Craftsman Automation up 2.7% as Q2 call highlights $100m engine book, heavy capex and margin reset

On 2nd November, 2026, Craftsman Automation submitted to the exchanges the transcript of its earnings conference call held on 29th October, 2026 for the unaudited standalone and consolidated results for the quarter and half year ended 30th September, 2026 (page 1).

While the financial statements themselves were disclosed earlier, this transcript gives colour on why leverage is rising, how new capacities will be filled, and when profitability in key segments could recover. That forward-looking narrative is what the market appears to be trading on.

One of the biggest concerns around Craftsman has been leverage. On the call, a participant pointed out that consolidated gross debt had increased from Rs 3,340.00 cr in March 2026 to Rs 3,618.00 cr in September 2026 (page 5), despite using QIP proceeds to repay borrowings.

Chairman and Managing Director Srinivasan Ravi acknowledged the rise, but stressed that:

• Net debt is “only around Rs 3,000.00 cr” because of cash and capital advances (page 5).
• Working capital has “ballooned” as top line has grown and GST credits and pipeline inventory have built up (page 5).
• The company has “done significant CAPEX in the first half” and expects consolidated net debt to EBITDA of 1.7-1.8 times for the year (page 5).
• He pegged an EBITDA “inflection point” at around Rs 1,850.00 cr of EBITDA, which he expects to reach next year, after which Craftsman aims to be self-sufficient for both growth and maintenance capex (page 5).

This framing helps explain why the stock moved up despite higher borrowings: the call positions leverage as a deliberate, front‑loaded bet on capacity and product diversification, rather than a sign of stress.

The transcript underlines that Craftsman is in the middle of a capex surge:

• Management said capex in Q3 on a consolidated basis will be between Rs 500.00 cr–Rs 600.00 cr (page 6).
• They referred to a broader Rs 1,500.00 cr capex outlay for overseas/subsidiaries, with about Rs 100.00 cr to Rs 130.00 cr already invested in the German subsidiary (page 8).
• Ravi emphasised that greenfield facilities have been put up “across India” in both powertrain and Aluminum, and that Q4 capex will likely be lower as longer‑term projects are phased out (page 6).

On the German operations, he clarified that:

• The core manufacturing asset is a foundry, which has “reported a healthy growth in the revenue” and “very decent” profitability (page 8).
• Costs such as power, raw materials and labour are indexed to customers, which he believes reduces business risk (page 8).
• Future investment in a local machine shop is expected to be small, “maybe 20, 30.00 cr on a couple of machines” (page 8).

Investors appear to be rewarding the clarity that the heaviest capex phase is front‑loaded, with incremental capex expected to be more modest and returns‑accretive.

Another key positive from the call is visibility on the stationary engine program, which targets data centres and backup power.

Ravi reiterated that long‑term capex has been “done bulk in the stationary engine side” (page 2). In the Q&A, he confirmed:

• The current order book in this segment is around $100 million (page 9).
• Revenues are expected to start from FY’29 and peak around $100 million by FY’30, with about 30% by FY’28 and 50% by FY’29 (page 9).

This multi‑year revenue pipeline, backed by already‑incurred capex, gives a structural growth leg that is relatively insulated from short‑term auto cycles. The market commentary around the stock move has repeatedly highlighted this order book as a key driver of interest.

The Aluminum segment has been the main drag on profitability, and the call transcript addresses this head‑on.

Management disclosed that Aluminum EBIT margin in the quarter had dropped to about 6.5% (page 9). Ravi attributed this to:

• A spike and then sudden drop in Aluminum prices, after the company had built high inventories to protect customer supplies amid raw‑material shortages and the Middle East crisis (pages 3 and 7–8).
• Higher energy and gas costs in an energy‑intensive business (page 12).
• Sub‑optimal utilisation and pre‑operative costs at new Aluminum plants, with operating leverage expected to improve over the next “two quarters” (pages 3–4 and 12).

He stressed that:

• The margin impact is “temporary” and largely a one‑time effect of elevated consumption cost, not a recurring mark‑to‑market loss (pages 3 and 12).
• Discussions are underway with OEMs for both past compensation and future pricing corrections, and he expects Aluminum margins to “go back to the normal” after these talks conclude (page 9).

Crucially, the filing does not quantify overall consolidated or segment margins beyond these references, and it does not provide a numeric margin guidance for FY’27 or FY’28.

The market seems to be reading this as a credible path to margin repair, especially since management also noted that H1 Aluminum growth between Q1 and Q2 was “mostly” real rather than commodity‑driven (page 12), and that alloy wheel utilisation is already around 70% (page 13).

Beyond Aluminum, the transcript reinforces a constructive view on the core powertrain business:

• Ravi said growth in Powertrain is “expected to continue” despite some near‑term contraction in tractors (page 4).
• He highlighted that India is becoming a manufacturing hub for powertrains and aggregates, with exports of engines and gearboxes for passenger vehicles, two‑wheelers and tractors rising (pages 4–5 and 11).
• For passenger vehicles, he sees strong logic for exporting 1.5 liter and below gasoline powertrains from India (page 11).

This export‑led angle, combined with ongoing outsourcing of Aluminum components by OEMs, supports the company’s stated ambition of around 15% CAGR in revenue “in real terms” over the medium term (page 5).

Putting it together, the 2.7% move in Craftsman Automation’s shares after the transcript filing appears to reflect:

• Management’s detailed explanation of why gross debt has risen to Rs 3,618.00 cr and why net debt around Rs 3,000.00 cr is still compatible with a net debt/EBITDA of 1.7-1.8 times.
• Visibility from a roughly $100 million stationary engine order book with clear timelines to FY’30.
• A candid but reassuring roadmap for Aluminum margin recovery from about 6.5% EBIT back towards “normal” levels as inventories normalise, new plants ramp up and price resets with OEMs take effect.
• Confirmation that the current capex bulge, including the Rs 500.00 cr–Rs 600.00 cr Q3 capex run‑rate and the Rs 1,500.00 cr overseas/subsidiary outlay, is intended to create a platform for self‑funded growth once the Rs 1,850.00 cr EBITDA inflection is reached.

The filing does not disclose detailed quarterly revenue, PAT or consolidated margin percentages, so investors are clearly trading more on the strategic narrative and forward guidance than on fresh headline numbers. For now, the market seems willing to look through near‑term Aluminum headwinds in favour of the longer‑term growth and operating leverage story described in the call.