Craftsman Automation hosted a conference call on July 26, 2022. In the conference call the company was represented by Mr. Srinivasan Ravi – Chairman and Managing Director.

Key takeaways of the call

In Q1 FY23, PV and CV segment witnessed a growth on YoY basis.

Company expects raw material prices to steadily come down. Management is focusing on products which have high value add potential.

As demand increases, company expects its operating leverage to improve. Company's current order book remains healthy.

Company is confident of delivering CAGR growth rate of approx 20% in next few years.

Company has flexible pricing, which enables passing price increases to customers. This mechanism can help reduce the impact of raw material inflation on margins.

In Automotive powerstrain segment management expects growth in Q2 to be similar to Q1 FY23. Power train business will be driven by expected pick up in Replacement cycle for HCVs in the coming quarters.

In Q1 FY23, value addition part of automotive powerstrain segment was approx Rs 223 crore.

Despite 2W industry facing challenging times, automotive aluminium products segment performed well in the quarter as other clients like M&M supported the business.

In Q1 FY23, value addition part of Automotive aluminium products segment was approx Rs 71 crore.

In Industrial and engineering segment growth is expected be driven by rising demand for storage of e-commerce, FMCG, food & beverages.

In Q1 FY23, value addition part of Industrial & engineering segment was approx Rs 58 crore.

Capex for FY23 will be approx Rs 220- 230 crore.

Capacity utilization for Q1 FY23 was approx 70%.

Overall debt level rose by Rs 50 crore in Q1 FY23; however management expects it to come down in coming years.

Company intends to grow its presence in the warehouse space and other end-user sectors such as e-commerce, organised retailing, consumer durables, auto components and pharmaceuticals as well as cold storage space.

Storage Solution and Material Handling business is doing well. Company has grown from Rs 65 crore in Q4 FY22 to Rs 88 crore in Q1 FY23. Management believes storage business will expand and assist margins at 12% at least in the coming years.

Factors such as a thrust on the BS6 standards and change in axle load is expected to open interesting growth opportunities for the Company in automotive powerstrain segment going forward.

Company intends to capitalize on the growing opportunities and emerging trends in the industry, particularly in the Automotive – Aluminium Products segment.

In the coming years, all the three segments of the company are expected to grow as most of the user industries will be on a strong recovery path.