Jyoti CNC Automation IPO: A High-Flying Machine Tool Maker Seeking Takeoff, Jyoti CNC Automation is a leading Indian manufacturer of high-precision CNC machine tools used in various industries, including automobiles, aerospace, construction, and engineering. With over 25 years of experience and a focus on innovation, Jyoti CNC has established itself as a prominent player in the growing Indian machine tool market.
Jyoti CNC Automation IPO Key Details:
- Issue Dates: Not yet finalized. However, it is expected sometime in early 2024.
- Offer Size: Rs. 1,000 crore (entirely fresh issue)
- Price Band: Yet to be announced.
- Listing: Proposed listing on both BSE and NSE.
IPO News and Developments:
- Jyoti CNC Automation filed its DRHP (Draft Red Herring Prospectus) with SEBI in July 2023, paving the way for the IPO.
- The company boasts a robust order book exceeding Rs. 1,400 crore, fueled by strong demand across various sectors.
- Recent government initiatives promoting domestic manufacturing and infrastructure development are expected to further benefit the machine tool industry and potentially Jyoti CNC.
- The IPO has seen strong interest from investors, with a grey market premium (GMP) already hovering around 30-40%, indicating positive sentiment.
Jyoti CNC Automation IPO: Offer Details
Securities Offered:
- Equity Shares: The Jyoti CNC Automation IPO will only offer equity shares to the public. This means investors buying into the IPO will become partial owners of the company and have voting rights at shareholder meetings.
Investor Category Reservation:
- Retail Investors: 10% of the total issue size will be reserved for retail investors. This category typically includes individuals investing less than a specific amount (currently undefined for Jyoti CNC).
- Qualified Institutional Buyers (QIBs): 75% of the issue will be reserved for QIBs, consisting of institutional investors like mutual funds, insurance companies, and foreign institutional investors.
- Non-Institutional Investors (NIIs): The remaining 15% will be available for Non-Institutional Investors, including high net worth individuals (HNIs).
Minimum Lot Size and Investment Amount:
- The minimum lot size for the Jyoti CNC Automation IPO is yet to be finalized. It will be specified in the final prospectus shortly before the issue opens.
Jyoti CNC Automation Company Profile:
A Storied Journey in Precision Engineering:
- Founded in 1991: Jyoti CNC Automation boasts a 32-year legacy of excellence in manufacturing high-precision CNC machine tools.
- Humble Beginnings: Starting with gearboxes for machines, Jyoti evolved into a leading manufacturer of sophisticated CNC turning and milling centers.
- Market Leader: Today, Jyoti CNC is the second-largest CNC machine manufacturer in India, holding an impressive 8% market share. Globally, it ranks a respectable twelfth.
Operations and Products:
- Diverse Portfolio: Jyoti CNC offers a wide range of over 200 machines in 44 series, catering to various industries like aerospace, automobiles, and general engineering.
- Customization King: Jyoti prides itself on its ability to deliver tailored solutions to meet specific customer needs.
- Manufacturing Prowess: The company operates three well-equipped facilities – two in Rajkot, India, and one in Strasbourg, France – with a production capacity exceeding 4,500 machines per year.
Branding and Partnerships:
- Global Reach: Jyoti CNC leverages the established dealer network of Huron, a French machine tool giant acquired in 2007, to distribute its products worldwide.
- Domestic Presence: The company boasts 29 sales and service centers across major Indian cities and a strong brand reputation.
Milestones and Achievements:
- Over 30,000 Machines Delivered: Since 2004, Jyoti CNC has supplied over 30,000 machines to more than 3,000 customers globally, a testament to its consistent performance.
- Order Book Boom: As of June 2023, Jyoti CNC boasts a robust order book exceeding Rs. 31,430 crore, fueled by strong demand across various sectors.
- Government Tailwinds: Recent initiatives by the Indian government promoting domestic manufacturing and infrastructure development bode well for Jyoti CNC’s future growth.
Competitive Edge and USP:
- Innovation Focus: Jyoti CNC’s dedication to research and development keeps it at the forefront of technological advancements in the machine tool industry.
- Vertical Integration: The company’s in-house foundry, sheet metal shop, and paint shop ensure superior quality control and cost efficiency.
- Customization Expertise: Jyoti’s ability to deliver bespoke solutions sets it apart from competitors offering standardized products.
Jyoti CNC Automation: Demystifying the Financials
Robust Growth Story:
- Revenue Surge: Jyoti CNC Automation has delivered impressive revenue growth in recent years. From FY20 to FY23, the company’s revenue jumped from Rs. 378 crores to Rs. 828 crores, representing a significant 218% increase.
- Profitability on the Rise: Jyoti CNC has also demonstrated strong profitability improvements. Net profit has climbed steadily, hitting Rs. 109 crores in FY23, a remarkable 291% rise compared to FY20.
- Controlled Debt: The company maintains a prudent financial approach with a debt-to-equity ratio of 0.45, well below the industry average of 1.2 for machine tool manufacturers.
Key Financial Ratios (as of March 31, 2023):
- P/E Ratio: Not applicable yet as the company is not listed. However, based on the anticipated IPO price band (yet to be announced) and FY23 EPS of Rs. 13.33, the P/E could fall within the range of 15-20, which is comparable to industry peers.
- EPS: Rs. 13.33, showcasing a consistent rise in shareholder value.
- Debt-to-Equity Ratio: 0.45, indicating a healthy financial position with manageable debt levels.
Jyoti CNC Automation IPO Objectives
Reasons for Going Public:
Jyoti CNC Automation’s decision to launch an IPO can be attributed to several factors:
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Fundraising for Growth: Raising Rs. 1,000 crore through the IPO will provide Jyoti CNC with the necessary capital to fuel its ambitious expansion plans. This includes:
- Expanding production capacity: The company aims to build a new manufacturing facility in South India to cater to the growing demand.
- Strengthening R&D capabilities: Jyoti CNC intends to invest in research and development to stay ahead of the curve in technological advancements.
- Enhancing brand visibility: Listing on the stock exchange will elevate Jyoti CNC’s brand image and attract a wider investor base.
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Improved Liquidity and Shareholder Value: Becoming a publicly traded company enables easier access to capital markets for future funding needs and potentially enhances shareholder value through stock price appreciation.
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Strategic Partnerships: Public listing attracts potential strategic partners and facilitates mergers and acquisitions, allowing Jyoti CNC to expand its geographical reach or product portfolio.
Fund Utilization Plans:
Jyoti CNC has outlined the following ways for utilizing the funds raised through the IPO:
- Debt Repayment: Approximately Rs. 450 crore will be used to repay or prepay existing debts, reducing their financial burden and improving balance sheet health.
- Working Capital Requirements: Rs. 200 crore and Rs. 100 crore will be allocated for long-term working capital needs in fiscal 2024 and 2025, respectively, ensuring smooth operations and inventory management.
- General Corporate Purposes: The remaining funds will be utilized for various business growth initiatives and unforeseen expenses.
Jyoti CNC Automation IPO: Navigating the Journey with Expert Hands
Lead Managers:
The Jyoti CNC Automation IPO boasts a team of three experienced lead managers who will guide the company through the listing process:
- Equirus Capital Private Limited: Equirus Capital has a strong track record in managing successful IPOs, particularly in the manufacturing and infrastructure sectors. Recent notable offerings include Astral Poly Technik Limited and Dixon Technologies (India) Limited.
- ICICI Securities Limited: ICICI Securities is a leading investment bank with extensive experience in handling large IPOs across various industries. Their recent successful offerings include Indigo Paints Limited and Affinia Logistics Parks Limited.
- SBI Capital Markets Limited: SBI Capital Markets, backed by the strength of State Bank of India, brings substantial experience and a robust distribution network to the table. Recent successful IPOs under their management include Clean Science and Technology Limited and Glenmark Life Sciences Limited.
Registrar:
Link Intime India Private Limited has been appointed as the registrar for the Jyoti CNC Automation IPO. Their role is crucial in managing the shareholder records, handling dividend payments, and ensuring compliance with regulatory requirements throughout the IPO process and beyond. Link Intime boasts a vast experience in handling IPOs for diverse companies across various sectors, ensuring a smooth and efficient investor experience.
Jyoti CNC Automation IPO Risks
While Jyoti CNC Automation presents a promising growth story, it’s crucial to acknowledge the potential risks before investing in its IPO.
Industry Headwinds:
- Competition: The Indian machine tool market is competitive, with established players and new entrants vying for market share. Intense competition could pressure Jyoti CNC’s margins and hinder its growth potential.
- Economic Dependence: The company’s performance is closely tied to the health of various industries like automobiles and aerospace. Slowdown in these sectors could translate into decreased demand for Jyoti CNC’s machines.
- Government Policies: Changes in government policies related to imports, infrastructure development, or manufacturing incentives could impact the entire industry and indirectly affect Jyoti CNC.
Company-Specific Concerns:
- Dependence on Key Personnel: Jyoti CNC’s success is reliant on its founding family and key management personnel. Any unexpected change in their leadership could raise concerns about future direction and operational efficiency.
- Limited Export Footprint: While Jyoti CNC is expanding its international reach, it remains primarily focused on the domestic market. Overdependence on a single market can amplify risks associated with economic fluctuations or policy changes in India.
- Reliance on Raw Materials: Jyoti CNC sources key raw materials like steel and castings from third-party vendors. Disruptions in the supply chain or price fluctuations of these materials could impact production costs and profitability.
Jyoti CNC Automation Limited – DRHP
Also Read: How to Apply for an IPO?
