Craftsman Automation (CRAFTSMAN) Q4 17/18 earnings summary

Executive summary

• FY18 net-of-excise operating revenue rose 35% YoY to Rs 1,471 crore and EBITDA increased 24%; tax effects drove lower PAT despite higher PBT.

• Growth reflected ramp-ups in automotive aluminium and railway products, existing-business expansion, new customers and capacity commissioned in Bengaluru and Faridabad.

• FY19 was expected to be another good year, supported by automotive and engineering demand and continued capacity expansion; management cautioned that the environment remained volatile.

Financial highlights

• Standalone revenue from operations was Rs 1,503.30 crore, up 25% YoY; net-of-excise operating revenue reached Rs 1,471 crore, up 35%.

• Standalone EBITDA rose 24% to Rs 290.18 crore; PBT increased 39% to Rs 45.01 crore, while PAT fell to Rs 32.13 crore from Rs 75.39 crore.

• PAT declined as FY18 included a deferred tax charge of Rs 12.88 crore, versus a deferred tax credit of Rs 43.09 crore in FY17.

• Consolidated revenue was Rs 1,511.53 crore versus Rs 1,210.13 crore; consolidated PAT was Rs 33.15 crore versus Rs 79.74 crore.

• Standalone operating cash flow was Rs 272.85 crore; investing cash outflow was Rs 222.41 crore, including substantial plant and equipment spending.

Outlook and guidance

• Management expected FY19 to be another good year, citing performance in the automobile and engineering sectors; no quantified revenue or earnings guidance was stated.

• The Pune roll-forming facility for storage solutions was targeted to be operational by March 2019; a Perundurai automotive-components unit was also planned.

• Automotive aluminium growth prospects were tied to vehicle lightweighting and tighter BS VI emissions requirements; capabilities were positioned to support customers’ transition.

• Storage-solutions prospects were expected to benefit from GST implementation and e-commerce growth; railway component sales were expected to build beyond cylinder liners.