Craftsman expands margins as tax burden rises
Revenue grew faster than costs, but a higher tax rate and other-income contribution made the profit growth less operationally clean.
Filed 07 May 2026, 12:11 IST · Craftsman Automation Ltd (CRAFTSMAN)
Key takeaways
- Consolidated revenue grew +27.28% YoY while expenses rose +24.06%, lifting operating margin by +2.17 percentage points to 16.1%.
- Net profit rose +74.39% YoY, but the tax rate increased by +21.11 percentage points and other income contributed 10.9% of pre-tax profit.
- The stock gained +11.09% on results day, well above its 3.4% median absolute move after the last eight results.
Price around the results
Q4 revenue growth improved operating leverage
Consolidated revenue grew +27.28% YoY and +8.22% QoQ, while expenses increased more slowly at +24.06% YoY and +7.04% QoQ. That gap drove operating profit growth of +47.17% YoY and +14.83% QoQ. The company told investors it had proposed new projects at Ludhiana for Craftsman and Sriperumbudur for DR Axion.
Operating margin reached a six-quarter high
Operating margin expanded by +2.17 percentage points YoY and +0.92 percentage points QoQ because revenue growth exceeded expense growth. It has risen every quarter in the reported trend, from 12.62% in Q3FY25 to 16.1% in Q4FY26. The margin was 1.29 percentage points above the 14.81% median for the 93 Consumer Discretionary peers that had reported.
Higher tax and interest costs diluted profit conversion
Pre-tax profit grew +129.10% YoY, faster than net profit at +74.39%, as the tax rate rose by +21.11 percentage points to 32.72%; sequentially, the tax-rate increase was +8.03 percentage points. Interest expense also rose +27.02% YoY and +8.67% QoQ. Other income accounted for 10.9% of pre-tax profit, making it a meaningful contributor to reported earnings.
Management flagged expansion and factory modernisation
Management said it had proposed new projects at Ludhiana for Craftsman and Sriperumbudur for DR Axion. The presentation also said the company was continuing to upgrade and modernise its manufacturing facilities, infrastructure, machinery, equipment and technology.
The market reaction was unusually positive for Craftsman
The stock rose +11.09% on results day and was up +15.53% by the next trading day. That response was much larger than the stock’s 3.4% median absolute move after its last eight results, when it rose three times and fell five times.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹2,226 cr | ₹2,057 cr | +8.22% | +27.28% |
| Other income | ₹19 cr | ₹24 cr | -22.25% | — |
| Expenses | ₹1,868 cr | ₹1,745 cr | +7.04% | +24.06% |
| Operating profit | ₹359 cr | ₹312 cr | +14.83% | +47.17% |
| Operating margin (%) | 16.10% | 15.18% | — | — |
| Interest | ₹86 cr | ₹79 cr | +8.67% | +27.02% |
| Depreciation | ₹118 cr | ₹115 cr | +2.79% | +24.44% |
| Profit before tax | ₹173 cr | ₹142 cr | +21.67% | +129.10% |
| Tax | ₹57 cr | ₹35 cr | +61.26% | +545.61% |
| Net profit | ₹116 cr | ₹107 cr | +8.69% | +74.39% |
| EPS (₹) | ₹48.80 | ₹44.90 | +8.69% | +74.35% |
Operating margin of 16.10% compares with a Consumer Discretionary sector median of 14.81% across 93 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +11.09% | +11.11% |
| Next session | +15.53% | — |
| 5 sessions | +10.19% | +12.83% |
| 15 sessions | +16.71% | — |
| 30 sessions | +26.14% | — |
Volume on the results session was 58.33× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
Expansion
- The company proposed new projects at Ludhiana for Craftsman and Sriperumbudur for DR Axion.
New initiatives
- Craftsman is continuing to upgrade and modernize its facilities, infrastructure, machinery, equipment and technology.
What to watch
- Operating margin versus 16.1% after its +0.92-percentage-point QoQ expansion.
- Tax rate versus 32.72% after the +8.03-percentage-point QoQ increase.
- Other income’s share of pre-tax profit versus 10.9%.