Craftsman Automation Limited — Q1 FY26 earnings call

Call held 30 Jul 2025

Management summary

Craftsman Automation reported a strong Q1 FY26 with a consolidated EBITDA margin of 15% and a net debt to EBITDA ratio of 2.27. Key subsidiaries like DR Axion and Sunbeam contributed significantly to revenue. The company is progressing with its Kothavadi plant order book and maintains its full-year guidance, expecting continued improvement in financial ratios despite ongoing capex and integration efforts.

Highlights

  • Consolidated EBITDA margin stood at approximately 15% for Q1 FY26.

  • Consolidated net debt to EBITDA was 2.27 on an annualized basis, with standalone at 2.87.

  • ROCE pre-tax annualized was 14%, and Return on Equity annualized was 10%.

  • Consolidated net debt for the quarter was INR 2,400 crores, an increase from INR 1,900 crores.

  • DR Axion reported Q1 revenue of INR 408 crores, Sunbeam's top line was INR 291 crores, and Craftsman GmbH (Germany) recorded INR 67 crores.

  • The Kothavadi plant's order book has reached almost 50% of its $100 million annual revenue target for 2030.

  • Bhiwadi plant revenue increased by 20% QoQ to INR 50 crores in Q1 FY26.

  • Full-year FY26 guidance for INR 70 billion revenue, INR 11 billion EBITDA, and INR 6.5-7 billion EBIT remains unchanged.

Key financials

  1. EBITDA Margin 15%
  2. Consolidated Net Debt ₹2,400 Cr
  3. Consolidated Net Debt/EBITDA 2.27
  4. ROCE Pre-tax 14%
  5. Return on Equity 10%

What they filed

Q1 FY27: revenue up 42.1%, net profit up 135.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue906 929 1,151 1,044 1,192 +32%1,237 +33%1,346 +17%1,484 +42%
EBITDA132 115 161 177 200 +52%214 +86%251 +56%266 +50%
Net profit29 5 27 40 47 +62%56 +1020%78 +189%94 +135%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • DR Axion
    ₹408 Cr Revenue
  • Sunbeam
    ₹291 Cr Revenue
  • Craftsman GmbH (Germany)
    ₹67 Cr Revenue
  • Bhiwadi Plant
    ₹50 Cr Revenue
  • Standalone Alloy Wheel Business
    13% Revenue Share

Order book

high confidence

Total value

$50 Mn

as of 2025-06-30 quantified

Execution

Prove-outs in FY27-FY28, production starts FY27, peak production FY29

The order book for the Kothavadi plant has reached 50% of the $100 million annual revenue target for 2030, with production expected to ramp up from FY27 and peak in FY29.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹800 Cr
    On a consolidated basis, we are looking at around INR800 crores for, say, around 20%, 25% -- 20% growth rate, which we have factored in, in our capex plans.
  • Debt Net ₹2,400 Cr · 2.3× EBITDA
    net debt to EBITDA on a consolidated basis is 2.27 on an annualized basis compared to Q1. So, we will keep on improving as we move on going forward in spite of the capex.
  • Liquidity Liquidity disclosed The company plans to sell land in Gurgaon, which is expected to reduce debt. The value of this land is publicly estimated at INR 350 crores, with the company aspiring for a higher value.
    And anyway in the next year, the land will be sold, if not in this year itself, that's what we have already started and we've not put up for sale, but I think that will also reduce the debt going forward. So, our net outflow towards acquiring Sunbeam has been quite reasonable.

Guidance & targets

Profitability

  • Consolidated Net Debt to EBITDA Profitability · Going forward · High confidence Improving towards 1-1.5
    debt we measure with the level of net debt to EBITDA. I think that ratio will keep improving. ... I think 1, 1.5 is very comfortable. I think 2 is not a bad number.

    — Srinivasan Ravi

  • Sunbeam Margin Improvement Profitability · Next year (FY27) · Medium confidence Far better off
    But I think Q4, we can see some reasonable margin improvement. Going forward for the next year, I think it should be far better off.

    — Srinivasan Ravi

Revenue

  • Kothavadi Plant Annual Revenue Target Revenue · 2030 · High confidence $100 million
    2030, this 100 million target is intact, that is both for the casting and machining of those particular parts.

    — Srinivasan Ravi

  • Bhiwadi Plant Revenue Growth Revenue · Next few quarters (barring Q3) · High confidence 20% increase QoQ
    I think the run rate of the same percentage of increase will happen for the next few quarters, barring Q3.

    — Srinivasan Ravi

  • Powertrain Segment Growth (Standalone) Revenue · FY26 · Medium confidence High single-digit, potentially double-digit in Q4
    So the second point on the Powertrain is we will see a high single-digit growth. And maybe in the Q4, we may on 1 quarter, we may see double-digit growth on Craftsman stand-alone on the Powertrain.

    — Srinivasan Ravi

  • Standalone Aluminum Business Growth (ex-alloy wheel) Revenue · Ongoing · High confidence 15-20% growth
    around 15%, 20% growth on the stand-alone aluminum business without alloy wheel and alloy wheel itself will be another growth story, which we are looking at. So the growth will continue, yes.

    — Srinivasan Ravi

  • Aluminum Segment CAGR (4 years) Revenue · Next 4 years · High confidence 20-25%
    I mean without alloy wheel itself, we will continue at 20%. Alloy wheel adding will lead to some surges in some quarters, then it should stabilize. So overall, I think when you look at the CAGR for 4 years, then I think 20% to 25% is okay.

    — Srinivasan Ravi

  • Storage Side Growth Revenue · This year (FY26) · High confidence 15% growth

    Previously 20% growth → 15% growth

    Top line growth, just give me a minute, please. Around 15%, sir. 15% is the top line growth.

    — Srinivasan Ravi

Production

  • Kothavadi Plant Peak Production Production · FY29 · High confidence Touching in FY29
    And peak production, I think, will be touching in FY '29.

    — Srinivasan Ravi

Margin

  • Storage Side EBITDA Margin Margin · Ongoing · Medium confidence Around 4%

    Previously Over 5% → Around 4%

    I think we can look at an EBITDA margin of around close to 4%, up and down.

    — Srinivasan Ravi

Financial

  • Full-Year FY26 Revenue Financial · FY26 · High confidence INR 70 billion
    No, nothing changes. I have given these numbers even before all the tariff wars started, it was much before that. And this is the first time we have given guidance. ... We stick to the guidance.

    — Srinivasan Ravi

  • Full-Year FY26 EBITDA Financial · FY26 · High confidence INR 11 billion

    — Srinivasan Ravi

  • Full-Year FY26 EBIT Financial · FY26 · High confidence INR 6.5-7 billion

    — Srinivasan Ravi

Capex

  • Consolidated Capex Capex · FY26 · High confidence INR 800 crores
    On a consolidated basis, we are looking at around INR800 crores for, say, around 20%, 25% -- 20% growth rate, which we have factored in, in our capex plans.

    — Srinivasan Ravi

What to watch in Q2 FY26

Sunbeam Q2 Profitability

Next quarter (Q2 FY26)
Current Uncertain for Q2, positive EBITDA in Q1
Target Improved profitability

Why it matters

To assess the successful integration and operational efficiency of the Sunbeam acquisition.

But I think Q4, we can see some reasonable margin improvement. Going forward for the next year, I think it should be far better off.

Risks & concerns

  • Market Slowdown

    medium

    The market is slow, and the domestic industry is experiencing some slowness, impacting segments like commercial vehicles and construction equipment.

    Management acknowledged

  • Sunbeam Q2 Profitability Uncertainty

    medium

    Due to ramp-up and shifting operations, Q2 profitability for Sunbeam is uncertain, though Q4 and next year are expected to be better.

    Management acknowledged

  • Commodity Price Volatility (Aluminum)

    medium

    A significant increase in aluminum prices (e.g., 50%) could negatively impact margins in the aluminum segment, as it is a pass-through business.

    Management acknowledged

  • Inflationary Pressure on Margins

    medium

    With 6% inflation in the country, growing at 6-8% means margins could be on a declining level.

    Management acknowledged

  • Global Macroeconomic Headwinds

    medium

    Potential headwinds in global markets and the possibility of project/capex deferments by global OEMs.

    Management acknowledged

  • Capacity Utilization Risk

    low

    Reaching 80% capacity utilization can be risky in certain months, especially during the festive season.

    Management acknowledged

Q&A highlights

5 direct, 1 evasive
Kothavadi Plant Order Book and 2030 Revenue Target Direct
2030, this 100 million target is intact, that is both for the casting and machining of those particular parts. ... our order book has almost crossed 50% of the 100 million target, projected for the annual basis.

Provides an update on the progress of a significant new growth driver and its long-term revenue potential.

Asked by Mumuksh Mandlesha

Sunbeam Ramp-up and Future Investments Partial
Q2 will be better than Q1 on the revenue side, but profitability side because of the huge ramp-up and the shifting, which has happened, we are still not certain of the margin improvement in Q2. But I think Q4, we can see some reasonable margin improvement. Going forward for the next year, I think it should be far better off.

Addresses the integration and profitability trajectory of a recent acquisition, highlighting near-term uncertainty but long-term optimism.

Asked by Mukesh Saraf

Overall Margin Trajectory (from 20% to 14%) Direct
The product mix has changed. Aluminum has become quite big now. The revenue on the aluminum is quite big. So, that means that the aluminum is a pass-through. So, our margins do not come from top line at all. Our margins come from the derived from the gross profit.

Explains the reasons for the shift in overall company margins, attributing it to changes in product mix and the nature of the aluminum business.

Asked by Kumar Saurabh

FY26 Consolidated Capex Guidance Direct
On a consolidated basis, we are looking at around INR800 crores for, say, around 20%, 25% -- 20% growth rate, which we have factored in, in our capex plans.

Confirms the capital expenditure plans for the current fiscal year, indicating investment levels for future growth.

Asked by Joseph George

Gurgaon Land Sale Timeline and Value Evasive
See, sorry, I'll decline on this matter. If I put a timeline, you know very well how it works in this business that we may lose on the value of the land. So, we are not desperate to sell the land and we know that we can delay it as long as we get the right value.

Highlights management's strategic approach to asset monetization for debt reduction, prioritizing value over speed, but leaves the timeline open-ended.

Asked by Ajox Frederick H

Full-Year FY26 Guidance Confirmation Direct
No, nothing changes. I have given these numbers even before all the tariff wars started, it was much before that. ... We stick to the guidance.

Reaffirms the company's financial targets for the full fiscal year, providing confidence in the outlook despite market conditions.

Asked by Mumuksh Mandlesha

Aluminum Segment Revenue Growth Direct
around 15%, 20% growth on the stand-alone aluminum business without alloy wheel and alloy wheel itself will be another growth story, which we are looking at. So the growth will continue, yes.

Provides specific growth expectations for a key segment, indicating its contribution to overall company expansion.

Asked by Abhishek Jain

Net Debt Increase vs. Finance Cost Decrease Partial
Last year, we did 3 acquisitions, the 24% of DR, the Sunbeam acquisition and also the Fronberg acquisition. And we had 2 greenfield projects coming up last year, and we had capex in almost all the plants. So it is a question of how much outflow has gone for acquisitions and how much capex we have incurred. So the debt has been a function of that.

Clarifies the drivers behind the increase in net debt, linking it to past acquisitions and capex, while finance costs may have decreased due to other factors not fully explained.

Asked by Abhishek Jain

2 min read 6 chapters

Detailed narrative

Q1 FY26 Financial Performance Overview

Craftsman Automation reported a consolidated EBITDA margin of approximately 15% for Q1 FY26. The consolidated net debt to EBITDA ratio stood at 2.27 on an annualized basis, with the standalone ratio at 2.87. The company's ROCE pre-tax annualized was 14%, and return on equity annualized was 10%. Consolidated net debt increased from INR 1,900 crores to INR 2,400 crores during the quarter, primarily due to past acquisitions and capex.

Kothavadi Plant and Long-Term Growth Outlook

The Kothavadi plant, a key growth driver, has secured an order book that represents almost 50% of its $100 million annual revenue target for 2030. This target encompasses both casting and machining operations. Prove-outs for production are scheduled for FY27-FY28, with initial production commencing in FY27 and peak production anticipated by FY29, aligning with customer demand from data center clients.

Sunbeam Integration and Performance

Sunbeam contributed INR 291 crores to the top line in Q1 FY26 and achieved a positive EBITDA. The company has successfully ceased Gurgaon operations as of May, settling all labor matters. While Q2 profitability remains uncertain due to ramp-up and shifting, management expects reasonable margin improvement by Q4 FY26 and a significantly better performance in the next fiscal year. The focus is on stabilizing operations and improving efficiency before expanding the client base.

Segmental Performance and Growth Drivers

DR Axion's revenue accelerated to INR 408 crores in Q1 FY26, while Craftsman GmbH (Germany) recorded INR 67 crores. The Bhiwadi plant saw a 20% quarter-on-quarter revenue increase, reaching INR 50 crores, and this growth rate is expected to continue. The standalone aluminum business (excluding alloy wheels) is projected to grow 15-20%, with the overall aluminum segment targeting a 20-25% CAGR over the next four years. The Powertrain segment is expected to achieve high single-digit growth, potentially reaching double-digits in Q4 FY26.

Capital Allocation and Debt Management

The company has guided for a consolidated capex of approximately INR 800 crores for FY26, supporting a 20-25% growth rate. Management aims to continuously improve the net debt to EBITDA ratio from the current 2.27, considering 1-1.5 as a comfortable level. The planned sale of land in Gurgaon, valued publicly at INR 350 crores (with a higher aspiration), is expected to significantly reduce debt, though the timeline is flexible to maximize value.

Outlook and Guidance Confirmation

Craftsman Automation reaffirmed its full-year FY26 guidance, targeting INR 70 billion in revenue, INR 11 billion in EBITDA, and INR 6.5-7 billion in EBIT. The company acknowledges potential headwinds in global markets and inflationary pressures but remains confident in its ability to meet targets. The storage side business, while targeted for 15% top-line growth, is expected to achieve an EBITDA margin of around 4%.

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