After a Flop Debut, Craftsman Automation Gains 18% in Two Months

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After a Flop Debut, Craftsman Automation Gains 18% in Two Months

By Aditya Raghunath -- 2021 has been a great year for IPOs. There have been three companies, Indigo Paints Pvt Ltd (NS: INDG ), G R Infraprojects Ltd (BO: GINF ) and Tatva Chintan Pharma Chem Pvt Ltd (NS: TATV ) who have closed day one at over 100%. Then there were companies like Zomato Ltd (BO: ZOMT ) that zoomed to over 50% of their listing price on day one.

In the midst of all this, there was one company, Craftsman Automation Ltd (NS: CRAF ), which closed at Rs 1,435, a discount of 4% to its issue price of Rs 1,490.  Craftsman is the largest player in India in the machining of highly engineered and critical engine parts for the auto industry.

However, things might be changing with respect to Craftsman. Investors who had faith in the company, and held on to the shares have seen an increase of 35% in its stock price. The company closed July 30 at Rs 2,009.9, an increase of 18% since its closing price of Rs 1,706.95 on May 31.

Brokerage firm LKP Securities has given a buy call on the stock with a target price of Rs 2,740. “The effect of BS-VI, with respect to value addition, is yet to reflect in revenues and we expect this to be seen in the next two years. This will lead to an increase in realizations due to additional content of 25-40%. In the case of exports, we believe that due to reduction in investments by European and North American foundries and China’s rise in labour costs should benefit India, and in turn Craftsman from likely outsourcing of foundry and machine operations," LKP Securities said.

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