There are some interesting IPOs scheduled to be launched in 2021. One such IPO is the Craftsman Automation Limited IPO that is being launched on March 15, 2021. Here is all you need to know about the issue.
|IPO Date||March 15, 2021 to March 17, 2021|
|Issue Type||Book Built Issue IPO|
|Issue Size||Equity Shares of Rs.5 totaling up to Rs.823.70 Crore|
|Fresh Issue||1,006,711 Equity Shares of Rs.5 totaling up to Rs.150 Crore|
|Offer for Sale||4,521,450 Equity Shares of Rs.5 totaling up to Rs.673.70 Crore|
|Face Value||Rs.5 per equity share|
|IPO Price||Rs.1488 to Rs.1490 per equity share|
|Market Lot||10 shares|
|Min Order Quantity||10 shares|
|Listing At||BSE, NSE|
|Bid/Offer Launch date||March 15, 2021|
|Bid/Offer Last date||March 17, 2021|
|Basis of Allotment finalization date||March 22, 2021|
|Initiation of Refunds||March 23, 2021|
|Credit of Shares to Demat Acct||March 24, 2021|
|IPO Shares Listing Date||March 25, 2021|
Craftsman Automation Limited is an engineering company having vertically-integrated manufacturing capabilities in three broad segments:
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. Further, it is among the top three-four component players with respect to the machining of cylinder blocks for the tractor segment in India. Craftsman Automation is present across the entire value-chain in the Automotive-Aluminum Products segment, providing diverse products and solutions.
Craftsman Automation’s comprehensive solutions include design, process engineering, and manufacturing including foundry, heat treatment, fabrication, machining, and assembly facilities. Its core competence in machining and assembly of industrial and engineering products has helped it to establish itself as a significant player in the Automotive – Powertrain and Others segment. The key products in this segment offered by Craftsman are highly engineered and include engine parts such as cylinder blocks and cylinder heads, camshafts, transmission parts, gearbox housings, turbochargers, and bearing caps. The end-users for its products include OEMs producing commercial vehicles, special-utility vehicles, tractors, and off-highway vehicles.
The company has several long-term relationships with multiple marquee domestic and global Original Equipment Manufacturers (OEMs), and component manufacturers across all business segments. In the Powertrain segment, the key customers include Daimler India, Tata Motors, Tata Cummins, Mahindra & Mahindra, Simpson & Co. Limited, TAFE Motors and Tractors, Escorts, Ashok Leyland, Perkins, Mitsubishi Heavy Industries, John Deere, and JCB India. In the Aluminum Products segment, the key customers include e Daimler India, TVS Motors, Royal Enfield, Perkins, and Mahindra & Mahindra.
Craftsman Automation Limited was incorporated in 1986 in Coimbatore, Tamil Nadu. In 2001, the company started an aluminum foundry unit at Kurichi in Coimbatore. Four years later, in 2005, it also started a satellite unit in Pithampur and obtained ISO 9001: 2000 and ISO/TS 16949:2002 registration certification. It also received the “Star Performer Award” in bearings, gears, gearing, and driving elements & parts (medium enterprise) from EEPC India. By 2007, it had commissioned a satellite unit in Chennai and Jamshedpur and entered into joint ventures with Carl Stahl and Mitsubishi. Further, it obtained a “Star Export House” registration certificate. Within a year, it incorporated its subsidiaries i.e. Craftsman Europe B.V. (formerly known as Craftsman Marine B.V.), and Craftsman Automation Singapore PTE Ltd. By 2014, it had set up satellite units in Pune (2 units), Faridabad, Sriperumpudur near Chennai, and storage solutions in Arasur, Coimbatore. In 2015, it set up a technology division in Bengaluru and an aluminum sand foundry, HPDC, and LPDC in Arasur, Coimbatore. Over the next five years, the company started a railway and camshaft business in Coimbatore, machining services and an HPDC facility at Bengaluru. It also set up the third satellite unit at Pune, the second satellite unit at Bengaluru, and started the process of winding up its subsidiary, Craftsman Automation Singapore PTE Ltd.
Here is a quick look at the financial performance of Craftsman Automation Limited over the last four years:
|Mar 2020||Mar 2019||Mar 2018||Mar 2017|
|Profit After Tax||40.01||99.52||33.15||79.74|
All amounts in INR Crore
A quick glance at the financial performance of Craftsman Automation over the last four years offers the following insights:
Overall, the performance of Craftsman Automation Limited has been inconsistent over the last four years. The total income grew at a CAGR of 22.48% between 2017 and 2019. However, it decreased by around 18.04% between 2019 and 2020. This inconsistency was primarily due to considerable capital expenditure for setting up production units. The long-term debt of the company is also a cause for concern.
The Automobile sector in India is expected to grow at a CAGR of 2.67% between 2020 and 2024. The primary growth is expected in the two-wheeler segment. The low rate of growth is due to the introduction of electric vehicles, increasing concerns about pollution, and rising fuel prices. While the automobile components sector grew at a CAGR of 6% between 2015 and 2020, the domestic demand is expected to grow at a CAGR of 7% and exports at a CAGR of 4% in the near future. The Indian Aluminum casting segment has a 78% demand from OEMs (Original Equipment Manufacturers) and is expected to grow at a CAGR of 8% by 2025. The Indian Powertrain segment is also expected to grow at a CAGR of 14% between 2020 and 2024.
Craftsman Automation is primarily into the manufacture of Powertrains and aluminum products for the automobile industry. This industry is driven by a few major players like Mahindra and Mahindra, Ashok Leylands, Tata, etc., and Craftsman Automation has a tie-up with these companies.
Here is a quick look at the performance of Craftsman Automation in comparison to its peers on some key aspects for FY 2020:
|Profit After Tax||Debt to Equity Ratio||Return on Net Worth (RoNW)|
|Craftsman Automation Limited||40.01||1.45%||6.19%|
|Bharat Forge Limited||473.52||0.25%||8.8%|
|Endurance Technologies Limited||427.7||–||19.5%|
|Jamna Auto Industries Limited||47.88||0.2%||9.27%|
|Mahindra CIE Automotive Limited*||172.3||0.3%||7.64%|
|Minda Industries Limited||107.05||0.4%||8.94%|
|Sundram Fasteners Limited||326.53||42.31%||15.6%|
|Ramkrishna Forgings Limited||9.70||1.09%||1.10%|
All amounts in INR Crore
* The reports are for the period Jan-Dec 2019
As you can see, compared to its listed peers, Craftsman Automation is smaller in size. While it boasts of having the highest profit margins compared to its peers, if it can keep you with its growth plans, it can emerge as a leading name in its segment.
Let’s look at the valuation factors of Craftsman Automation in comparison with its peers:
|Earnings Per Share||P/E Ratio|
|Craftsman Automation Limited||20.08||–|
|Bharat Forge Limited||10.17||60.76|
|Endurance Technologies Limited||40.2||36.54|
|Jamna Auto Industries Limited||1.20||58.75|
|Mahindra CIE Automotive Limited*||9.33||17.40|
|Minda Industries Limited||5.91||93.38|
|Sundram Fasteners Limited||15.46||39.10|
|Ramkrishna Forgings Limited||2.94||181.89|
As per the peer group selected by Craftsman Automation in the RHP, the average PE Ratio is 72.76. If we look at the price band of Craftsman Automation IPO and calculate the P/E Ratio at the higher price of Rs.1490, then we get a value of P/E Ratio of 74.20. This is close to the industry average. Therefore, the IPO is valued correctly.
Craftsman Automation Limited proposes to utilize the net proceeds from the fresh issue for:
You can apply for the Craftsman Automation Limited IPO by using one of these two methods of payment:
Here are some things that you need to keep in mind before investing in the Craftsman Automation IPO:
The Craftsman Automation Limited IPO is a Main Board IPO for the issue of equity shares having the face value of Rs.5 totaling up to Rs.823.70 crores. The registrar for the IPO is Link Intime India Private Limited and the shares are proposed to be listed on the BSE and NSE.
The Craftsman Automation Limited IPO opens on March 15, 2021, and closes on March 17, 2021.
The lot size of the Craftsman Automation IPO is 10 shares. Also, the minimum order quantity is 10 shares.
According to the RHP, the basis of allotment will be finalized by March 22, 2021. Further, investors can expect to receive the credits in their demat accounts by March 24, 2021 and may get listed on March 25.