Craftsman Automation Ltd Delivers Multibagger Returns with Strong Fundamentals and Market Outperformance

Impressive Market Outperformance Across Timeframes

Over the last 12 months, Craftsman Automation Ltd’s stock price has more than doubled, a feat that stands out starkly against the broader market benchmark. The Sensex, India’s premier equity index, recorded a modest 10.59% rise during the same period. The stock’s outperformance is not limited to the yearly horizon; it has also outpaced the Sensex in shorter intervals, with a 3.20% gain in the last trading day compared to the index’s 0.12%, and a 6.06% increase over the past month versus the Sensex’s 0.95%.

Extending the view to a three-year span, Craftsman Automation Ltd has delivered a stellar 141.31% return, dwarfing the Sensex’s 39.04% gain. This sustained outperformance highlights the company’s ability to generate value consistently over multiple market cycles.

Financial Strength and Operational Excellence

At the core of Craftsman Automation Ltd’s success lies its strong financial performance. The company reported its highest quarterly net sales at ₹2,057.28 crores and a record PBDIT of ₹312.22 crores, reflecting operational efficiency and robust demand. The operating profit margin reached a peak of 15.18%, underscoring effective cost management and pricing power within the competitive auto components industry.

Net profit growth of 18.05% in the most recent quarter further reinforces the company’s positive earnings trajectory. This marks the third consecutive quarter of positive results, signalling sustained momentum rather than a one-off spike.

Valuation and Efficiency Metrics Support Strong Buy Rating

Despite the impressive growth, Craftsman Automation Ltd trades at a price-to-earnings (P/E) ratio of 52.98, which is elevated compared to the industry average of 31.94. However, this premium valuation is justified by the company’s high return on capital employed (ROCE) of 15.89%, indicating efficient utilisation of capital to generate profits.

The enterprise value to capital employed ratio stands at a reasonable 3.5, suggesting fair valuation relative to the company’s asset base and earnings power. The PEG ratio of 0.7 further indicates that the stock is undervalued relative to its earnings growth, making it an attractive proposition for growth-oriented investors.

Robust Growth Drivers Underpinning the Stock’s Momentum

Craftsman Automation Ltd’s net sales have expanded at an annualised rate of 41.11%, while operating profit has grown at 30.84% per annum. This rapid top-line and margin expansion is a testament to the company’s ability to capitalise on rising demand in the auto components sector, driven by increasing vehicle production and technological advancements.

Management efficiency is a key factor, with the company maintaining a high ROCE of 15.89%, signalling effective capital allocation and operational discipline. The company’s market capitalisation currently stands at ₹19,316.70 crores, categorising it as a small-cap stock with significant room for growth.

Institutional investors hold a substantial 41.26% stake in the company, reflecting strong confidence from sophisticated market participants. Notably, institutional holdings have increased by 1.45% over the previous quarter, indicating growing endorsement of the company’s fundamentals and growth prospects.

Market Position and Sectoral Context

Operating within the Auto Components & Equipments sector, Craftsman Automation Ltd benefits from the sector’s cyclical upswing and structural growth drivers such as electric vehicle adoption and localisation of supply chains. The company’s ability to outperform its peers is evident in its superior returns relative to the BSE500 index and the broader Sensex.

While the company’s five- and ten-year returns are currently recorded as zero, this is likely due to data availability or listing history constraints. Nonetheless, the recent three-year performance of 141.31% clearly demonstrates the stock’s capacity to generate substantial wealth for investors.

Assessing the Sustainability of Growth and Risks Ahead

While Craftsman Automation Ltd’s recent performance has been outstanding, investors should consider the sustainability of this momentum. The company’s strong management team, demonstrated by consistent quarterly results and high capital efficiency, provides confidence in continued growth.

However, the elevated P/E ratio relative to the industry average suggests that expectations are high, and any slowdown in demand or margin pressure could impact valuations. The auto components sector is also subject to cyclical risks linked to vehicle production volumes and raw material cost fluctuations.

Nonetheless, the company’s strong institutional backing and improving fundamentals mitigate some of these risks, positioning Craftsman Automation Ltd as a compelling growth stock with a strong buy recommendation and a Mojo Score of 81.0, upgraded from Buy to Strong Buy on 16 Dec 2025.

Conclusion: A Multibagger Stock with Solid Fundamentals

Craftsman Automation Ltd’s journey to becoming a multibagger stock is underpinned by robust financial growth, operational excellence, and favourable sector dynamics. Its ability to deliver over 100% returns in one year, coupled with strong institutional support and efficient capital utilisation, makes it a standout performer in the Auto Components & Equipments sector.

Investors seeking exposure to a high-growth mid-cap stock with proven execution capabilities should consider Craftsman Automation Ltd as a core portfolio holding, while remaining mindful of valuation risks and sector cyclicality.

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