Jyoti CNC Automation IPO

Jyoti CNC Automation IPO: Engineering Precision and Growth

Company Overview

Jyoti CNC Automation Limited, established in January 1991, is a prominent player in the CNC (Computer Numerical Control) machine manufacturing industry. The company specializes in a broad range of CNC machines including turning centres, turn-mill centres, vertical and horizontal machining centres, and multi-tasking machines. Notable clients include ISRO, Bharat Forge, Bosch Limited, and more. Over 30,000 CNC machines have been supplied globally by Jyoti CNC since April 1, 2004.

Company Financials

Jyoti CNC Automation has shown impressive financial growth. For the financial year ending March 31, 2023, the company reported a 27% increase in revenue and a remarkable 131.18% rise in profit after tax (PAT) compared to the previous year. The company's assets as of September 30, 2023, stood at ₹1,706.07 crores, with a revenue of ₹510.53 crores and a PAT of ₹3.35 crores.

Company SWOT Analysis

• Strengths: Diverse product range, strong client base, global presence.

• Weaknesses: Dependency on customer-relationship management due to lack of long-term contracts, pending legal proceedings, occasional delays in statutory payments.

• Opportunities: Expansion in global CNC market, innovation in CNC technology.

• Threats: Market competition, regulatory challenges, reliance on key clients.

Valuation

The company is valued at FY23 EV/EBITDA multiple of 85.6x based on the upper price band on post-issue capital. The company currently holds a market share of over 10% in India, making them the third largest player in the country.

Globally, the company accounts for a 0.4% market share. The company will use the proceeds of the IPO to repay the debt to the tune of Rs 475 cr, thereby reducing its long term debt on the balance sheet by ~50%.

Post IPO, leverage on the balance sheet is likely to reduce significantly, as the company will utilise Rs. 360 cr from the IPO proceeds to fund its working capital requirement.

IPO Overview

The Jyoti CNC Automation IPO marks a strategic growth initiative, leveraging its strong market position and manufacturing capabilities.

IPO Details

• IPO Date: January 9, 2024, to January 11, 2024

• Listing Date: January 16, 2024

• Price Band: ₹315 to ₹331 per share

• Issue Size: ₹1,000 Crores

• Lot Size: 45 Shares

• Minimum Investment: ₹14,895 (Retail)

Objectives of the Issue

• Repayment/prepayment of certain borrowings.

• Funding long-term working capital requirements.

• General corporate purposes.

IPO Grey Market Premium (GMP)

The GMP for Jyoti CNC Automation's IPO has seen fluctuations, but is currently around Rs.75-85.

Conclusion for IPO

Jyoti CNC Automation's IPO presents a significant opportunity in the CNC manufacturing sector, backed by robust financials and a strong market presence. However, potential investors should consider the company's risks and challenges, including legal proceedings and reliance on customer relationships.

Disclaimer

All information is provided for educational and informational purposes only. Data is fetched from publicly available sources such as the DRHP filed by the company and other reliable sources. The website or the author takes no guarantee for the accuracy of the data; however, we have tried our best to present accurate data to our readers. Please consult a financial advisor or do your own analysis before investing/trading in the stock market.