Are you a stock market enthusiast interested in entering the manufacturing industry? If yes, the upcoming IPO from Jyoti CNC Automation might grab your attention! The two-decade-old Jyoti CNC is all set to go public today. Understand the company’s background, financials and IPO details to analyse if this investment opportunity suits you.
Who is Jyoti CNC Automation Ltd?
Jyoti CNC Automation Ltd is a company manufacturing CNC (Computer Numerical Control) machines. The firm is the third-largest CNC manufacturer in India and the twelfth-largest globally in terms of market share.
History
The promoters and owners of Jyoti CNC are Mr P.G. Jadeja and Mr S.L. Jadeja. The two have been involved in manufacturing machine tools since 1989 and began CNC machinery manufacturing in a full-fledged manner in 2002.
Objective
The company aims to achieve technological advancement in the area of machine tools, along with contributing significantly to society, both culturally and economically.
Vision: To customise products for customers that integrate technology and innovation.
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Jyoti CNC today
Jyoti CNC continues to be a leading manufacturer in its industry today, with an 8% market share in India. The company is a multinational firm operating an export wing with demand in various countries like Romania, France, Poland, Belgium, the United Kingdom, etc.
Jyoti CNC has 29 centres with sales and services spread across the nation. The company operates with a vision to build a temple of technology.
Jyoti CNC’s financials
| Particulars | FY 2023 (₹ million) | FY 2022 (₹ million) | FY 2021 (₹ million) |
| Revenue from operations | 9,292.59 | 7,464.87 | 5,800.59 |
| Expenses | 9,552.01 | 7,918.11 | 6,616.65 |
| Profit for the year | 150.60 | (483.00) | (700.29) |
| Earnings per share (₹) | 1.02 | (3.28) | (4.75) |
| Return on capital employed (%) | 9.50% | 4.85% | 0.47% |
| Debt to equity ratio (in times) | 10.17 | 19.25 | 6.44 |
| Gross fixed assets turnover ratio (in times) | 1.27 | 1.08 | 0.77 |
Jyoti CNC Automation’s IPO details
| Jyoti CNC IPO’s opening date | January 09, 2024, Tuesday |
| Jyoti CNC IPO’s closing date | January 11, 2024, Thursday |
| Bidding date for anchor investors | January 08, 2024, Monday |
| Issue size | ₹1,000 crores |
| Jyoti CNC’s share price (IPO price band) | ₹315 to ₹331 per share |
| Issue type | Fresh issue of 3.02 crore shares through book building |
| Face value per share | ₹2 per share |
| Minimum lot | 45 shares per lot |
IPO reservations | 75% – Qualified Institutional Buyers 15% – Non-Institutional Investors 10% – Retail investors |
Shareholding pattern before IPO
The below list contains the names of shareholders holding more than 1% stake in Jyoti CNC before the IPO:
| Shareholder | Percentage of shareholding |
| Parakramsinh Ghanshyamsinh Jadeja | 31.03% |
| Jyoti International LLP | 18.63% |
| Anilkumar Bhikhabhai Virani | 16.66% |
| Vijay Mohanlal Parekh | 8.67% |
| Paresh Mohanlal Parekh | 8.67% |
| Sahdevsinh Lalubha Jadeja | 3.39% |
| Vikramsinh Raghuvirsinh Rana | 2.31% |
| Joint holding of Hemant J Jhaveri and Indira J Jhaveri | 1.27% |
Fund utilisation plan
- The company plans to utilise ₹475 crores in 2024 to repay borrowings, either wholly or in parts.
- ₹100 crores will be used in 2024 to fund capital expenses of the firm.
- ₹260 crores will again be used for long-term capital needs in 2025.
- The remaining amount based on the subscription will be diverted towards general corporate purposes.
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Should you invest in Jyoti CNC’s IPO?
| Peer comparison (Figures as of March 2023) | ||||||
Company | Face value (₹ per share) | Revenue from operations (₹ million) | EPS basic (₹ per share) | NAV (₹ per share) | P/E | RONW (%) |
| Jyoti CNC Automation Limited | 2 | 9,292.59 | 1.02 | 5.57 | – | 18.35% |
| Elgi Equipments Limited | 1 | 30,406.98 | 11.72 | 43.27 | 44.30 | 27.04% |
| Lakshmi Machine Works Limited | 10 | 47,191.49 | 359.47 | 2,189.04 | 37.69 | 16.42% |
| Triveni Turbine Limited | 1 | 12,475.50 | 5.97 | 23.92 | 67.76 | 25.32% |
| TD Power Systems Limited | 2 | 8,722.97 | 6.23 | 38.74 | 46.66 | 16.01% |
| Macpower CNC Machines Ltd | 10 | 2,018.90 | 12.89 | 96.61 | 51.31 | 13.34% |
Consider investing because
- CNC machines use computer programs to run tools and machinery for manufacturing. This helps in reducing manual labour and additional efforts. Jyoti CNC works in this niche segment, making this a unique investment opportunity for investors.
- Jyoti CNC is one of the top manufacturers in the CNC industry, holding the third position in terms of market share. It also has a global presence and is ranked number twelve in terms of market share. Jyoti CNC produces various kinds of machinery spread across the CNC machine value chain.
- The company has customers across different continents besides Asia, such as Europe, North America, etc. The company has supplied more than 30,000 CNC machines in the last 20 years, with 8,500 machines supplied in the last three years.
- The company’s strong research and development team, works constantly to deliver customised and innovative solutions to clients. Jyoti CNC has a diverse product range consisting of basic to high-end CNC machinery. In 2007, Jyoti CNC acquired Huron Graffenstaden SAS, a pioneer in 5-Axis machine technology, to get access to global markets and increase Jyoti’s technical capabilities. Today, Jyoti CNC has 141 employees working exclusively in the R&D department.
- Besides the above, the company has three large manufacturing facilities. Jyoti CNC is led by a strong management team having decades of experience in the CNC machinery field.
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Watch out for the following
- The company has been at a loss in the past. FY 2023 did not see a final loss because there was a profit on the waiver of a loan. Jyoti CNC does not guarantee to incur profit in the future.
- Jyoti CNC’s products are not meant for end-consumers. They are usually supplied to other manufacturing industries. Some of the top customers of Jyoti CNC are the aerospace and defence industries, auto and auto components industry, general engineering industry, etc. A downfall for any of these industries will adversely affect the business and revenue of Jyoti CNC.
- The company does not have business from recurring customers as these machineries are one-time purchases. So, Jyoti CNC may or may not succeed in constantly onboarding new customers.
- The firm has delayed making statutory payments and filing statutory reports, like audited financial statements in the past. Continuing the same way can invite troubles in the form of penalties, affecting the firm’s goodwill.
- Given the manufacturing nature of Jyoti’s business, any machinery breakdown can impact the firm’s operations, thereby affecting its revenue.
Bottomline
Jyoti CNC is a niche industry offering a distinct opportunity to investors. Given the size and market share of the firm, investing in Jyoti CNC might seem like a good option. However, investors must thoroughly analyse the risk factors associated with Jyoti CNC. Besides its losses, the firm has displayed delays in payments and filings. It is important for investors to analyse the causes and consequences of such actions before deciding to invest.
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