Ladies and gentlemen, good day and welcome to the Earnings Conference Call hosted by Craftsman Automation Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Srinivasan Ravi, Chairman and Managing Director of Craftsman Automation Limited. Thank you, and over to you, Mr. Ravi.
Good afternoon, everybody. Thank you for joining this earnings call for the quarter ended 30th June 2025. In the interest of time, all the financial numbers have been published, and we also have put up a PowerPoint presentation explaining some segment details a little more. I will straight away skip to certain data which is not there in the presentation or in the earnings report. I will first talk about consolidated financial ratios. We are at an EBITDA margin of around 15%, and what is a very hard thing is the net debt to EBITDA on a consolidated basis is 2.27 on an annualized basis compared to Q1. We will keep on improving as we move on going forward in spite of the CapEx. ROCE pre-tax annualized is 14%. Still, the plants are not mostly operational, I mean fully operational, and this will improve.
Again, the return on capital, return on equity annualized is around 10%. This is an indicator of the trend which has happened because after the consolidation, all numbers are going for big changes. This is not a Q-on -Q, quarter- on- quarter comparison in general. In the standalone net debt to EBITDA, it's around 2.87 because we have borrowed in Craftsman for the acquisitions and other even for the CapEx which has been done major. Coming to the subsidiaries, DR Axion has been accelerating on revenue. It has been around INR 408 crore in the first quarter. Sunbeam top line has been INR 291 crore, and Craftsman GmbH for Germany has been INR 67 crore on the top line. In the case of Sunbeam where there has been an EBITDA, I think still it is work in progress as we move forward.
A milestone there is the Gurgaon operations have ceased as of end of May, and also all labor has been settled, paid off on the matter. The biggest challenge has been overcome. We are still working on the other plants and the equipment have been shifted. This is an update on Sunbeam. Now I'll open the floor to Q&A.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, please press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. You may note that some of the statements which may be made by the management team during this earnings conference call may contain certain forward-looking information which are not guarantees of future performance and are subject to a number of risks and uncertainties. We encourage you to refer to the disclaimer in the investor's presentation of the company. Further, the management will not be addressing any customer-specific queries owing to confidentiality obligations. We kindly request that you avoid mentioning any customer names in your questions.
Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in this conference, please limit your questions to two per participant. We will wait for a moment while the question queue assembles. The first question is from the line of Mumuksh Mandleshah from Anand Rathi Institutional Equities. Please go ahead.
Yeah, thank you, sir, for the opportunity and congrats on the strong results for this quarter. Sir, starting with this on the Kothavadi plan, sir, any update on how is the order book shaping there and how do you see the revenue target of $100 million in its four - five years? Do you see intact or do you see any further upside to that number, sir?
Sir, the second part of the question first, 2030, this $100 million target is intact. That is both for the casting and machining of those particular parts. The castings will be done at Kothavadi. Machining will be done at the Arasur plant of Craftsman. We are ready and the order intake, I think our order book has almost crossed 50% of the $100 million target that has been projected for the annual basis. Of course, this comes into production in various phases.
The approvals will be happening in FY 2027 mainly and FY 2028, and production will start a little in FY 2027, and peak production I think will be touching in FY 2029. This is also in line with the end market requirement of our customers who are mainly catering these products to the data center customers totally. Currently, we are doing some engineering parts and the capacity utilization is hardly 5% or something like that. We are incurring some minor cash losses, of course, depreciation loss. This is when we prove the other engineering parts as well as the engine blocks. Some trials already have been taken of one particular part. Now the strategy has been in cooperation with the customer that some of the parts are already being produced in Fronberg and there is an increased requirement of volume.
I mean, from the Fronberg means Craftsman GmbH, Fronberg GmbH, and the same customer is asking for increased volume. We are getting the duplicate tooling from there and the approval will be happening along with our German team. Our new customers who are coming in or not customers of Fronberg, they expressed a lot of confidence in Fronberg after visiting them. They have expressed some of them and they have mandated that we do the development, submit the development in Germany before we shift it. I think there is some echo. Can we mute the line, please? Okay.
We expect that there are few challenges in this sort of business, but we are fully equipped to meet the challenges because of our preparation, our investment, and our thorough study from 2020 and careful understanding of the project and customers and also the acquisition of Fronberg, which has allowed us to have a firsthand view of the technology available. The Craftsman team and the German team are working together. This is the update.
Great to see the progress from order book there, sir.
Sir, coming to this quarter results, sir, we've seen a good sequential growth in the aluminum segment. Despite the low production Q-on-Q of the PV and the CV segment, can this extension, will it stand alone? The growth will be largely driven by the alloy wheel ramp-up, sir? Also, margin improvement there also being seen. Is it because of alloy wheel business getting more profitable, sir?
As we speak today, there is Q1 or going forward in Q2, Q3, the alloy wheel portion of the business is today even very small compared to the entire aluminum business holistically as a standalone itself totally, let alone the consolidated portion. I would rather put up, I think, less than 15%, 20%, 15% on the alloy wheel. Let me get back to that number. Now the other customers, whether it's domestic and export, their ramping up has happened.
In spite of the market being slow, our orders which we won a few years back started to ramp up. We will see the ramp up continue in these coming quarters for standalone Craftsman aluminum business in spite of little slowness in the domestic industry. The alloy wheel business is around 13% of our revenue in the standalone. On the consolidated basis, it doesn't make any significant change.
Got it, sir. I think gear exchange is.
Sorry to interrupt, sir, but I may request you to rejoin the question queue for follow-up questions.
Sure, yeah, sure.
Thank you. The next question is from the line of Mukesh Saraf from Avendus Spark. Please go ahead.
Yes, sir. Good evening and thank you for the opportunity. First question is on Sunbeam. Now that you mentioned that the machinery has been moved out of Gurgaon, could you kind of give us some sense on what we can expect in terms of a ramp-up there in the next, say, two to three quarters? Will we require any more investments now that you know you are now running it for the last two quarters? You have probably more insights into how we're going to see things ramp up there.
You may be aware that what we invested and what labor settlement happened and what CapEx has been reported in the last year, that is already published, I think. Now let us compare to the challenges. There is a modernization requirement because I think some of the equipment are obsolete. The other portion of the CapEx is the building requirements and other things which may come up because of the shifting. Gurgaon has left it very congested. The third aspect is some of the processes have been manual. We like to semi-automate it in view of the fact that even today, the cost towards manpower is quite high. From the time we negotiated the deal to today, around 50% of the manpower costs have been brought down to 50%. There is a long way to go.
That headcount reduction has to happen with better processes in the layout, better productivity, better equipment which is more productive. That means some of the less producing equipment, I think we have to use it for small volume production. Also, a little automation is required. This will have a trade-off between long-term manufacturing costs versus the CapEx. We are doing it carefully on this matter. Anyway, in the next year, the land will be sold, if not in this year itself. That's what we have already started. Not really, not put up for sale, but I think that will also reduce the debt going forward. Our net outflow towards acquiring Sunbeam has been quite reasonable.
Q2 will be better than Q1 on the revenue side, but on the profitability side, because of the huge ramp-up and the shifting which has happened, we are still not certain of the margin improvement in Q2. I think Q4 we can see some reasonable margin improvement. Going forward for the next year, I think it should be far better off.
Got it. As of now, we are not expecting this modernization CapEx to be a significant number. We're working with what we have already planned.
Yes, we have planned, not a significant number.
No incremental addition to that, basically.
Yeah, we are assessing whether the ordering field is going to be there in the future or not. It will be unless the revenue grows in a big way, then there's no necessity for any huge CapEx there. It is maybe marginal.
All right. My second question is on the alloy wheel facilities. Could you give some? I mean, I think we started production last quarter in Bhiwadi and Hosur will probably come up in the second or third quarter. Number one, on Hosur, will we see some one-off costs initially when the plant starts like we saw in the third and fourth quarter last year? Number two, on Bhiwadi, how is the ramp-up there?
Compared to Q4, I think we have a 20% increase in revenue at Bhiwadi. We just crossed around INR 50 crore on the revenue in Q1. We will be quarter on quarter, I think the trend rate of same percentage of increase will happen for the next few quarters, barring Q3. I think the plant should be more mature in the coming, say, three, four quarters. We will not see that sort of shake-up which has happened at Bhiwadi in Hosur for the simple reason it was the first alloy wheel plant and we took a short-term decision within a month and our preparation time was only a few months. We wanted to hit the festive season. We decided in December, started in January, and then we started producing in August.
In this case, the parts are already proved and some production we are already supplying from north to south a little. We are going to also whatever needs to be proved out will be done before the start of production. It will be maybe one quarter there can be a small impact. Again, the aluminum segment, but per se of Craftsman itself has become bigger standalone. That impact might not be double much.
Got it. Great. Thanks, sir, for this. I'll get back.
Thank you. The next question is from the line of Abhishek Jain from Alf Accurate Advisors. Please go ahead.
Thanks for the opportunity and congrats for a strong set of numbers. My first question on the powertrain business. On a standalone basis, what kind of growth are you predicting for the full-year basis, given the metered growth in the CV construction tractor business? In Craftsman Germany, we have seen that revenue rate is around INR 70 crore. How do you see ramp-up in the coming quarter in the Germany business?
I'll answer the second question first. The Germany business is not a growth business. There will be marginal adjustment. It's a small plant and it is quite an old plant with existing customers and customer base. We will be expecting the same thing. We have 140 people, 160 people there with the variable people also. It's a hand-molded process and these are very low volume, high variety parts. There is no question about ramp-up per se in Germany. The second point on the powertrain is we will see a high single-digit growth and maybe in Q4, we may on one quarter, we may see double-digit growth on Craftsman standalone on the powertrain. This is in spite of commercial vehicle not doing so well. As you may be aware, many multinationals first in the tractor segment and then a little in the industrial engine segment.
Now you can see a lot of news coming today for medium and heavy-duty trucks. India is also going to ramp up in a very big way. We have the German major announcing that India will become a hub for medium-duty trucks in the future. That means for other markets, they're going to ship out of Chennai. We have seen the Indian biggest commercial vehicle manufacturer announce trying to have a tie-up and having an acquisition plan in Europe, which I saw in the news today. This means that, as I've been mentioning earlier also, India is the right place for the powertrain manufacturing for whether it's a small tractor or medium-duty to medium-duty. Our heavy-duty is actually medium-duty trucks. Like commercial vehicles and also construction equipment of the type which is being used in India, which is required in other parts of the market.
India is becoming a perfect fit for being a manufacturing base for the multinationals. The export of these products will happen through the multinationals. We will find more investments coming into India from the multinational companies and also Indian companies becoming really large corporate multinational companies, Indian names also. This is the growth trajectory for the conventional powertrain of Craftsman, which I have mentioned a few names about tractor manufacturers and engine manufacturers in the past. We are going to expect more and more of this. On top of this, we have added now the large stationary engines, mainly driven by data centers for the IIEA, which is a growth story for the next at least seven, eight years. The powertrain segment is set to grow in total.
My next question on the aluminum side. We have seen a very strong revenue growth in the DR Axion in the past two to three quarters. What is the key reason? Is there any price hike? Will INR 400 crores quarterly revenue be continued in the coming quarter in DR Axion?
No, I don't want to comment too much on that because there are only a few customers there. Some customers we have already added now, but they're still not revenues far away. We'll be continuing to add more customers there for DR Axion also. Now, stating that we are first focused on our key customers, I think we are very, very, I think extremely focused on giving them very good quality service and products for the powertrain. There can be a little movement up and down on the alloy price, and the alloy price is a pass-through. That may be some fluctuation on the top line. We had a little of exports going back to Korea, which is going to continue for a few more quarters. There's no doubt about that, or maybe more than a few more years. Let us see how it comes.
You may be aware, even in Korea, EV has slowed down a little. We expect these sort of ICE cylinder blocks, cylinder heads, whatever may be, which is required in the market to continue to be stable or grow. We also see a new trend coming into the picture on passenger vehicles. It is not the Indian number one, number two companies, which are basically Japanese, Koreans, and also we have two large Indian players doing very well in the Indian market in passenger vehicle. The small passenger vehicle market, I think the other European players and other even Japanese players may make India a hub for the small engine manufacturing in the future. For the similar reason of whatever India requires in the Indian market, we will be able to export also because there is the good. Even the two-wheeler, we see the same trend.
Thank you, Srinivasan.
Thank you. The next question is from the line of Mitul Shah from DAM Capital. Please go ahead.
Sir, thank you for the opportunity and congratulations on a very strong operational performance in this challenging environment. My first question is on utilization. If you can help with broader numbers on various segment-wise utilization.
On powertrain, on the commercial vehicle, the proportion of its utilization is very low. I think it's around less than 60% depending on the customer, depending on the product, even maybe a few percent level. On the farm sector in the current quarter, it has been at a higher level. I would say around 70%, 80%. On the SUV segment, I think it is around 70%, 80%. On the construction equipment on the powertrain, it has been quite poor because of the emission norm change, which has there has been some lot of pre-buy. I hope I answered the question on powertrain. Now I'll move to the aluminum.
Yeah, on the aluminum side, we are looking at a diverse customer portfolio in Craftsman.
Whatever is the growth, the growth we have each of the customers in the DR Axion, and it is already mirrored in, but there has been a loss set by, you know, that May is always a weak month. There is a shutdown of one of the auto players for two weeks for their annual maintenance. That is a seasonal effect, but I think we had some exports we've done okay in DR Axion. Similarly, on Craftsman side, capacity-wise, plant-wise, when we look at it, the variety of parts, what we are getting in, and the other direct, indirect exports have been growing. Capacity utilization is already touching around 75%. Going forward, it may enter the critical mass of 80%-odd which is a little risky on a few months on the festive season. We have a good visibility going forward.
We will be adding capacity in the coming quarters also in view of the next year festive season.
The second question on margins. Powertrain margins are at a highest in the last four quarters, 15.2%, despite more or less production cut by a few players as well as industry-wide slowdown in terms of the PV and CV production. What could be the reason for reasonably good margins on this segment?
Earlier, post-COVID, the ramp-up was very steep and we had no chance to do repair and maintenance for a long time. We had undertaken a lot of improvement activity, repair and maintenance, modernization, many things in the past. A lot of expenses were booked in many quarters, I think around five quarters on almost a continuous basis. Now that is behind us, number one. Number two, with that, we optimized all of our costs. We have not added per se any manufacturing plant in the powertrain. In the past, we added one more plant last year adjacent to the current plant for infrared bed that had a cost strain for us on this matter. As things are very stable and no expansion is planned there, other than the large engines, the expense has been controlled. This is the real state of affairs.
In the future, let us say in one year later or two years later, we again go for an expansion because our order book is very high. For some reason, we may see again production margins for two quarters because the expenses will precede the revenue coming in. That has to be factored in in the future. I think now any revenue increase will even further help us for the operating margins.
Yeah, good. Thanks.
Thank you. Before we take the next question, we would like to remind the participants to press star and one to ask a question. The next question is from the line of Joseph George from IIFL. Please go ahead.
Oh, thank you. Sir, I have two questions. One is in relation to the aluminum segment margins, aluminum segment within the standalone entity. This quarter, we have seen that margins have shot up. One is what are the drivers? Second is how is the sustainability as you see it? Third is as the alloy wheel business continues to grow and becomes a larger piece of aluminum, do you think these kind of margins will sustain?
I'll answer the questions in a sequence and please come up with follow-up questions so that the clarification is complete. One thing is the traditional aluminum business of Craftsman has got only two locations. Fundamentally, one is in Coimbatore a nd one is in Bangalore. We are operating at optimum capacity already now. This is giving good operating leverage that is helping our profitability.
The Bhiwadi plant, which was a drag on for almost two, three quarters, I would say three quarters, now at least it has been EBITDA positive, but not EBIT positive, I would say, but EBITDA positive. That drag has stopped. Now that we expect Bhiwadi aluminum alloy wheel also to concentrate, I mean, to start giving some margins to the EBITDA at EBIT level. Still, the portion of the, even though alloy wheel has been ramping up, the portion of the alloy wheel business has been only around INR 50 crore in the last quarter when compared to the top line revenue on the aluminum business, which has been around INR 377 crore. That means it's around less than 14%, which I mentioned, 13%, 14%.
The plant of Bhiwadi has been placed in a bigger location where Sunbeam Gurgaon plant also has been shifted and the adjacent plot and building has been allocated to Sunbeam. Our overheads are reasonably well controlled because the Tapukara plant of Sunbeam is also hardly 10 minutes away from the current Bhiwadi plant totally. This sort of better operating leverage will lead to the alloy wheel margins also being improving steadily as the revenue growth in the alloy wheel happens because the entire overhead of the plant is not a standalone alloy wheel plant. That is an advantage there because now we have pressure decasting. We are also contemplating in the future whether large tonnage machines of Craftsman high pressure decasting, we want to put it up there or not. As a composite plant, we are confident about the alloy wheel margins.
Understood, sir. Just one question. The second question was in relation to CapEx. What's the guidance for CapEx FY 2026 on a consolidated basis?
On a consolidated basis, we are looking at around INR 800 crore for, say, around 20% growth rate, which we have factored in in our CapEx plans. The way I look at it is that it depends on what happens in the near future. For example, we have announced a plant in Nagpur way back in, say, 2021, and it still is in the land stage. There are opportunities which are coming. We are not really concerned about doing a little CapEx, but I would say that we are very careful with the group debt. Now, when the land sale happens at Gurgaon, and then we see visibility of debt coming down quite dramatically, we may undertake CapEx if the opportunity is there. Otherwise, we may have to let go of the opportunity also. This will be a function of market and our performance.
Understood, sir. Thank you. That's all I had.
Thank you. The next question is from the line of Mumuksh Mandleshah from Anand Rathi Institutional Equities. Please go ahead.
Yeah, thank you so much for the opportunity again. On the storage side, we had targeted about 20% growth for this year in implement guidelines, and also for the margin, about 5% should be achievable, right, sir?
I think we can look at an EBITDA margin of around close to 4% up and down. I'm not sure of exactly because it depends on project to project. It's not an order book which is there and we can have our margins very stable, but we are gaining traction there and more visibility in the market. Even today, if you look at the revenue portion, it looks big, but I think the amount of capital employed is negligible there. When you look at the valuation portion of it as all of Craftsman standalone itself, it is very less.
I think we will be giving it a little more time to look at the, but it's a scalable business. That is one advantage that without capital, we can scale the business. Since now we are now five years into this business, I would rather give it another six months to one year and then look at it how we'll be able to scale it to the next level.
For the top line growth, sir, how big the growths are?
Top line growth, just give me a minute, please. Around 15%, sir. 15% in the top line growth.
Got it, sir. Sir, on the full-year target, which we are almost at about INR 70 billion revenue and INR 11 billion EBITDA and INR 6.5 billion-INR 7 billion EBITDA, do you see any change in the guidance, sir, in the full year? Any upside, sir?
No, nothing changes. I have given these numbers even before all the tariff wars started. It was much before that. This is the first time we have given a guidance. The reason we have given the guidance is that there's a big change in our business model by it per se. For everybody to understand where it looked like after one year we had given. We are at that run rate. There may be some headwinds in the global markets or anything. We had also a near-war situation, which was stopped at least. We stick to the guidance. I don't see any change to downgrade the guidance. There can be an upside depending on how Q4 behaves.
Got it, sir. Lastly, any shares? What is the absolute net debt number for this quarter, end of this quarter, sir?
Pardon?
Net debt number at end of June.
Net debt number? Okay.
Yeah, net debt number.
Net debt? Okay. Net debt consolidated is around INR 2,400 crores.
Thank you so much for this.
Thank you. The next question is from the line of Ajox Frederick H from Sundaram Mutual Fund. Please go ahead.
Hi, sir. Congrats on a good set of numbers. Sir, my question is on Sunbeam. If I'm right, you mentioned the quarterly revenue to be INR 291 crores, right, for this quarter?
Yes.
What was this last year and last quarter, sir?
Last quarter, because the previous year we are not in operations.
Last quarter.
Yeah, Q4 was around INR 300 crores . Yeah.
Okay. Okay. Sir, incrementally, will we be increasing our client base here? What is the visibility we have, particularly on Sunbeam's case, let's say one year out?
One year is too short a period for us to look at it because we know that the next six months or nine months will be on a consolidation basis. We might not be very keen to add clients in Sunbeam. Of course, there are clients that are being added in Craftsman. We have an overlap there on this matter, but we are more on the eight and eight. Their end and age and our start and age is more or less matching. We will address it either from Craftsman or from Sunbeam as the time comes totally. Our idea is how to satisfy our existing clients on delivery and quality, which is the most important going forward, and also reduce the operational cost in the plant and improve operational efficiency.
Without that, we don't want to really expand the Sunbeam operations until we are very sure about the stability in the financial results and also our deliverable to the customer.
Got it, sir. Secondly, sir, on the land, we were supposed to sell it sometime this year, right? Now it's getting shifted to next year. What is happening there?
Nothing is happening there. We just got the AGM through and we got the approval only last week. We cannot jump the gun and start trying to do that activity. You are aware that the process, there is some portion of the land which will be acquired by the Haryana government for some expansion, and we received some notices last month. We are analyzing that. We know that it's coming. It's around 10% of the land. After that, what is the residual land? What's the value? We are trying to analyze the value. We know that we have put a number of INR 350 crores. It was earlier looked at around INR 275 crores, then it was INR 350 crores, which is in another Sunbeam annual report also on this matter. We are trying to maximize the value.
Trying to sell land in a hurry is also a problem because we might not get the right price. What is in the public domain is INR 350 crore, but our aspiration is to go much higher.
Got it, sir. That's it from me.
Thank you.
Thank you. Participants who wish to ask a question may press star and one at this time. The next question is from the line of Kumar Saurabh from Scientific Investing. Please go ahead.
Hello?
Yes, sir. Go ahead.
Yeah. Sir, earlier, we used to work around 20%, 21% margin, and we have come down to 14%. I know that some of us have told that we may go back to 16%, 17%. What is this? This is trapped in us coming back to 20%. It's like we used to do more machining than that, and it's decreased. The question is, what is the gap? Where is the gap between 16%, 17% to 20%? Is there a way to fill this gap or 17% where you would stop? I mean, you'll take it as time progresses rather than giving us guidance?
Sorry, I will try to answer that in a different way where everybody can understand very easily. Standalone on the powertrain business, today we buy more castings than we used to do in the past.
Even then, our powertrain business is showing much more than the 20% margins, much higher than the 20%. The aluminum business was non-existent around 10 years ago, and it was a small portion of the aluminum business. That means predominantly powertrain was determining the EBITDA margins. The product mix has changed. Aluminum has become quite big now. The revenue on the aluminum is quite big. That means that the aluminum is a pass-through. Our margins do not come from top line at all. Our margins come from the derived from the gross profit. Tomorrow, aluminum prices increase by 50%. Our margins optically will further come down totally. Please look at our gross margin and then derive the gross from the gross margin, derive the margin. I think they have been pretty stable over the number of years.
Got it. Got it. That's it, sir. Other questions I don't know if we are. Wish you all the best, sir.
Thank you.
Thank you. The next question is from the line of Abhishek Jain from AlfA ccurate Advisors. Please go ahead.
Thanks for the opportunity. Sir, in this quarter, we have seen that the finance cost has gone down quarter on quarter. While you have mentioned that the net debt has increased from INR 1,900 crores to INR 2,400 crores. I just wanted to reconfirm that the net debt is INR 2,400 crores or it is lower than that?
The three equations happened in the last year. The balance 24% stays.
Sorry to interrupt, sir, but your voice dropped. Could you please repeat your answer?
Last year, we did three acquisitions, the 24% of DR, the Sunbeam acquisition, and also the Fronberg acquisition. We had two greenfield projects coming up last year, and we had CapEx in almost all the plans. It is a question of how much outflow has gone for acquisitions and how much CapEx we have incurred. The debt has been a function of that.
At the end of the year, this is what kind of the debt reduction we can expect?
See, debt we measure with the two levels of EBITDA to debt, net debt to EBITDA. I think that the ratio will keep improving.
Okay. Do you have any target for the debt reduction for the next two years?
The aspiration is from our side, we are doing a fine balancing act between customer growth expectations. If we say no to customer, customer will find another supplier who will also take away over a period of time all the new businesses, which will lead to degrowth in Craftsman. The second thing is to maintain all the, I would say, the key personnel and things like that. We need to have growth. The third portion is that we have an inflation of 6% in the country. Growing at 6%- 8% means standing at the same still. We will be on a declining level of margins as and when we do. There is an expectation of shareholders that there should be a growth in profitability going forward. I think the net debt and everything will be in always, we'll be looking at net debt to EBITDA.
It's not the absolute debt we are looking at. See, if suppose the EBITDA drops to half, then I think we will stop all CapEx, all acquisitions, everything like that. At the same time, if EBITDA grows quite significantly in the coming year, we may keep the debt level at the same level or maybe lesser because we might not do CapEx, then the debt will also reduce further. I think we have mentioned in our earlier earnings call also at what level we will be comfortable. I think 1, 1.5 is very comfortable. I think 2 is not a bad number. All financial institutions, for lending institutions, will look at 3.5, 3. I think we are on a reasonable traction.
Okay. My next question on the revenue-based target for the aluminum segment when all plants will be operational in FY 2027 with two listings. I just wanted to understand how would be the revenue growth in FY 2027 because all the plants will be operational and plus that Sunbeam will be with a full listing.
We will be outgrowing the powertrain in the aluminum segment. Aluminum segment will outgrow the powertrain. That is very clear on this matter, standalone as well as consolidated. In aluminum, we have been always saying that the growth potential is quite high. We have shown from the past that the standalone number on the aluminum, on what has been the growth for aluminum quarter on quarter, 56% has been the growth compared to Q1 of last year to Q2 of this year. That means standalone, I mean. That is with a small contribution. Even when you remove that INR 50 crore of the alloy wheel business, even then we look at it, the growth has been around 34% in the standalone aluminum business, apple to apple. I think around the 15%, 20% growth on the standalone aluminum business without alloy wheel. alloy wheel itself will be another growth story which we are looking at.
The growth will continue, yes.
Will 20% growth continue for the next two or three years in the aluminum business?
I mean, without alloy wheel itself, we'll continue at 20%. Alloy wheel adding will lead to some surges in some quarters, it should stabilize. Overall, I think when you look at the CAGR for four years, I think 20% - 25% is okay.
What will be the tax rate for FY 2026?
Everything will be same as Craftsman and DR is concerned, which is suitable for all companies. Sunbeam, we have some tax shield, which is there. We have some unabsorbed depreciation. I think the tax portion will be around INR 100 crores, INR 140 crores, something like this. Yes.
That means that tax rate will go below 20%.
No, for DR Axion and Craftsman, it will be the same as applicable for all companies. For Sunbeam alone, we have a tax shield for some few years, which will be around INR 100 crore tax will be available. Yeah, unabsorbed depreciation of around INR 400 crores.
Okay. Thank you, Srinivasan.
Thank you.
Thank you. The next question is from the line of Mitul Shah from DAM Capital. Please go ahead.
Yes, sir. Thanks for the follow-up opportunity. Only one question on global micros based on our discussion with a few key global OEMs. Do you see any near-term deferment of the projects or CapEx for the next two , three quarters? Of course, we are betting big on the FY 2028 onwards for us, but in general, just to understand the global environment of the auto OEM side.
See, we have to look at specifically the weather forecast for Craftsman Automation Limited, I would say. I think our, even though we are connected to the global business fraternity, how our customers perform is the key and what is our customer strategy and whether they're winning in the marketplace. We have one German truck manufacturer who is also a customer who has announced in the public domain in the global platform itself that India is going to be a growth story and a few thousand people are going to be hired here. They are going to use the medium duty platform across the rest of the world. This has been a listed company giving a public statement in the global environment. This means that that kind of their customer is going to grow. That means there can be an opportunity for us.
Similarly, we may have a few customers, whether it's in the two-wheeler or passenger vehicle, which are growing. When they're growing, we need to do that. I mean, they are growing in spite of the global headwinds. We follow the current customer base and we follow our instinct on exactly how the market is going to play. We are not taking any long-term just strategic bets, just like investing for the future. Everything is based on hard reality. There can be upside, there can be downside because there can be changes in the market environment. If we don't follow the customer, I think we'll default on our supplies.
Conclusively, we can say that our key customers are outperforming or outgrowing the industry situation of slowdown.
Not all customers. Commercial vehicle in general has been down. It is not that we have done practice. Almost everybody is doing well. Construction is not doing well. I think wherever there is a need on that particular segment, that particular plant, that particular product, we need to invest. It is not about CapEx available in our Coimbatore plant; it cannot be used in our plant in Jamshedpur, not in Pune. We may then have to move the machines up and down. Yes, we have done that in the past. I think this depends on actual demand.
Yeah, understood, sir. Sir, as you just highlighted in terms of this sale of land at Gurgaon, what timeline roughly do you as a company internally expect to get it done in FY 2026 itself, or may it take a nearly one-year type of time frame to maximize the sale value?
Sorry, I'll be plain on this matter. If I put a timeline, you know very well how it works in this business that we may lose on the value of the land. We are not desperate to sell the land, and we know that we can delay it as long as we get the right value. It's not a problem. It's a question of value, time value for money. If you think that by delaying, we'll get more than the interest we are paying to the bank, I think we will delay it.
Understood, sir.
Thanks. Thanks a lot.
Thank you. Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to Mr. Srinivasan Ravi for closing comments.
Thank you very much for joining the call and staying with us for this time.
Thank you. On behalf of Craftsman Automation Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.