Buy Craftsman Automation; target of Rs 12,400: Emkay Global Financial
Moneycontrol • 2 days ago
Key Investment Pillars
- Diversified revenue base: CAL's revenue mix is undergoing a significant shift, with a growing contribution from the aluminum products segment, which is expected to drive growth.
- Strong growth momentum: The company is expected to sustain its growth momentum, with a 15% medium-term CAGR, driven by the aluminum products and powertrain segments.
- Margin expansion: Despite current margin pressure from aluminum costs, the company is expected to improve its profitability as it passes on price increases to customers and benefits from operating leverage.
- Investment in new capacities: CAL's investments in new capacities, particularly in the aluminum products segment, are expected to drive growth and improve profitability.
Thesis Validation Checklist
To validate the investment thesis, investors should watch for:
- Sustained revenue growth: CAL's ability to sustain its revenue growth momentum, particularly in the aluminum products and powertrain segments.
- Margin improvement: The company's ability to improve its margins, despite commodity price pressures, through price increases and operating leverage.
- Successful integration of new capacities: The successful integration of new capacities, particularly in the aluminum products segment, and their contribution to revenue and profitability growth.