Craftsman Automation held its earnings conference call on January 29, 2026, discussing the unaudited financial results for the quarter and nine months ended December 31, 2025. Key topics included aluminum business margins, alloy wheel utilization, the powertrain segment outlook, and Sunbeam’s performance. Management discussed strategies for growth, cost control, and capacity expansion.
Aluminum Business Discussion
Management addressed concerns about sequential decline in aluminum standalone margins in Q3 2026. The startup of a new plant in Shoolagiri incurred operational losses during the quarter as the company proved out all parts. Production has commenced and is expected to ramp up by Q2 2027.
While commodity prices have been volatile, Craftsman maintains its margin through gross margin and value addition strategies. Import volatility due to rupee depreciation is being passed through to customers, with short-term minor corrections.
Alloy Wheel Capacity and Margins
Alloy wheel utilization remains below 50% of installed capacity due to high variety of parts, BIS approvals, and customer validation. The company anticipates reaching optimal plant utilization with double-digit margins by Q3 2027.
Powertrain Segment Outlook
The commercial vehicle segment shows positive signs and tractor sales are performing well. Future growth will be driven by the shift to higher engine and gearbox capacities, aligning with global trends towards heavier-duty vehicles with increased horsepower. This transition will enable the company to implement cost-effective pricing from scratch.
Sunbeam Performance
The heavy lifting for Sunbeam is over, and the company has passed the 50% critical point. Margin improvements are expected from Q2 2027 onwards. The company targets a 10% EBITDA level by year-end, up from approximately 7% in the current year. Sunbeam benefits from a plant in Gujarat and strategic positioning for the 2-wheeler segment.
Industrial and Engineering Segment
The Industrial and Engineering segment experienced a sharp increase in EBIT margin, deemed sustainable due to operating leverage. With growing demand and a consolidated supplier base, the company aims for optimum plant utilization. There will be a positive impact on the steel purchasing power.
Capex and Debt
Craftsman is looking at a standalone capex of around INR 1,000 crores this year. The consolidated net debt to EBITDA stands at 2.55 as of now, and the return on capital employed is approximately 16% pre-tax. ROE is around 12% annualized.
Electric Vehicle (EV) Impact and Aluminum
Light weighting, through increased aluminum use, is beneficial for both ICE and EV vehicles, aiding in carbon footprint reduction and improved efficiency. While the pace of aluminium content increase in passenger vehicles lags behind Western standards, strategic investment in new platforms is required to fully capitalize on this opportunity.
DR Axion Margins and Growth
DR Axion’s EBITDA margins are currently at 20%. A new plant is being established, with the investment planned to increase the current capacity. During the new plants establishment, preoperative costs can be expected.
Source: BSE
