Craftsman Automation has clarified its debt position following a rise in gross debt to Rs 3,618 crore, attributing it to temporary working capital and inventory buildup. The company maintains a 15% CAGR target, plans to reach a 1.7x-1.8x net debt-to-EBITDA ratio by FY27, and is focusing on domestic capacity while shunning large foreign acquisitions.
Craftsman Automation Updates Growth Strategy and Debt Outlook
Gross debt rose to Rs 3,618 crore by September 2026, while management targets a net debt-to-EBITDA ratio of 1.7x-1.8x by FY27.
Reader Takeaway: Domestic capacity expansion and exiting low-margin business are key growth drivers, though margin recovery faces short-term OEM pricing headwinds.
What just happened
Craftsman Automation provided a comprehensive update on its operational and financial health. Management addressed the rise in gross debt from Rs 3,340 crore in March 2026, explaining that the increase is tied to higher working capital, pipeline inventory, and ongoing greenfield capex. The company remains focused on its 15% revenue CAGR target while expecting its capital expenditure cycle to peak, aiming for self-sufficiency in funding requirements starting next year.
Why this matters
Investors are closely watching the company’s deleveraging path as it navigates a transition phase. The strategic exit from low-margin business segments—specifically within the Sunbeam business—is designed to improve absolute profit margins. Additionally, the company has secured a $100 million order book for stationary engines, with significant revenue contributions expected to ramp up by FY29.
Management Commentary
Chairman and Managing Director Srinivasan Ravi confirmed the company’s aversion to overseas acquisitions. Instead, the firm is doubling down on its identity as an Indian manufacturing hub, leveraging its expanded domestic capacity to cater to large multinational OEMs.
Risks to watch
Margin pressure persists in the Aluminum segment, where the company is currently negotiating price corrections with OEMs to offset rising energy and commodity costs. Operating leverage is also a point of concern, as new plants are currently running at suboptimal levels; management expects these to turn profitable within two quarters.
What to track next
Watch for the stabilization of the net debt-to-EBITDA ratio and the success of price rationalization discussions with OEMs, which are critical for margin recovery in the coming two quarters.