Craftsman Automation Limited — Q2 FY26 earnings call

Call held 10 Nov 2025

Management summary

Craftsman Automation delivered strong H1 FY26 results, driven by robust growth in Aluminum Products and Powertrain segments. The company is actively investing in capacity expansion, with a significant CAPEX plan for the next two years, and is focused on improving profitability in its Sunbeam business. Management highlighted India's emerging role as a global manufacturing hub, attracting multinational investments and creating substantial growth opportunities.

Highlights

  • H1 FY26 Sales reached INR 3,786 crores, marking a 59.9% YoY growth.

  • H1 FY26 EBITDA stood at INR 582 crores, with margins around 15%.

  • Consolidated Net Debt to EBITDA was 0.94 for H1 FY26, with an annualized figure of 2.46.

  • The Kothavadi plant has an order book of $100 million, with $50 million already on paper.

  • Sunbeam business reported an EBITDA margin of ~6% in Q2 FY26, targeting double-digit by FY27.

  • New CAPEX projects are targeted to achieve a minimum pre-tax ROCE of 20%.

  • The company plans to sell Gurgaon land (approx. INR 350 crores) to reduce debt.

Concerns

  • Quality Sensitivity for Data Center Products

Key financials

  1. Sales ₹3,786 Cr +59.9%YoY
  2. EBITDA ₹582 Cr
  3. EBITDA Margin 15%
  4. EBIT Margin 10%
  5. ROC Annualized 15%
  6. Net Debt to EBITDA (Consolidated) 0.94
  7. Net Debt to EBITDA (Annualized) 2.46
  8. Sunbeam EBITDA Margin 6%
  9. German Subsidiary H1 Revenue ₹158 Cr
  10. German Subsidiary H1 EBITDA ₹14.87 Cr
  11. German Subsidiary H1 EBIT ₹11.4 Cr
  12. German Subsidiary H1 PAT ₹8 Cr

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

Share of Revenue
₹4,785 Cr Total
  • Aluminum Products ₹2,275 Cr 47.5%
  • Powertrain ₹2,034 Cr 42.5%
  • Industrial Engineering ₹476 Cr 9.9%

Order book

high confidence

Total value

$50 Mn

as of 2025-09-30 quantified

Execution

Development and validation takes three to four years, revenue stream starts in 2029.

The Kothavadi plant's order book for stationary engines is $100 million, with $50 million already secured, and the company sees strong traction due to limited new global capacities.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹1,000 Cr
    • DR Axion expansion for existing customers and new requirements ₹280 Cr
    • Overall capacity expansion for global demands and domestic growth
    The second question was on the CAPEX. Can you give an update on the INR 280 crores CAPEX announced by DR Axion and when will it come on stream? This is for existing customers and any guidance of total CAPEX itself for the next two years? ... It will be around closer to INR 1,000 crores for Craftsman and DR depends on how much land we buy.
  • Debt Net ₹2,800 Cr · 0.9× EBITDA
    • Repayment Plan to sell Gurgaon land to reduce debt ₹350 Cr
    The net debt to EBITDA on the consolidated basis is 0.94.

Guidance & targets

Revenue

  • Kothavadi Plant Revenue Revenue · next four to five years (by 2029/2030) · High confidence $100 million
    And further to that, any update on the revenue target of $100 million in the next four to five years, anything you want to add on that? ... But the order book is of the $100 million, I think $50 million of the order book is on paper received with us and products are under development, rest of it is in final stage of discussions. As you know, the lead time for development of these products and validation of the products is three to four years' time, we are on track for the 2029 numbers.

    — Srinivasan Ravi

  • Revenue from INR 1,200 crores CAPEX Revenue · FY28 · High confidence starts
    And as you are mentioning that around INR 1,000 crores kind of the CAPEX in the standalone business and INR 280 crores in the DR Axion, so when are all these numbers will start to yield the results, I mean to say that this INR 1,200 crores CAPEX will be in FY27 and revenue will start from FY28?

    — Srinivasan Ravi

Margin

  • Sunbeam EBITDA Margin Margin · FY27 · High confidence double-digit (10% +)
    I think we are looking at double-digit EBITDA margin for the financial year '27.

    — Srinivasan Ravi

Debt

  • Net Debt to EBITDA (Consolidated) Debt · FY27 · Medium confidence closer to two
    I think we will be closer to the number of two net debt-to-EBITDA for the consolidation for FY27.

    — Srinivasan Ravi

ROCE

  • Minimum ROCE for New CAPEX ROCE · long-term (after 3-4 years of investment) · High confidence 20%
    The new CAPEX, the minimum threshold level will be a pre-tax ROC of 20%.

    — Srinivasan Ravi

Capex

  • Total CAPEX (Craftsman + DR Axion) Capex · next two years · Medium confidence INR 1,000 crores
    It will be around closer to INR 1,000 crores for Craftsman and DR depends on how much land we buy.

    — Srinivasan Ravi

Sales

  • Total Sales Sales · FY26 · Medium confidence INR 7,700 crores
    And my last question on that, your total sales should be around INR 7,700 crores in FY26, and in FY27, it is expected to cross INR 9,000 crores as you are mentioning.

    — Abhishek Kumar Jain

  • Total Sales Sales · FY27 · Medium confidence INR 9,000 crores

    — Abhishek Kumar Jain

Capacity

  • Alloy Wheel Plant Capacity (Bhiwadi & Hosur) Capacity · Q2 FY27 · High confidence 7 million
    I think we are not breaking the revenue on the alloy wheel, but the plant capacity the installed in total will be 5.8 million between Bhiwadi and Hosur as of now, another 2 million will go to phase-II which is to be installed in the coming couple of quarters at the Hosur plant. With that we are having order of the customers above 6 million and we are putting capacity of 7 million because of the seasonality of the business. So, that will be in full operation by Q2 of next year.

    — Srinivasan Ravi

What to watch in Q3 FY26

Sunbeam EBITDA Margin Improvement

next quarter / FY27
Current ~6% (Q2 FY26)
Target Progress towards double-digit

Why it matters

Key indicator of successful integration and operational efficiency improvements in the acquired business.

I think we are looking at double-digit EBITDA margin for the financial year '27.

Risks & concerns

  • Quality Sensitivity for Data Center Products

    high

    Products for data centers are highly sensitive to quality; even small fluctuations in generators can cause system failures.

    Management acknowledged

  • Lag in Revenue Generation from New CAPEX

    medium

    New CAPEX investments have a lag of around three to four years from investment to peak revenue generation, impacting immediate returns.

    Management acknowledged

  • Skilled Manpower Shortage in Europe

    medium

    Europe faces a shortage of skilled manpower, which could hinder the execution of large projects.

    Management acknowledged

  • Uncertainty in EV Projects

    medium

    The company has largely avoided EV projects due to uncertainty in the market and technology.

    Management acknowledged

Q&A highlights

8 direct
Kothavadi Plant Update & Order Book Direct
For the Powertrain portion of it which is the stationary engines, as I mentioned, the revenue stream will start in 2029. But the order book is of the $100 million, I think $50 million of the order book is on paper received with us and products are under development, rest of it is in final stage of discussions.

Provides specific details on the Kothavadi plant's progress, order book, and timeline for revenue generation, indicating long-term visibility.

Asked by Krupashankar NJ from Avendus Spark

CAPEX Guidance for Next Two Years & ROCE Target Direct
It will be around closer to INR 1,000 crores for Craftsman and DR depends on how much land we buy. ... The new CAPEX, the minimum threshold level will be a pre-tax ROC of 20%.

Clarifies the company's CAPEX plans for the near future and sets a clear profitability hurdle for new investments, indicating disciplined capital allocation.

Asked by Joseph George from IIFL Capital

Sustainability of Aluminum Products Margins Direct
These are sustainable margins, earlier the base was small when we tried to do the new Bhiwadi plant and that start-up operations cost actually really affected the equation of profitability for say a couple of quarters that is behind us now and now as soon as we start the new project in Hosur, we are more prepared and the base is bigger, so the whatever expenses or the start-up cost which we are incurring more or less it is becoming smaller in the context of the entire aluminum products business.

Explains the drivers behind improved margins in a key segment and assures investors of their sustainability, linked to operational maturity and scale.

Asked by Mithul Shah from DAM Capital Advisors

Sunbeam Business EBITDA Margin Target and Debt Reduction Direct
I think we are looking at double-digit EBITDA margin for the financial year '27. ... So, from January onwards, the land can be put up for sale. So, we are in contact with the key people and large organizations to look at the land sale. This will be a process which will go more through the middle of the next financial year and that will reduce the debt of Sunbeam and Craftsman Group as a whole.

Outlines specific financial targets for the Sunbeam acquisition and a clear plan for debt reduction, addressing key investor concerns.

Asked by Abhishek Kumar Jain from AlfAccurate

Data Center Opportunity and Revenue Targets Direct
I stick to the same number from India, $100 million, going into 2029 or 2030, as the case may be. It depends on product approval cycles. So, this is the first stage of revenue. After that, for this, more than 50% is orders on hand, and the balance 50% is already in advanced state of negotiation with the customer.

Reiterates the significant potential in the data center segment and provides an update on the order pipeline and revenue timeline.

Asked by Abhishek Kumar Jain from AlfAccurate

M&A Strategy and Organic Growth Focus Direct
Currently, in the next 18 months, we are not looking at any large inorganic subjects. It may be a few crores here and there for some slump sale for taking over some technological area somewhere, it can be possible, but I would rule out any M&A in a big way in the next 18 months. And I do not see any merit going forward because our traction as a standalone as well as on a consolidated basis we are seeing close to 20% even more maybe I would say that the order book is showing CAGR growth of around 20% in the coming years.

Clarifies the company's capital allocation strategy, emphasizing organic growth and ruling out major M&A in the near term, while keeping options open for the longer term.

Asked by Chirag Jain from Emkay Global Financial Service

India as a Global Manufacturing Hub Direct
So, India is the best place outside our large Asian neighbor to really grow the business. So, outside China, I think India is very surely becoming the largest manufacturing hub with eye for the Indian market growth as well as the Middle East, Asia Pacific, the African markets and South Asian markets which are more or less similar to the Indian markets.

Highlights a significant macro trend benefiting the company, positioning India as a key manufacturing base for global OEMs and export markets.

Asked by Chirag Jain from Emkay Global Financial Service

Alloy Wheel Plant Ramp-up and Capacity Direct
I think we are not breaking the revenue on the alloy wheel, but the plant capacity the installed in total will be 5.8 million between Bhiwadi and Hosur as of now, another 2 million will go to phase-II which is to be installed in the coming couple of quarters at the Hosur plant. With that we are having order of the customers above 6 million and we are putting capacity of 7 million because of the seasonality of the business. So, that will be in full operation by Q2 of next year.

Provides specific details on the ramp-up and total capacity of the alloy wheel plants, indicating future revenue potential and operational readiness.

Asked by Shubham Bhatra from Ambit Asset Management

2 min read 6 chapters

Detailed narrative

Robust H1 FY26 Financial Performance

Craftsman Automation reported strong financial results for the first half of FY26, with sales reaching INR 3,786 crores, a substantial increase from INR 2,365 crores in the previous year. The company achieved an EBITDA of INR 582 crores, translating to an EBITDA margin of approximately 15%. The annualized Return on Capital (ROC) stood at 15%, reflecting efficient capital deployment.

Segmental Contributions and Margin Sustainability

The Aluminum Products segment was a key growth driver, contributing INR 2,275 crores in revenue and INR 351 crores in EBITDA. Management confirmed that the improved margins in this segment are sustainable, attributed to better preparedness for new projects like Hosur and increased operational scale. The Powertrain segment generated INR 2,034 crores in revenue and INR 236 crores in EBITDA, while Industrial Engineering added INR 476 crores in revenue and INR 32 crores in EBITDA.

Strategic CAPEX and Long-Term Growth Initiatives

The company plans a CAPEX of approximately INR 1,000 crores over the next two years for Craftsman and DR Axion, with INR 280 crores specifically for DR Axion. New CAPEX projects are evaluated against a minimum pre-tax ROCE target of 20%, though revenue generation from these investments typically has a 3-4 year lag. The Kothavadi plant, focused on stationary engines, has an order book of $100 million, with $50 million already secured, and is expected to contribute to revenue by 2029.

Sunbeam Turnaround and Debt Reduction Strategy

The Sunbeam business, which recorded an EBITDA margin of around 6% in Q2 FY26, is targeted to achieve double-digit EBITDA margins by FY27 following ongoing restructuring and operational shifts. To manage debt, the company plans to sell its Gurgaon plant land, expected to generate around INR 350 crores, starting from January. This initiative aims to reduce the current net debt of INR 2,800 crores and bring the consolidated net debt-to-EBITDA ratio closer to two by FY27.

India's Growing Role as a Global Manufacturing Hub

Management emphasized India's increasing significance as a global manufacturing hub, driven by factors such as 'China Plus One' strategies and skilled labor shortages in other developed economies. This trend is attracting multinational OEMs to establish or expand their manufacturing bases in India, creating substantial opportunities for component suppliers like Craftsman Automation across various vehicle segments and for export markets in the Middle East, Africa, and South America.

Alloy Wheel Capacity Expansion and Operational Readiness

The company's alloy wheel plants in Bhiwadi and Hosur currently have an installed capacity of 5.8 million units, with an additional 2 million units planned for Phase-II. The total capacity of 7 million units is expected to be fully operational by Q2 FY27. This expansion is crucial for meeting customer demand and capitalizing on the growing market for alloy wheels.

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