Jyoti CNC Automation IPO - Key Details You Need to Know
About the Company
Jyoti CNC Automation is one of the top manufacturers of CNC machines and accounted for 8% market share in the 2022 fiscal. It has a diverse portfolio of CNC machines, including CNC Turn Mill Centers, CNC Horizontal Machine Centers, CNC Vertical Machine Centers, and CNC Turning Centers, among others.
The company caters to the needs of the aerospace, defense, auto and auto components, and general engineering sectors. The company claims to have more than 3000 clients spread across continents and, since April 1, 2004, has supplied over 30,000 CNC machines across the globe.
IPO Details
The company’s IPO consists of a fresh issue of Rs 1,000 crore. While details about the issue price, size lot, IPO subscription date, closing date, etc., are awaited, the company plans to use Rs 450 crore to repay its debt and use Rs 300 crore to meet its long-term capital requirements. It plans to use the remaining funds for general corporate purposes.
Financial Snapshot
As of June 30, 2023, the firm's order book stood at Rs 3143.05 crore, which included an order of Rs 260.25 crore from an electric manufacturing services company. Some other key financial details for FY 23 are as follows:
| Total Assets | Rs 15,153.81 million |
|---|---|
Total Equity | Rs 820.63 million |
Total Income | Rs 9526 million |
Total Expenses | Rs 9552.01 million |
Return on Equity | 18.35% |
Strengths and Risks
Here are the company’s key strengths
- One of the World’s Top CNC Manufacturing Companies
Jyoti CNC Limited is one of the world’s leading manufacturers of CNC machines, and in the 2022 fiscal, it was India’s second-largest CNC machine manufacturer. The Economic Times has recognized the company as the Best Brand in the Metal Cutting Industry for 5 consecutive years from 2018 to 2022. The company has a wide range of customizable product portfolios.
- Diversified Global Customer Base
The company has a well-diversified global customer base. During the last three fiscal years, it has supplied over 7200 machines to more than 3000 customers in India and across Asia, North America, Europe, and the rest of the world. The company’s client base includes Space Applications Centre ISRO, Bharat Forge Limited, Turkish Aerospace, BrahMos Aerospace Thiruvananthapuram Limited, Bosch Limited, etc.
- Vertically Integrated Operations Enabling Customization
The company operates out of 3 manufacturing facilities. Two of them are in Rajkot, Gujarat, while one is in France. The firm’s integrated operations enable it to manufacture critical machine components with ease and precision. This reduces dependence on third parties and bolsters operational efficiencies. It also allows the company to maintain control over its manufacturing processes.
Risks
The risks involved are:
- No long-term purchase contracts with customers
- No long-term agreements with suppliers for input materials
- Complete reliance on third-party logistics service providers for transport of input materials and finished products
- High working capital requirement
In Conclusion
The CNC machine market is expected to notch healthy growth in the coming days, with many industries moving towards industry 4.0 and automation. With market players looking for more precision-oriented machines, the demand for CNC machines is expected to increase. CNC machines will also gain from increasing capex investments. These developments position Jyoti CNC Automation to gain significantly. Including shares of Jyoti CNC Automation in your portfolio can boost wealth creation in the coming days. That said, you must go through the company’s red herring prospectus to know the risk factors before investing.
