Craftsman Automation Limited — Q4 FY25 earnings call

Call held 8 May 2025

Management summary

Craftsman Automation reported a strong close to FY25 with consolidated EBIT of Rs.512 crores, maintaining its ambitious FY26 guidance for revenue and EBITDA. The company is actively consolidating its Sunbeam acquisition and ramping up new powertrain and storage businesses, while managing geopolitical uncertainties and tariffs. Strategic investments in capacity and modernization are underway to support future growth across segments.

Highlights

  • FY25 Consolidated EBIT reached Rs.512 crores.

  • FY26 guidance set for Rs.7,000 crores top line and Rs.1,100 crores EBITDA.

  • New powertrain business is expected to generate peak revenue of $100 million (Rs.800 crores) by 2029-2030, with first revenues in FY27.

  • Sunbeam's Q4 revenue was around Rs.300 crores with an EBITDA of Rs.23 crores (6-7% margin).

  • The two-wheeler alloy wheel segment recorded Q4 revenue of close to Rs.40 crores, being EBITDA-neutral and EBIT negative by Rs.5 crores.

  • Craftsman's organic business (excluding Sunbeam and DR Axion) is projected to grow at over 20% CAGR for FY26 and FY27.

  • Total group CAPEX for FY26 is guided at Rs.750-800 crores, with Rs.550 crores for Craftsman standalone.

  • The storage business is expected to grow at high teens, almost 20%.

Key financials

2 periods

Headline

  • Consolidated EBIT
    ₹512 Cr
  • Sunbeam Q4 Revenue
    ₹300 Cr
  • Sunbeam Q4 EBITDA
    ₹23 Cr
  • Alloy Wheel Q4 Revenue
    ₹40 Cr
  • Alloy Wheel Q4 EBIT
    ₹-5 Cr

FY25

  • Consolidated Revenue
    ₹4,000 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

  • Alloy Wheel
    ₹40 Cr Q4 RevenueEBITDA-neutral status Q4 EBITDA Status₹-5 Cr Q4 EBIT
  • Sunbeam
    ₹300 Cr Q4 Revenue₹23 Cr Q4 EBITDA6% Q4 EBITDA Margin
  • DR Axion
    ₹376 Cr Q4 Revenue
  • Powertrain
    ₹500 Cr Q4 Revenue Run Rate
  • Consolidated Aluminum
    ₹1,000 Cr Q4 Revenue

Capital allocation

high confidence
  • Capex ₹750 Cr
    • Craftsman standalone ₹550 Cr
    • Fronberg repair and maintenance ₹40 Cr
    I think Rs.550 crores for Craftsman is what we expect in the current condition. Between Sunbeam and DR Axion, we will take it as it comes. We have just budgeted now and there is some repair and maintenance for a very old equipment at Fronberg, which may be around Rs.40 crores, Rs.50 crores, may be there, we're evaluating that.
  • Debt Gross ₹1,900 Cr
    And my last question is on the loan borrowing side. Now we have around Rs.1,900 Crores kind of debt in books.
  • M&A Sunbeam Acquisition · Integrated

    Consolidation and stabilization post-insolvency

    Insolvency situation, no new orders initially, focus on stabilization and consolidation.

    Sunbeam, as I mentioned, it was in an insolvency situation, so there was no order pipeline when we took over Sunbeam totally. So, it is the question of stabilization for the next one year before we get in any new order pipeline and that will get into any sort of revenue only in FY27 and FY28 only.
  • M&A Fronberg Foundry Acquisition · Integrated

    Acquisition for global capability and capacity in large engine blocks.

    Global capability and capacity now after the acquisition of Fronberg Foundry.

    So, we have a global capability and global capacity now after the acquisition of Fronberg Foundry.
  • M&A DR Axion Acquisition · Integrated

    Part of M&A work, 24% taken over.

    Because of this lot of M&A work we have done, we have taken over 24% of DR Axion, Sunbeam takeover, there was a Fronberg takeover, there is a lot of expenses we have incurred as one-time.

    Yes, because of this lot of M&A work we have done, we have taken over 24% of DR Axion, Sunbeam takeover, there was a Fronberg takeover, there is a lot of expenses we have incurred as one-time.
  • Liquidity Liquidity disclosed Cash run rate generation expected to be high. Potential land sale of Sunbeam to add Rs.300 crores. Fronberg working capital infusion of €0.8 million, with €3-4 million remaining at holding company.
    So, if you look at it, the cash run rate generation will be quite high even in the next financial year plus aided by possibly the land sale in Q3 or Q4 of Sunbeam, that will add around Rs.300 crores plus depending on that market value at that particular point of time. Our CAPEX guidance as a whole for a group will be only around Rs.750 crores to Rs.800 crores totally in that region.

Guidance & targets

Revenue

  • Consolidated Top Line Revenue · FY26 · High confidence Rs.7,000 crores
    the guidance given during the last quarter earnings call for the first time for FY26, we have given Rs.7,000 crores top line and Rs.1,100 crores EBITDA levels

    — Srinivasan Ravi

  • New Powertrain Business First Revenue Revenue · FY27 · High confidence FY27

    Previously FY26 → FY27

    We expect the first revenues to come in, in FY27 not in '26. In '26, it will be there, the order book is filling up, but the development cycle time is around 18 to 24 months. So, we will not see any three-digit revenue, the three-digit revenue will only come in FY27 on the new powertrain business.

    — Srinivasan Ravi

  • New Powertrain Business Peak Revenue Revenue · 2029-2030 · High confidence $100 million (Rs.800 crores)
    I think it will peak in 2029, 2030 for $100 million revenue for this business. So, for that, the phase I of Kothavadi plant is ready and it has become operational in Q1.

    — Srinivasan Ravi

  • Sunbeam Revenue Revenue · FY26 · High confidence Rs.1,200 crores
    As a whole, I think yes, we are only guiding for around 1,200 crores only for the year.

    — Srinivasan Ravi

Profitability

  • Consolidated EBITDA Profitability · FY26 · High confidence Rs.1,100 crores
    the guidance given during the last quarter earnings call for the first time for FY26, we have given Rs.7,000 crores top line and Rs.1,100 crores EBITDA levels

    — Srinivasan Ravi

  • Consolidated EBIT Profitability · FY26 · High confidence Rs.650 crores to Rs.700 crores
    we are expecting in the region of Rs.650 crores to Rs.700 crores EBIT going forward in the next financial year because the depreciation will be around Rs.450 crores.

    — Srinivasan Ravi

Depreciation

  • Depreciation Expense Depreciation · FY26 · High confidence Rs.450 crores
    the depreciation will be around Rs.450 crores.

    — Srinivasan Ravi

Margin

  • Sunbeam EBITDA Margin Margin · FY26 · High confidence 8% to 10%
    So, on a blended average we can say between 8% to 10% EBITDA is what we expect for the full financial year, but Q1 will be quite muted.

    — Srinivasan Ravi

Growth

  • Craftsman Organic CAGR Growth · FY26 and FY27 · High confidence >20%
    I would say that between DR and Craftsman, Craftsman will be growing more than 20% CAGR for the next two years, that is FY26, FY27.

    — Srinivasan Ravi

  • DR Axion CAGR Growth · FY26 · High confidence 8% to 10%
    We will have a double-digit growth on DR I would say on a CAGR basis. But I think 8% to 10% is realistic for FY26 and maybe slightly higher than 10% in FY27, yes.

    — Srinivasan Ravi

  • Powertrain Business Growth Growth · Current Year (FY26) · High confidence Double-digit growth
    So, overall, I think the run rate on the powertrain will continue to grow. It will have a double-digit growth for the current year.

    — Srinivasan Ravi

  • Storage Business Growth Growth · Next Year (FY26) · High confidence High teens, almost 20%
    High teens I would say, almost 20% we can expect the growth on the storage business.

    — Srinivasan Ravi

Capex

  • Group CAPEX Capex · FY26 · High confidence Rs.750 crores to Rs.800 crores
    Our CAPEX guidance as a whole for a group will be only around Rs.750 crores to Rs.800 crores totally in that region.

    — Srinivasan Ravi

What to watch in Q1 FY26

Sunbeam Plant Shifting & Consolidation

next quarter (Q2 FY26)
Current Gurgaon plant 75% emptied, customer approval pending
Target Plant shifting completed by Q2 FY26, consolidation in Q3 FY26, operating leverage in Q4 FY26

Why it matters

Crucial for Sunbeam's operational efficiency, cost optimization, and achieving target EBITDA margins.

So, Q1 will be weak, Q2 will be strong, Q3 will be weak, Q4 will be the most strong on both on the revenue and EBITDA numbers. So, there are three, four factors. The plant shifting from Gurgaon to Bhiwadi will be completed by Q2 latest I would say. So, there will be consolidation happening in Q3. So, in Q4, the operating leverage at Bhiwadi will set in and the cost optimization also will set in and also manpower rationalization will be completed in Q4, also peak revenue will be generated in Q4.

Risks & concerns

  • Sunbeam customer approval for new plant

    medium

    Customer approval for the new Sunbeam plant is taking a few more months, delaying full operationalization and consolidation.

    But there is a customer approval required for the new plant, that is taking some more time, maybe a few months more, but we are on track.

    Management acknowledged

  • Geopolitical situation and tariffs

    low

    Company is quite insulated from geopolitical situation and tariffs; products are high value-add and competitive, with no requests for price reduction due to tariffs.

    So, the guidance remains intact in spite of whatever is happening in the geopolitical situation and the tariffs. So, we are quite insulated, and we are ramping up quite well to sustain whatever the numbers we have given.

    Management downplayed

  • Quarterly seasonality in Powertrain business

    low

    Q1 and Q3 are typically challenging for the powertrain business, but overall run rate is expected to grow double-digit for the current year.

    Yes. I think the worst is over for the powertrain. Our margins also will start creeping up with better operating leverage but depends on one quarter to another quarter there may be some changes, always Q1 will have some challenges, but we don't see much challenge this year, Q3 will be always a challenge.

    Management acknowledged

Q&A highlights

7 direct
Two-wheeler alloy wheel and Sunbeam Q4 financials Direct
See, the alloy wheel is in the region of close to Rs.40 crores for Q4 and we were EBITDA-neutral and EBIT negative of around Rs.5 crores for alloy wheel. And Sunbeam revenue for Q4, around Rs.300 crores is the revenue. ... No, that is the one-time some subjects are there, which is leading to Rs.23 crores EBITDA.

Provides specific Q4 performance metrics for key segments, including profitability for the newly acquired Sunbeam and the struggling alloy wheel business.

Asked by Mukesh from Anand Rathi Institutional Equities

Powertrain segment margin improvement and Kothavadi plant outlook Direct
Now overall slight improvement in the operating leverage has happened. That is helping us totally. ... So, the new business now, our motive or whatever is the strategy behind the powertrain business was, we were so heavily dependent on commercial vehicle earlier... now our growth is going to come from not only the revival of these segments, but also from the stationary engine side. We expect the first revenues to come in, in FY27 not in '26.

Explains the drivers behind powertrain margin recovery and clarifies the timeline for revenue generation from the new Kothavadi plant for stationary engines, pushing initial revenue expectations to FY27.

Asked by Mukesh from Anand Rathi Institutional Equities

Sunbeam FY26 revenue and EBITDA margin outlook Direct
So, Q1 will be weak, Q2 will be strong, Q3 will be weak, Q4 will be the most strong on both on the revenue and EBITDA numbers. ... So, on a blended average we can say between 8% to 10% EBITDA is what we expect for the full financial year, but Q1 will be quite muted. ... As a whole, I think yes, we are only guiding for around 1,200 crores only for the year.

Provides detailed quarterly seasonality and full-year guidance for Sunbeam's revenue and EBITDA margin, indicating a consolidation phase with no immediate revenue increase.

Asked by Abhishek K Jain from AlfAccurate

Consolidated employee cost jump in Q4 FY25 Direct
Yes, that is a one-off in Germany, yes, correct. ... That is Rs.4.5 crores that is there, yes. Because there is holiday, accounting, like Christmas holidays, bonuses, all those things because we formed a new company and taken over and we just bought the assets, so everything is in place now.

Clarifies that a Rs.4.5 crore jump in employee costs was a one-off related to German operations and not a recurring expense, providing clarity on margin impact.

Asked by Abhishek K Jain from AlfAccurate

VRS expenses for Sunbeam Direct
No VRS expenses will hit the P&L in Sunbeam, everything was provisioned in the beginning itself.

Assures that no further VRS-related expenses for Sunbeam will impact the P&L, as all provisions were made at the time of takeover, removing a potential future cost concern.

Asked by Abhishek K Jain from AlfAccurate

Other expenses reduction in Q4 FY25 Direct
Yes, because of this lot of M&A work we have done, we have taken over 24% of DR Axion, Sunbeam takeover, there was a Fronberg takeover, there is a lot of expenses we have incurred as one-time. ... Yes, I think the absolute number will increase, as a percentage it will come down, yes, correct.

Explains that the reduction in 'other expenses' was due to the winding down of one-time M&A related costs, and while absolute numbers might increase, as a percentage of revenue, they will decrease.

Asked by Abhishek K Jain from AlfAccurate

Standalone 'others' segment in Q4 Direct
So, this is the one-time subject which has come on to two fronts. One is regarding some CAPEX which has incurred by Sunbeam, we had to buy the equipment, keep everything ready because Sunbeam was not ready at that level financially and we transferred the brand-new machines to them totally. ... Second thing was, we rationalized the aluminum alloy inventory, which was high in Craftsman by transferring at cost to DR Axion.

Clarifies the nature of the Rs.148 crores in the standalone 'others' segment, attributing it to one-time Sunbeam-related CAPEX and aluminum alloy inventory rationalization, not ongoing operational activity.

Asked by Mumuksh Mandlesha from Anand Rathi Institutional Equities

Operating cash flow compression and working capital stretch Partial
Because it's a consolidated basis it's Sunbeam, right. It's not an apple-to-apple comparison because Sunbeam we had it only for six months, that may be the reason maybe not being able to compare.

Management attributes the operating cash flow compression to the non-comparable nature of Sunbeam's six-month consolidation, suggesting it's not a core business issue but an accounting effect.

Asked by Ajox Frederick from Sundaram Mutual Fund

2 min read 6 chapters

Detailed narrative

Overall Performance and FY26 Guidance

Craftsman Automation concluded FY25 with a consolidated EBIT of Rs.512 crores. The company has reiterated its ambitious FY26 guidance, targeting a top line of Rs.7,000 crores and an EBITDA of Rs.1,100 crores. EBIT for FY26 is projected to be in the range of Rs.650-700 crores, factoring in an estimated depreciation of Rs.450 crores. Management expressed confidence in sustaining these targets despite geopolitical situations, citing the company's insulated position and competitive offerings.

Powertrain Segment Outlook and New Business Development

The powertrain segment showed slight improvement in Q4 FY25 due to operating leverage and stabilization of market conditions. The existing powertrain business is expected to achieve double-digit growth in FY26, with quarterly revenue run rates exceeding Rs.500 crores. The new powertrain business, focusing on stationary engines, is a long-term growth driver. While initial revenues are now expected in FY27 (pushed from FY26), the segment is projected to reach a peak revenue of $100 million (approximately Rs.800 crores) by 2029-2030, with the Kothavadi plant already operational.

Aluminum Business: Sunbeam and DR Axion

The aluminum business, including Sunbeam and DR Axion, is undergoing significant changes. Sunbeam reported Q4 revenue of Rs.300 crores with an EBITDA of Rs.23 crores (6-7% margin). For FY26, Sunbeam's revenue is guided at Rs.1,200 crores with a blended EBITDA margin of 8-10%, though Q1 is expected to be muted due to plant consolidation. DR Axion is projected to grow at an 8-10% CAGR in FY26. The two-wheeler alloy wheel segment, a part of the aluminum business, recorded Rs.40 crores in Q4 revenue, being EBITDA-neutral and EBIT negative by Rs.5 crores.

Storage Solutions Business Growth

The automated storage division demonstrated strong improvement in Q4 FY25 margins, driven by new orders, market penetration, and optimized product costing. Management expects this segment to continue its robust performance, projecting a growth rate in the high teens, almost 20%, for FY26. This business is maturing and is seen as a standalone viable solution offering.

Capital Allocation and Debt Management

The company's gross debt stands at approximately Rs.1,900 crores. For FY26, the total group CAPEX is guided at Rs.750-800 crores, with Rs.550 crores allocated to Craftsman standalone and Rs.40-50 crores for Fronberg's repair and maintenance. A key deleveraging strategy involves the potential sale of Sunbeam's land in Q3 or Q4 FY26, which is expected to generate around Rs.300 crores. The company also noted a one-time employee cost of Rs.4.5 crores in Q4 FY25 related to German operations.

Export Strategy and Market Diversification

Craftsman Automation emphasizes its diversified customer portfolio, with the top 60% of revenue now coming from 12 customers. The company's product mix shows commercial vehicles at 17%, two-wheelers at 18%, passenger vehicles at 32%, storage at 10%, off-highways at 5%, and tractors at 4%. The company is leveraging India's position as an export hub for automotive components, particularly to developing markets in Africa and South America, and has not experienced any adverse impact from tariffs on its high value-added products.

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