This Small Cap Auto Ancillary Company Recommends Dividend of Rs 11.25/Share, Stock Gets A 'Buy' Rating

Craftsman Automation, a small-cap auto ancillary company has got a buy rating from Anand Rathi brokerage. The stock broking firm feels that the company's margins would remain stable, despite the Axion acquisition and its share price will increase to reach a price target of Rs 4,000.

Craftsman Automation recently posted its Q4 FY23 results and announced a final dividend. Craftsman's Q4 FY23 standalone EBITDA grew 9 per cent year-on-year(yoy) to Rs 1.68 billion, slightly below the estimated Rs 1.7 billion. The EBITDA margin contracted 220bps y/y, but q/q expanded 20bps to 21.3 per cent.

While the revenue grew 16 per ent to Rs 3.93 billion. The EBIT margin contracted 190bps y/y, 110bps q/q, to 23.6 per cent. The tax rate was 12.2 per cent (36.4 per cent a year back, 35.4 per cent the prior quarter). The company shifted to the new tax regime, which led to re-measured deferred tax liabilities. Overall, PAT grew 37 per cent to Rs 703 million as against above the estimates due to lower tax rate. DR Axion consolidated from 1st Feb'23. Revenue was Rs1.96bn and the EBIT margin was 6.6 per cent.

Aandathi expects a 21 per cent and 30 per cent growth in, revenue and PAT CAGRs over FY23-25. The demand outlook across segments was robust, led by value addition and underlying volume growth. The RoCE (post-tax) would rise from 15 per cent to 19per cent. We expect Rs 4.3 billion free cash flow annually, powered by the lower capex required. Net debt-to-equity would improve from 0.8x in FY23 to 0.4x in FY25. We resume coverage of the company with a Buy, at a revised 12-month target price of Rs4,000 (20x FY25e).

Lastly, the company has also announced a final dividend of Rs 11.25 per equity share of Rs 5 each (225%) for the financial year ended 31st March 2023, subject to the approval of shareholders at the 37th Annual General Meeting (AGM). The record date to determine the eligibility of the equity shareholders for the dividend is set as Monday, 26th June 2023.

The current market price of Craftsman Automation stock is 3,404 per share, up marginally by 0.46 per cent. The share price has rallied by 57.38 per cent in one year while over three years it soared nearly by 128.06 per cent.

Disclaimer

The stocks have been picked from the brokerage report of Anand Rathi. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.