Craftsman Automation IPO subscription: Public issue subscribed 2.11 times in Retail category
Craftsman Automation IPO subscribed 1.26 times. The public issue subscribed 2.11 times in the retail category, 0.56 times in QIB, and 0.19 times in the NII category by Mar 16, 2021 5 pm. One of the leading engineering organizations in the manufacturing precision components,
Craftsman Automation IPO subscribed 1.26 times. The public issue subscribed 2.11 times in the retail category, 0.56 times in QIB, and 0.19 times in the NII category by Mar 16, 2021 5 pm. One of the leading engineering organizations in the manufacturing precision components. The offer will close today for Subscription and the company has fixed the price band at Rs 1488-1490 per equity share.
Avinash Gorakshakar, 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.
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Power Train & Industrial segment contributes over 80% of Revenue and EBITDA margins are over 20% in these segments while Aluminium product segment contributes 20% and it is 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. Given the fact that, company delivered Muted Performance, low solvency and expensive valuation, Avainash says Avoid subscribing to this issue.
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. Marwadi Financial Services recommend to “Subscribe” this IPO based on favorable valuation and also the industry has good future prospects due to the transformation from BS-IV to BS-VI, scrappage policy and electric vehicles introduction.
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