Craftsman Automation IPO listing date: No gain, share price debuts 9% below issue price of Rs 1490 -

Craftsman Automation IPO listing date: No gain, share price debuts 9% below issue price of Rs 1490


Craftsman Automation IPO listing date: Craftsman Automation IPO got listed today on the exchanges without any listing gains. The stock opened weak on the exchanges today at Rs 1359, 9% below the issue price of Rs 1490. Since the company is sound fundamentally the share price saw an upward move after a weak opening. There is some buying in the counter after getting listed at a discount and the stock has recovered Rs 100 from the lows.

Craftsman Automation share price is Rs 1450, down Rs 40 or 2.7%. The market cap of the company is Rs 3060 cr. Craftsman Automation IPO was subscribed 3.82 times. The public issue subscribed 3.44 times in the retail category. Analysts believe that the valuations of the company were placed on a higher side, leaving nothing much on the table for Investors.
 

See Zee Business Live TV Streaming Below:

Zee Business Managing Director Anil Singhvi said that the fundamentals of Craftsman Automation are extremely strong. The stock saw weak opening because the valuations were on the higher side. However, the stock witnessed sharp buying after it got listed at a discount. Singhvi said that at discounted price, investors saw good value in the counter and hence the buying emerged in the counter.
 
Craftsman Automation Overview:

 

Craftsman Automation is the largest player involved in the machining of cylinder blocks and cylinder heads in the intermediate, medium and heavy commercial vehicles segment as well as in the construction equipment industry in India. They are among the top three-four component players with respect to machining of cylinder block for the tractor segment in India.

Craftsman Automation operates in three business segments, namely Automotive – Powertrain & Others, Automotive–Aluminium Products, and Industrial & Engineering division. It owns and operates 12 strategically located manufacturing facilities across seven cities in India, with a total built up area of over 1.5 million sq. ft., close to some of key customers to enable meeting the customer’s just-in-time delivery schedules, allow economies of scale and logistical advantages. Craftsman Automation customer base includes Tata Motors, Daimler India, Tata Cummins, Mahindra & Mahindra, Royal Enfield, Siemens, Escorts, Ashok Leyland, etc.

Valuation of Craftsman Automation:

Considering FY20 adjusted EPS of Rs19.44 on a post issue basis, the company is going to list at a P/E of 76.65X while its peers such as Bharat Forge Ltd is trading at a P/E of 82.28X and Minda Industries at 93.38X. 

Avinash Gorakshkar, Director Research at ProfitMart Securities says that Craftsman Automation business can be categorized in three segments:

1) Powertrain and other products for the automotive segment
2) Aluminum products for the automotive segment
3) Industrial and engineering products segment.

The Power Train & Industrial segment contributes over 80% of Revenue and EBITDA margins are over 20% in these segments while the Aluminium product segment contributes 20% and it is a loss making venture. He believes that the fundamentals of Craftsman Automation are weak. Over last 3 years company financial performance was not impressive, 20% degrowth in FY20 over FY19, Total Debt to EBITDA stands at 3x, average cost of debt 14% which is very high, ROE 6.5%, Credit rating BBB+ (CRISIL)

The Valuations of Craftsman Automation are expensive. The Issue is coming at PE of 68x and EV/EBITDA of 11x which is expensive compared to most of its peers. 
 

 





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