CRAFTSMAN: Rising Wedge Breakout Post Q1 FY26

CRAFTSMAN Breaks Above Rising Wedge: A Bullish Technical Play Worth Watching Post Decent Q1 FY26 Results

Price Action Analysis:

Current Price Movement:
• Current Price: ₹6,863.50 (as of July 30, 2025)
• Day's Performance: +₹415.50 (+6.44%)
• Volume: 91.27K shares
• 52-Week Range: ₹3,700 - ₹7,121.25

Price Structure Analysis:
• Trend: Strong uptrend from March 2025 lows
• Higher Highs: Consistent formation since March 2025
• Higher Lows: Well-defined support levels during pullbacks
• Momentum: Acceleration post-breakout with gap-up opening

Volume Spread Analysis:
• Volume Patterns: Decreasing volume during the consolidation phase
• Breakout Volume: Significant surge indicating institutional participation
• Volume Profile: Above-average participation at key resistance levels

Key Price Levels:
• All-Time High: ₹7,121.25 (immediate target zone)
• Breakout Level: ₹6,500 (now acting as support)
• Previous Resistance: ₹6,200-6,300 (now support zone)
• Major Support: ₹5,800-6,000 (rising trendline confluence)

Base Formation:
• Primary Base: Extended consolidation between ₹4,800-6,500 from March to July 2025
• Duration: Approximately 4 months
• Depth: Shallow correction of 15-20% from previous highs
• Character: Healthy sideways movement with diminishing volatility

Key Support and Resistance Levels:
• Major Resistance: ₹7,121.25 (all-time high)
• Immediate Resistance: ₹6,900-7,000 zone
• Strong Support: ₹6,500 (breakout level)
• Major Support: ₹5,800-6,000 (rising wedge upper trendline)
• Critical Support: ₹5,200-5,300 (previous consolidation zone)

Technical Pattern:

Rising Wedge Breakout:
• Pattern: Bullish breakout from a rising wedge formation
• Formation Period: March 2025 to July 2025
• Breakout Level: ₹6,500 approximately
• Volume Confirmation: Strong volume spike on breakout day

Trade Setup:

Entry Strategy:
• Primary Entry: ₹6,850-6,900 (current levels on any minor dip)
• Aggressive Entry: ₹6,800-6,850 (immediate entry)
• Conservative Entry: ₹6,650-6,700 (on pullback to breakout level)

Target Levels:
• Target 1: ₹7,200-7,300 (immediate resistance zone)
• Target 2: ₹7,800-8,000 (measured move target)
• Target 3: ₹8,500-9,000 (cup and handle projection)

Stop-Loss Levels:
• Aggressive Stop: ₹6,400 (below breakout level)
• Conservative Stop: ₹6,200 (below rising wedge support)
• Trailing Stop: Move to breakeven once Target 1 is achieved

Position Sizing:
• Risk per trade: Maximum 2% of portfolio
• Position size calculation based on stop-loss distance
• For ₹6,850 entry with ₹6,400 stop: Risk = ₹450 per share
• Recommended allocation: 1-2% of equity portfolio

Risk Management:

Risk Factors:
• Market-wide correction could drag the stock down
• Sector rotation out of engineering/auto components
• Profit booking at all-time high levels
• Global economic headwinds affecting the auto sector

Risk Mitigation:
• Strict stop-loss adherence
• Partial profit booking at each target level
• Position size limiting to manage portfolio risk
• Monitoring broader market sentiment

Exit Strategy:
• Book 30% profits at Target 1
• Book another 40% at Target 2
• Trail remaining 30% with rising stop-loss

Sectoral and Fundamental Backdrop:

Business Overview:
• Diversified engineering company with vertically integrated manufacturing
• Three main segments: Automotive Powertrain (51%), Aluminium Products (21%), Industrial & Engineering (28%)
• Market capitalization: ₹16,357 crores
• Revenue: ₹6,323 crores with profit of ₹211 crores (TTM)

Recent Financial Performance(Q1 FY26):
• Q1 FY26 results: Revenue of ₹1,784 crores, profit of ₹70 crores
• PAT growth: 31% YoY in Q1 FY26
• Segment performance: Aluminium Products revenue up 102.82% YoY
• Powertrain revenue: ₹496.41 crores (up 19.23% YoY)

Sector Dynamics:
• Automotive sector recovery post-pandemic
• Increasing adoption of aluminium components for weight reduction
• Growing demand for powertrain components in commercial vehicles
• Beneficiary of the Make in India initiative

Key Clients and Market Position:
• Supplies to tier 1 OEMs including Tata Motors, Cummins, M&M, Royal Enfield
• Strong presence in commercial vehicles, two-wheelers, and tractor segments
• Established player in aluminium die-casting and machining

Growth Drivers:
• Capacity utilization improvements
• Focus on higher-margin aluminium products
• Expansion in industrial and engineering segments
• Increasing content per vehicle trends

Analyst Outlook after Q1 FY26:
• Average 1-year price target: ₹5,754 (though this appears conservative given current price)
• Price target range: ₹4,318 to ₹8,085
• Positive sentiment on aluminium business growth
• Capex guidance of ₹100-120 crores annually for maintenance and debottlenecking

My Take:

The technical setup for CRAFTSMAN presents a compelling bullish case with the successful breakout from a rising wedge pattern, supported by strong volume and a healthy fundamental backdrop. The stock is well-positioned to test new highs, though traders should remain disciplined with risk management given the proximity to all-time high levels. The diversified business model and strong sectoral tailwinds provide fundamental support to the technical breakout.

Keep in the Watchlist and DOYR.
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Disclaimer: "I am not a SEBI REGISTERED RESEARCH ANALYST AND INVESTMENT ADVISER."
This analysis is intended solely for informational and educational purposes and should not be interpreted as financial advice. It is advisable to consult a qualified financial advisor or conduct thorough research before making investment decisions.