Craftsman Automation: Poised for a Strong Rebound?

Craftsman Automation Ltd. is a leading engineering company with vertically integrated manufacturing capabilities. It operates in three key segments:

Automotive – Powertrain and Others (51% revenue share): Manufactures engine crankcases, cylinder heads, camshafts, transmission housings, and axle components for major OEMs.

Automotive – Aluminium Products (25% revenue share): Supplies aluminum die-casting products to two-wheelers and medium & heavy commercial vehicle manufacturers.

Industrial & Engineering (24% revenue share): Produces warehouse storage solutions, automated racking systems, and precision engineering products.

Fundamental Analysis
Financial Performance

• Revenue: ₹5,046.57 crore (YoY growth: 39.88%)
  
• Net Profit: ₹190.14 crore (+22.58% YoY)
  
• Earnings Per Share (EPS): ₹84.55 (+22.39% YoY)
  
• Profitability Ratios
  
• ROCE: 10.50%
  
• ROE: 9.14%
  

Valuation Metrics

• P/E Ratio: 50.9 (Higher than industry avg. of 39.5)
  
• P/B Ratio: 4.30
  

Dividend Yield

• 0.28% (Low yield, growth-oriented stock)
  

Growth Outlook

• Earnings Growth Forecast: 41.67% per year
  

Risk Factors

• Interest Coverage: Low, earnings do not sufficiently cover interest payments.
  
• Profit Margins: Declined from 7.4% to 3.8% in the past year.
  

Technical Analysis
Price Movement & Chart Pattern

• 52-Week High: ₹7,121.25 (Sep 25, 2024)
  
• Correction: -45.74%
  
• Recent Low: ₹3,864 (Feb 14, 2025)
  
• Pattern Formation: Falling Wedge
  
• Breakout Date: March 5, 2025
  
• Volume Surge on Breakout: 277.93K (vs 30-day avg. 90.32K)
  

Reversal Zone

• Key Buy Zone: ₹4,165 - ₹4,380
  
• Bullish Momentum Expected if price stabilizes within this support range.
  

Resistance Levels

R1: ₹5,900
R2: ₹6,370
R3: ₹7,670
R4: ₹8,800

Conclusion
Craftsman Automation is fundamentally strong with robust revenue growth and promising future earnings potential. However, valuation remains high. Technically, the breakout from the falling wedge with significant volume indicates a potential bullish reversal. If the stock retraces to the ₹4,165 - ₹4,380 support zone, it may provide a good buying opportunity. Watch for resistance at ₹5,900, ₹6,370, ₹7,670, and ₹8,800 for profit booking levels.