Craftsman Automation makes weak market debut, lists at 9% discount

Shares of Craftsman Automation made a weak debut at the bourses on Thursday, listing at Rs 1,350, a 9 per cent discount over its issue price of Rs 1,490 per share on the BSE. The stock opened at Rs 1,359 on the National Stock Exchange (NSE).

However, post listing, the stock rose up to 1,433 on the BSE and NSE, the exchange data shows. At 10:10 am, it was trading at Rs 1,416, down 5 per cent against its issue price on the BSE.

The initial public offer (IPO) of Craftsman Automation had received decent response from the investors. The issue was subscribed 3.8 times led by qualified institutional buyers (QIBs) who bid for 5.21 times the shares on offer, according to exchange data. The non-institutional investors’ portion subscribed by 2.84 times and of retail investors by 3.44 times, the data shows.

Craftsman Automation is a diversified engineering company involved in manufacturing key components for automobile and industrial sectors. It owns and operates 12 plants pan India, strategically located close to its customers. The company is the largest player involved in the machining of cylinder blocks and cylinder heads in the intermediate, medium and heavy commercial vehicles (M&HCV) segment as well as in the construction equipment industry in India.

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. Top 10 customers constituted 53 per cent, 59 per cent of its sales in FY20, 9MFY21, respectively.

M&HCVs and tractors comprise over 70 per cent in the overall revenue pie of the company. Besides, both the segments together contribute around 51 per cent of the total share of domestic automotive powertrain industry. Further, auto aluminium and storage solution divisions contribute 21 per cent and 6 per cent of the total revenue, respectively.

“Given robust growth opportunities, we believe these business divisions are at a nascent stage in India as compared to global industries and the company can harness the opportunities in both segments,” said analysts at Prabhudas Lilladher in IPO note.

The company proposed to utilise the net proceeds of the issue for repayment or pre-payment of certain borrowings availed of by the company and for general corporate purposes. In addition, the company expected to receive the benefits of listing the equity shares on the stock exchanges.

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