Jyoti CNC Automation Limited plans to launch an initial public offering (IPO) to raise Rs 1,000 crore. The IPO will open on January 9, 2024 and close on January 11, 2024, and aims to issue 3.02 billion new shares. The company specializes in manufacturing and supplying his CNC machines and offers a diverse product range catering to industries around the world.
About Jyoti CNC Automation Limited
Jyoti CNC Automation is a prominent manufacturer and supplier specializing in manufacturing metal cutting Computer Numerical Control (CNC) machines.
Its diverse customer base includes reputed companies such as ISRO, BrahMos Aerospace, Turkish Aerospace, Tata Group, and Bharat Forge.
Operating from three manufacturing facilities, two in Rajkot, Gujarat and one in Strasbourg, France (acquired in November 2007 through the acquisition of Huron Graffenstaden SAS), the company operates in India’s third largest market. It holds a market share of around 10% in India. 2023
Furthermore, on a global scale, it ranks 12th with a market share of 0.4% in calendar year 2022. This position emphasizes the importance of Jyoti CNC Automation in the CNC machinery industry and its international expansion.
Jyoti CNC Automation IPO Details
- Publication period: January 9, 2024 to January 11, 2024
- Listing date: Scheduled for January 16, 2024
- Price range: Rs 315 to Rs 331 per share
- Lot size: 45 shares
- Total issue amount: 30,211,480 shares, total up to ₹ 1,000.00 Cr
- New issue: 30,211,480 shares, total up to ₹ 1,000.00 Cr
- Employee discount: Rs 15 per share
- Listing platform: BSE, NSE
- Par value: Rs 2 per share
Purpose of IPO
Net proceeds from the new issuance will be used to:
- Repayment and/or prepayment of certain borrowings.
- Financing long-term working capital requirements.
- General corporate purposes.
Financial overview
| Period ends | March 31, 2021 | March 31, 22 | March 31, 23 | September 30, 23 |
|---|---|---|---|---|
| assets | 1,388.19 | 1,286.24 | 1,515.38 | 1,706.07 |
| revenue | 590.09 | 750.06 | 952.6 | 510.53 |
| Profit after tax | -70.03 | -48.3 | June 15th | 3.35 |
| net worth | 18.67 | -29.68 | 36.23 | 205.63 |
| reserves and surplus | 83.11 | 11.67 | 49.14 | 213.33 |
| Total loan amount | 725.12 | 792.16 | 834.97 | 821.4 |
Jyoti CNC Automation IPO – Why invest?
- Industry demand: Growing demand in the CNC machinery industry.
- purchase order: A strong order book of Rs 3,315.33 billion is expected to be executed in the next few years.
- Debt reduction: The company plans to use the IPO proceeds to pay down debt and improve its financial risk profile.
- Diverse customer base: Key clients include ISRO, BrahMos Aerospace, Turkish Aerospace, etc.
Jyoti CNC Automation IPO – Risk Factors
- High rating: The PER in the upper range for FY2013 is 324.51 times.
- Unstable finances: Recovery from historic losses.
- Lower return rates: RoE and RoCE are relatively low compared to peers.
- Debt ratio: In FY2017, it will be 10.17 times.
What do stock market experts say about this IPO?
- Street Anand Rati, our long-term subscription recommendation is based on the idea that Jyoti CNC Automation IPO is fairly priced despite its high P/E ratio of 374.22x and EV/EBITDA of 85.59x. Dedicating a large portion of the IPO proceeds to debt repayments, coupled with the outlook for revenues from the lucrative aerospace and defense industries, is expected to have a positive impact on profitability.
- support from Reliance Securities is proposing a long-term agreement with a focus on Jyoti CNC’s market share expansion, industry demand growth, presence diversification and significant order book of Rs 3,310 crore. This recommendation is supported by confidence in the company’s strategic measures, including debt reduction, and promotes a favorable long-term outlook.
- meter stocks emphasizes recovery from historic losses and recommends long-term subscription. They caution against relying solely on P/E valuations and suggest an analysis based on a reasonable price-to-book value of 6.2x annualized FY24 compared to the industry average. Investors are advised to consider Jyoti CNC Automation IPO given its long-term potential and strategic recovery levers.
Jyoti CNC Automation IPO Gray Market Premium (GMP)
Investor sentiment towards Jyoti CNC Automation IPO is reflected in Gray Market Premium (GMP) as follows:
- According to Livemint, shares of Jyoti CNC Automation Ltd are trading at a premium of Rs 76 in the gray market.
- According to an article in Moneycontrol, the gray market premium (GMP) surged by Rs 96, indicating a 29% premium over the issue price of Rs 331. This means the potential listing price is Rs 426.
- IPO Watch reports that Jyoti CNC Automation IPO has a GMP of Rs.
- Chittorgarh provides daily IPO GMP trends showing fluctuations. On January 9, GMP fell to Rs 72 from the previous day.
Jyoti CNC Automation IPO – Should I subscribe?
- Despite the very high valuation and volatile financials, many analysts recommend Jyoti CNC Automation IPO as a long-term subscriber. The company is focused on debt reduction, strong order book and positive industry trends are contributing to the positive outlook.
- However, investors should carefully consider risk factors such as high valuations and a company’s recovery from past losses before deciding to invest.
High-risk investors who understand all these pros and cons can invest in this IPO.
Suresh KP is the founder of Myinvestmentideas. He is a NISM Certified Investment Advisor and he is a NISM Certified Research Analyst. He has been analyzing financial markets for the past 20 years. He can be reached at suresh@myinvestmentideas.com.
