Jyoti CNC Automation Limited is one of the world's leading manufacturers of metal cutting computer numerical control (CNC) machines with the third largest market share in India accounting approximately 10% of the market share in India in Fiscal 2023 and twelfth largest market share globally accounting for 0.4% of the market share globally in calendar year 2022. They are a prominent manufacturer of simultaneous 5-Axis CNC machines in India and supply a diverse portfolios of CNC machines including CNC Turning Centers, CNC Turn Mill Centers, CNC Vertical Machining Centers (VMCs) and CNC Horizontal Machining Centers (HMCs). They rely on the expertise built over 2 decades of presence and strong R&D capabilities to deliver customised solutions to the customers across diverse set of industries including aerospace and defence, auto and auto components, general engineering, EMS, dies and moulds, and others. They have vertically integrated operations which they consider essential to the ability to provide technologically relevant and customized solutions that has helped them garner customers such as Space Applications Centre – ISRO, BrahMos Aerospace Thiruvananthapuram Limited,Turkish Aerospace, Uniparts India Limited, AVTEC Limited, Tata Advanced System Limited, Tata Sikorsky Aerospace Limited, Bharat Forge Limited, C.R.I. Pumps Private Limited, Kalyani Techno forge Limited, Shakti Pumps (India) Limited, Shree ram Aerospace & Defence LLP, Rolex Rings Limited, Orbit Bearings India Private Limited, Omnitech Engineering Private Limited, Harsha Engineers International Limited, Bosch Limited, HAWE Hydraulics Private Limited, Festo India Private Limited, Elgi Rubber Company Limited, National Fittings Limited, and Aequs Private Limited. They have been awarded Best Metal Cutting Brands by Economic Times for 5 consecutive years from 2018 to 2022. They offer over 200 variants across 44 series and during the last 6 months period ended September 30, 2023, and during the last 3 Fiscals, the Company has supplied over 8,400 CNC machines to more than 3,500 customers in India and across Asia (excluding India), Europe, North America and rest of the world. Since April 1, 2004, they have supplied over 30,000 CNC machines globally. During the last 6 months period ended September 30, 2023, and during the last 3 Fiscals they have sold the products in India and 16 other countries across the globe through the principal offices in India, France, Germany, Turkey and Canada. They sell the products in Romania, France, Poland, Belgium, Italy, and United Kingdom through Huron's established dealer network and also have 29 sales and service centres spread across 12 states in India. As of September 30, 2023, they had an order book of Rs 33,153.26 million including an order of Rs 3,049.17 million from an entity in the electronics manufacturing services (EMS) industry. They operate out of 3 manufacturing facilities, 2 in Rajkot, Gujarat, (Indian Manufacturing Facilities) and 1 in Strasbourg, France, which are equipped with capabilities to design, develop and manufacture the product portfolio. The Indian manufacturing facilities have obtained ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018 certification and the manufacturing facility in Strasbourg, France has obtained ISO 9001:2015 certification. As on September 30, 2023, they had the capacity to manufacture 4,400 machines p.a. in India and 121 machines p.a. in France. The total capacity utilisation for FY21, FY22, FY23 and H1 FY24 is 34.9%, 56.54%, 68.64% and 56.42% respectively with same capacity of 4521 machines p.a. As per financial performance, Jyoti CNC Automation Limited has posted total income / net profits of Rs 590.09 Cr / Rs (70.03) Cr (FY21), Rs 750.06 Cr / Rs (48.30) Cr (FY22), Rs 952.60 Cr / Rs 15.06 Cr (FY23) and Rs 510.53 Cr / Rs 3.35 Cr (upto Q2 FY24). So as per previous financials data, company has shown good sales growth, but posting losses. Company has an average EPS of Rs (1.38) and average RoNW of (40.65%) for last three fiscals. Issue is priced at a P/BV of 59.43 as per NAV of 5.57 as on 31.03.23. If we attribute latest earnings of FY22, FY23, and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around (155.85), 499.83 and 1,122.83 respectively, which looks aggressively priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, three lead managers are associated with this IPO, and have handled around 91 IPOs in last three fiscals. Equirus Capital Private Limited : This is 17th IPO from this BRLM. From last 10 IPOs, two opened below issue price and remaining above issue price or at par on the day of listing. As of now, from last 10 IPOs, two are trading below issue price and remaining are trading above issue price or at par. ( As on 03.01.2024 ) ICICI Securities Limited : This is 56th IPO from this BRLM. From last 10 IPOs, two opened below issue price and remaining above issue price or at par on the day of listing. As of now, from last 10 IPOs, two are trading below issue price and remaining are trading above issue price or at par. ( As on 03.01.2024 ) SBI Capital Markets Limited : This is 21st IPO from this BRLM. From last 10 IPOs, four opened below issue price and remaining above issue price or at par on the day of listing. As of now, from last 10 IPOs, two are trading below issue price and remaining are trading above issue price or at par. ( As on 03.01.2024 ) As per financials, Jyoti CNC Automation Limited has shown good sales growth, RoNW is 18.35% and P/E is respectively (155.85), 499.83 and 1,122.83 as per FY22, FY23 and annualised FY24 earnings. So, issue looks aggressively priced and company has posted losses in FY21 and FY22. But healthy order-book is positive. Company is in business of manufacturing metal cutting CNC machines, which is niche segment. Performance of BRLM is good. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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