
5.4
2.8
Basic EPS (`)
15.7
48.4
20.4
Fully Diluted EPS (`)
15.7
48.4
20.4
% chg
195.8
(58.1)
Source: Company, Angel Research
Craftsman Automation Ltd |
IPO Note
March 12, 2021
4
Consolidated Balance Sheet
Y/E March (` cr)
FY2018
FY2019
FY2020
SOURCES OF FUNDS
Equity Share Capital
10
10
10
Reserves& Surplus
587
673
709
Shareholders Funds
597
683
719
Total Loans
847
985
1,041
Deferred Tax Liability
145
154
166
Total Liabilities
1,589
1,822
1,926
APPLICATION OF FUNDS
Gross Block
1,668
2,077
2,201
Less: Acc. Depreciation
344
489
659
Net Block
1,323
1,589
1,542
Capital Work-in-Progress
24
91
89
Investments
4
4
3
Current Assets
648
642
670
Inventories
300
323
326
Sundry Debtors
202
210
194
Cash
49
27
72
Loans & Advances
46
49
35
Other Assets
51
33
43
Current liabilities
524
621
506
Net Current Assets
124
21
163
Deferred Tax Asset
113
118
129
Mis. Exp. not written off
-
-
-
Total Assets
1,589
1,822
1,926
Source: Company, Angel Research
Craftsman Automation Ltd |
IPO Note
March 12, 2021
5
Consolidated Cash Flow Statement
Y/E March (Rs cr)
FY2018
FY2019
FY2020
Profit before tax
44
140
57
Depreciation
149
176
195
Change in Working Capital
20
(33)
(46)
Interest / Dividend (Net)
112
135
137
Direct taxes paid
(12)
(25)
(22)
Others
(30)
(33)
(17)
Cash Flow from Operations
283
360
305
(Inc.)/ Dec. in Fixed Assets (212) (361) (140)
(Inc.)/ Dec. in Investments
2
3
3
Cash Flow from Investing (210) (359) (137)
Issue of Equity
0
0
0
Inc./(Dec.) in loans
54
113
17
Dividend Paid (Incl. Tax)
(1)
(1)
(6)
Interest / Dividend (Net) (113) (130) (139)
Cash Flow from Financing (6
0)
(18)
(128)
Inc./(Dec.) in Cash
12
(17)
40
Opening Cash balances
24
36
19
Closing Cash balances
36
19
60
Source: Company, Angel Research
Craftsman Automation Ltd |
IPO Note
March 12, 2021
6
Key Ratios
Y/E March FY2018
FY2019 FY2020
Valuation Ratio (x)
P/E (on FDEPS)
95.1
30.8
73.0
P/CEPS
16.6
11.0
12.7
P/BV
5.0
4.4
4.2
EV/Sales
2.6
2.2
2.7
EV/EBITDA
12.9
8.9
10.1
EV / Total Assets
2.4
2.2
2.1
Per Share Data (Rs)
EPS (Basic)
15.7
48.4
20.4
EPS (fully diluted)
15.7
48.4
20.4
Cash EPS
89.8
135.9
117.3
DPS
72.6
187.4
112.0
Book Value
296.5
339.6
357.3
Returns (%)
ROCE
10.0
16.0
11.2
Angel ROIC (Pre-tax)
10.4
16.3
11.7
ROE
5.6
14.4
5.7
Turnover ratios (x)
Asset Turnover (Gross Block)
0.9
0.9
0.7
Inventory / Sales (days)
74
65
1
Receivables (days)
50
42
84
Payables (days)
96
75
82
Working capital cycle (ex-cash) (days)
28
32
3
Source: Company, Angel Research
Craftsman Automation Ltd |
IPO Note
March 12, 2021
7
Research Team Tel: 022
-
39357800 E
-
mail: research@angelbroking.
com Website:
www.angelbroking.com
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