Jyoti CNC Automation’s IPO is still upcoming and opens for subscription tomorrow, January 9th, 2024 and closes on January 11th, 2024. Here’s the complete information I could gather:
Issue details:
- Type: Main-board IPO
- Issue size: 30,211,480 equity shares of Rs. 2 each, aggregating to Rs. 1,000 crore
- Price band: Rs. 315 – Rs. 331 per share
- Minimum order quantity: 45 shares and in multiples thereafter
- Open date: January 9, 2024
- Close date: January 11, 2024
- Listing: BSE and NSE (tentatively on January 16, 2024)
- Lead managers: HDFC Bank Ltd., ICICI Securities Ltd., Axis Capital Ltd., IIFL Securities Ltd., Yes Securities Ltd.
Company details:
- Jyoti CNC Automation Limited is a leading manufacturer of CNC Turning Machines and Vertical Machining Centres in India.
- They offer over 200 variants across 44 series and have supplied over 30,000 machines globally.
- They have a strong presence in India and export to 16 other countries.
Financial Performance:
- Revenue for FY23 was Rs. 529 crore, up from Rs. 355 crore in FY22.
- Net profit for FY23 was Rs. 60 crore, up from Rs. 39 crore in FY22.
Key risks:
- Competition in the CNC machine market is intense.
- The company’s growth is dependent on the overall health of the manufacturing sector.
- Any delays in product launches or new project announcements could impact the stock price.
Resources:
- Jyoti CNC Automation IPO DRHP: https://www.sebi.gov.in/filings/public-issues/jan-2024/jyoti-cnc-automation-limited-rhp_80382.html
- Chittorgarh IPO report: https://www.chittorgarh.com/ipo-recommendation/jyoti-cnc-automation-ipo/1611/
- SMC Global IPO details: https://www.chittorgarh.com/ipo/jyoti-cnc-automation-ipo/1611/
Do remember:
- This information is for informational purposes only and should not be construed as investment advice. Please consult with a financial advisor before making any investment decisions.
- The IPO is still open, so the grey market premium (GMP) might change.
Detailed Analysis of Jyoti CNC Automation IPO
Strengths:
- Leader in CNC machines: Jyoti CNC is a leading manufacturer of CNC Turning Machines and Vertical Machining Centres in India, offering over 200 variants and boasting a global presence. This robust product portfolio and established market position provide a strong foundation for growth.
- Healthy financials: The company has shown consistent revenue growth over the past two years, with FY23 seeing a 49% increase compared to FY22. They also turned profitable in FY23, further strengthening their financial health.
- Strong order book: With an order book of over Rs. 3315 crore, Jyoti CNC has secured future revenue and demonstrated healthy demand for their products.
- Government tailwinds: The Indian government’s focus on “Make in India” and promoting domestic manufacturing bodes well for companies like Jyoti CNC, potentially increasing demand for their products.
Weaknesses:
- Valuation concerns: At the higher end of the price band, the IPO is priced at a P/E of 501.52 based on FY23 earnings, and 1103.33 on annualized FY24 earnings. This high valuation raises concerns about potential overpricing and risks for investors.
- Profitability volatility: While profitable in FY23, the company’s recent profitability was partly driven by an exceptional gain from loan waiver. This raises questions about the sustainability of its future profitability.
- Competition: The CNC machine market is highly competitive, with several established players vying for market share. Jyoti CNC needs to continuously innovate and optimize its offerings to maintain its competitive edge.
- Limited export reach: Although present in 16 countries, export revenue contributes a relatively small portion to the overall revenue. Expanding their export footprint could diversify their revenue streams and mitigate domestic economic risks.
Opportunities:
- Growing CNC machine market: The global CNC machine market is expected to grow at a CAGR of 5.5% from 2023 to 2028, driven by factors like increasing automation and technological advancements. This presents a significant growth opportunity for Jyoti CNC.
- Focus on R&D: Jyoti CNC has invested heavily in R&D, focusing on developing new and efficient CNC machines. This continuous innovation can help them stay ahead of the competition and cater to evolving customer needs.
- Expansion plans: The company has plans to expand its manufacturing capacity and diversify its product offerings. This strategic expansion can drive future revenue growth and market share gains.
Threats:
- Macroeconomic headwinds: Global economic slowdown or a downturn in the manufacturing sector could negatively impact demand for CNC machines, posing a risk to Jyoti CNC’s growth trajectory.
- Supply chain disruptions: Any disruptions in the global supply chain for raw materials or components could delay production and hinder Jyoti CNC’s ability to meet delivery timelines.
- Technological advancements: Rapid advancements in CNC technology could render existing machines obsolete and create pressure for Jyoti CNC to constantly adapt and upgrade its offerings.
Overall:
Jyoti CNC Automation is a strong company with a leading position in the Indian CNC machine market. However, the high valuation, recent profitability driven by exceptional gains, and competitive landscape raise concerns for investors. A careful analysis of the company’s financials, growth prospects, and risk factors is crucial before making any investment decisions.
Disclaimer: This analysis is for informational purposes only and should not be construed as investment advice. Please consult with a financial advisor before making any investment decisions.
I hope this detailed analysis provides a more comprehensive picture of Jyoti CNC Automation’s IPO and helps you make informed investment choices.