Union Budget 2026: Craftsman Automation Poised for Growth in Capital Goods

Union Budget 2026: Craftsman Automation Poised for Growth in Capital Goods

Union Budget 2026, presented on February 1, 2026, outlines a strategic vision for India's economic growth, with a pronounced emphasis on infrastructure development, domestic manufacturing, and strengthening the capital goods sector. These budgetary priorities are directly aligned with the core business segments of Craftsman Automation Ltd, a leading engineering and manufacturing company specializing in precision components and systems for automotive and industrial applications. The comprehensive policy framework and substantial allocations are expected to create a robust demand environment, significantly impacting Craftsman Automation's operational trajectory and financial performance in the coming years.

Massive Infrastructure Push Fuels Capital Goods Demand

The Union Budget 2026 proposes a substantial increase in public capital expenditure, with an allocation of ₹12.2 lakh crore for the financial year 2026-27. This marks a continued momentum from ₹11.2 lakh crore in BE 2025-26 and ₹2 lakh crore in 2014-15. This significant outlay is earmarked for critical infrastructure projects, including the establishment of new dedicated freight corridors, operationalization of 20 new national waterways, and the development of seven high-speed rail corridors connecting major economic hubs. For Craftsman Automation, which manufactures components for commercial vehicles (CVs) and industrial segments, this translates into a direct surge in demand. Enhanced infrastructure activity necessitates more construction and infrastructure equipment, commercial vehicles for logistics, and industrial machinery, all requiring precision components that Craftsman Automation provides.

Strengthening Domestic Manufacturing and Capital Goods Capability

The budget explicitly recognizes the importance of a strong capital goods capability as a determinant of productivity and quality across sectors. Several measures are proposed to bolster this segment. The establishment of high-tech tool rooms by central public sector enterprises, functioning as digitally enabled automated service bureaus, will enhance local design, testing, and manufacturing of high-precision components. Furthermore, a new scheme for the enhancement of construction and infrastructure equipment aims to strengthen domestic manufacturing of high-value and technologically advanced equipment. A dedicated scheme for container manufacturing, with a budgetary allocation of ₹10,000 crore over five years, is also introduced to foster a globally competitive ecosystem. These initiatives directly support Craftsman Automation's expertise in precision engineering and component manufacturing, potentially opening new avenues for growth and collaboration within the domestic supply chain.

Incentivizing Global Value Chain Integration and Exports

To position India as a key player in global value chains, the budget proposes a special bonded logistics park regime. This regime aims to facilitate efficient manufacturing, assembly, and re-exports by multinational corporations, supporting a 'China plus one' strategy. Such measures are expected to attract more manufacturing to India, increasing the overall demand for high-quality components and systems, which Craftsman Automation supplies. Additionally, the extension of drawback/Remission of Duties and Taxes on Export Products (RODTEP) benefits to goods manufactured in MOOWR (Manufacturing and Other Operations in Warehouse Regulations) premises and exported thereafter will enhance the export competitiveness of Indian manufacturers, including Craftsman Automation. The budget also encourages foreign investment in capital goods by proposing a five-year income tax exemption for non-residents providing capital goods, equipment, or tooling to toll manufacturers in bonded zones, further boosting advanced manufacturing capabilities within India.

Operational Efficiency and Ease of Doing Business

The Union Budget 2026 includes several provisions aimed at improving operational efficiency and simplifying the business environment. Customs processes are set to undergo reforms for minimal intervention, ensuring smoother and faster movement of goods and greater certainty for trade. This includes enhancing duty-deferment periods for authorized economic operators and leveraging AEO accreditation for preferential treatment. Simplified income tax rules and rationalized penalty frameworks contribute to an improved ease of doing business. For Craftsman Automation, these reforms translate into reduced logistical friction, lower compliance costs, and a more predictable operating landscape, allowing the company to focus more on its core manufacturing and expansion activities.

Craftsman Automation's Strategic Alignment with Budgetary Goals

Craftsman Automation's ongoing strategic initiatives align well with the budget's thrust. The company's plan to invest ₹150 crore in a new factory in Hosur to bolster production capacity by 15% and its substantial ₹850 crore capital expenditure for FY2025 are indicative of its commitment to growth. The management's guidance for consolidated revenue to reach ₹7,000 crore by FY2026, up from ₹5,500 crore, is now further supported by the favorable policy environment. Acquisitions like DR Axion and Sunbeam have already strengthened its capabilities in lightweight aluminium products, a segment that aligns with the broader industry trend towards fuel efficiency and advanced materials. The budget's focus on domestic manufacturing and infrastructure will provide a strong tailwind to these expansion efforts, reinforcing Craftsman Automation's market position.

Financial Implications and Outlook

The budgetary support for the capital goods and manufacturing sectors is expected to positively impact Craftsman Automation's financial metrics. Increased demand from infrastructure projects and a more conducive manufacturing environment should contribute to higher revenue growth and improved profitability. The company has already reported strong consolidated net sales of ₹2,057.28 crore for December 2025, up 30.53% year-on-year. The budget's initiatives are likely to sustain this growth momentum. Projections of consolidated EBITDA rising from ₹850 crore to over ₹1,100 crore (a 29% increase) and EBIT growing from ₹500 crore to ₹700 crore (a 40% increase) appear more achievable given the supportive policy landscape. The focus on domestic investments, with only ₹150 crore allocated outside India, further underscores the company's commitment to capitalizing on the Indian growth story.

Key Budgetary Measures Impacting Craftsman Automation

Market Sentiment and Investment Landscape

The Union Budget 2026's pro-manufacturing and pro-infrastructure stance is likely to foster positive market sentiment for the capital goods sector. Craftsman Automation, as a prominent player, is well-positioned to attract investor interest. The company's strong fundamentals, coupled with a clear growth strategy and favorable government policies, could lead to a re-rating of its valuation. While the company currently trades at a discount to peers due to margin concerns, a sustained improvement in operational efficiency driven by increased demand and reduced friction from budget reforms could address these concerns. The overall investment landscape for companies contributing to India's manufacturing prowess is expected to remain robust.

Conclusion

Union Budget 2026 presents a highly favorable environment for Craftsman Automation Ltd. The government's unwavering commitment to boosting infrastructure, strengthening domestic manufacturing, and integrating India into global value chains directly supports the company's growth ambitions. With substantial capital expenditure plans, targeted schemes for capital goods, and reforms aimed at improving the ease of doing business, Craftsman Automation is strategically positioned to capitalize on these opportunities. The coming fiscal years are expected to see the company accelerate its growth trajectory, driven by increased demand and a supportive policy ecosystem, as it continues to expand its footprint in the Indian and global markets.