Craftsman Automation, a diversified engineering company, has launched its Rs 824 crore-initial public offering (IPO) on Monday at a price band of Rs 1,488-1,490 per share.

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The issue, which closes on March 17, consists of a fresh issue of Rs 150 crore and an offer for sale of 45,21,450 equity shares by existing shareholders.

On the back of the company’s strong financial performance, growth potential in automotive aluminum and storage divisions and M&HCV segment rebound, certain brokerages have recommended subscribing to the issue.

Read here:

Craftsman Automation IPO opens: Should you subscribe?

Here are the key things to know before investing in the offer:

About IPO

- The IPO opens on March 15 and closes on March 17.

- The price band is fixed at Rs 1,488-1,490 per share. At the higher price band, the company plans to raise Rs 824 crore from the issue.

- The issue consists of a fresh issue of Rs 150 crore and an offer for sale of 45,21,450 equity shares by existing shareholders.

- Investors can bid for a minimum of 10 equity shares and in multiples of 10 thereafter. A retail-individual investor can apply for up to 13 lots.

- The company’s promoter Srinivasan Ravi will sell 1,30,640 equity shares, and investors Marina III (Singapore) Pte Ltd and International Finance Corporation will divest 15,59,260 equity shares and 14,14,050 equity shares, respectively, through the offer for sale (OFS) route. Individual shareholder K Gomatheswaran will sell 14,17,500 equity shares via OFS.

- The promoter shareholding after the issue would reduce to 59.76 percent from 63.40 percent at present.

- The company intends to use the proceeds of the fresh issue to retire around Rs 120 crore of debt. This will improve the balance sheet health of the Company by reducing the debt/equity ratio to less than 1x, and create headroom for future borrowing if and as required for expansion.

- It has appointed Axis Capital and IIFL Securities as the book-running lead managers to the issue.

Read here: Craftsman Automation to launch Rs 824 crore-IPO on March 15; price band fixed at Rs 1,488-1,490

About Craftsman Automation

Craftsman is a diversified engineering company with vertically integrated manufacturing capabilities, engaged in three business segments, namely a) powertrain and other automotive products b) Aluminium products for the automotive segment, and c) Industrial and engineering products. The Company specializes in manufacturing high-quality, intricate and critical components.

It 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. It is also among the top three-four component players with respect to the machining of cylinder block for the tractor segment in India.

Over its operating history, the company has expanded its manufacturing capacity to 12 vertically integrated strategically located manufacturing facilities across 7 cities in India, with in-house engineering and design capabilities. The company also has the ability to interchange capacity and product mix to shift production lines between various segments and optimize machine productivity and operational efficiency.

Craftsman also recently set up a new unit in Pune with high-end automated equipment from Italian and Swiss manufacturers to expand its storage solutions business.

The company counts all major auto OEMs and key players in the industrial segment as its key clients. In the automotive segment, its key clients include; Daimler India, Tata Motors, Ashok Leyland, M&M, TAFE, Escorts, John Deere, JCB India, TVS Motors, Royal Enfield, among others. Its clientele in industrial & engineering segments includes Siemens and Mitsubishi Heavy Industries.

The top 10 customers constituted 53 percent, 59 percent of its sales in FY20, 9MFY21, respectively. It also has high client stickiness with more than 50 percent of sales coming from clients that were associated with the company for more than or equal to 10 years.

Financials

The company exhibits EBITDA margins of 28.81 percent for 9MFY20. The EBITDA margin has also been expanding continuously – it was 20.19 percent, 25.12 percent and 27.24 percent in FY18, FY19 and FY20 respectively.

Source: Angel Broking

(Edited by : Ajay Vaishnav)

First Published:Mar 15, 2021 10:42 AM IST