CRAFTSMAN - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 3.5

📊 Core Financials

Earnings Growth: PAT rose from ₹27.5 Cr to ₹39.7 Cr, a 23% QoQ increase—positive momentum, but still modest in scale.

EPS: ₹42.4 is decent, but not enough to justify the current price given the high P/E.

Return Metrics: ROCE at 8.11% and ROE at 4.31% are weak, indicating underutilization of capital and low shareholder returns.

Debt Profile: Debt-to-equity of 0.70 is moderate, but leverage is high relative to its ROE.

Cash Flow: Not explicitly stated, but low ROE and high debt suggest cash flow efficiency may be under pressure.

💰 Valuation Indicators

Metric Value Insight

P/E Ratio 160 Extremely overvalued vs. industry PE (29.1)

P/B Ratio ~5.78 Premium over book value, but not excessive

PEG Ratio -9.83 Negative PEG suggests valuation disconnect

Dividend Yield 0.07% Minimal income play

Valuation is highly stretched, and the negative PEG ratio flags caution despite recent earnings growth.

🏭 Business Model & Competitive Advantage

Craftsman Automation Ltd. is a precision engineering and manufacturing company serving automotive, industrial, and storage segments. Key strengths include

Strong presence in engine components and aluminum castings

Diversified customer base across OEMs and Tier-1 suppliers

Recent expansion into EV components and warehousing solutions

The company has delivered 142.4% returns over 3 years, supported by 3% quarterly revenue growth and a 5.4% profit margin

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. However, its ROE and ROCE remain below industry benchmarks.

📈 Technical & Sentiment Indicators

RSI: 50.9 – Neutral zone, suggesting consolidation.

MACD: 22.6 – Bullish crossover, indicating short-term strength.

Volume Weakness – Current volume is significantly below weekly average, suggesting reduced interest.

DMA 50 & 200: Price is above both, confirming medium-term bullishness.

💡 Investment Strategy

🔽 Entry Zone

Ideal Buy Range: ₹6,300–₹6,500, near DMA 50 and below current price.

Current Price ₹6,784: Above ideal entry, and valuation is not supported by fundamentals.

🕰️ Long-Term Holding

Cautious Hold or Wait for Correction: While the business has niche strengths, weak return metrics and high valuation suggest limited upside at current levels.

Monitor ROE/ROCE Improvement: Long-term potential depends on margin expansion and capital efficiency.

You can explore Craftsman’s live share price and technical analysis or review its 10-year forecast and valuation breakdown for deeper insights. Let me know if you'd like a peer comparison with Sundram Fasteners or Endurance Technologies.

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