Jyoti CNC Automation IPO: 10 things to know before subscribing to the issue

Jyoti CNC Automation IPO: The issue will open for subscription on January 9 and will close on January 11

Jyoti CNC Automation’s Rs 1,000-crore IPO will open for subscription on January 9. The offer consists of only a fresh issue of 3 crore shares. The metal-cutting computer numerical control (CNC) machines manufacturer will use the proceeds to finance long-term working capital needs and repayment of some borrowings.

Here are 10 key things to know before subscribing to the offer:

1) IPO Dates

The IPO will open for subscription on January 9 and will close on January 11, 2024.

2) Price Band

The price band for the issue has been fixed at Rs 315-331 per share.

3) Offer Details

Jyoti CNC Automation plans to raise Rs 1,000 crore via IPO. The public offer consists of only a fresh issue of 3.02 crore shares. The anchor book will open for a day on January 8.

The company has reserved 75 percent of the IPO size for qualified institutional buyers, 15 percent for high-net-worth individuals, and the remaining 10 percent for retail investors.

Also Read: Jyoti CNC Automation sets Rs 315-331 price band for Rs 1,000-cr IPO opening Jan 9

4) Objectives of Issue

Jyoti CNC Automation plans to use the net proceeds to finance long-term working capital needs and for the repayment of some of the borrowings and the remaining amount will be used for general corporate purposes.

5) Lot Size

Investors can bid for a minimum of 45 equity shares and multiples of 45 after that. Hence the minimum investment by retail investors would be Rs 14,175 (45 (Lot size) x 315 (lower price band)). At the upper end, the bidding amount will increase to Rs 14,895.

6) Company Profile

Jyoti CNC Automation is a manufacturer and supplier of CNC machines. The customer base includes ISRO, BrahMos Aerospace, Turkish Aerospace, Uniparts India, Tata Advances System, Tata Sikorsky Aerospace, Bharat Forge, Shakti Pumps, Shreeram Aerospace & Defense, Rolex Rings, Harsha Engineers, Bosch Limited, HAWE Hydraulics, Festo India, Elgi Rubber, National Fittings and others.

The company has three manufacturing facilities, two of which are located in Rajkot, Gujrat, and another in Strasbourg, France.

7) Financials

The company reported a net profit of Rs 15.06 crore with a revenue of Rs 952.60 crore in FY23 against a loss of Rs 29.68 crore in FY22. EBITDA (earnings before interest, tax, depreciation and amortisation) grew by 34 percent on-year to Rs 97.4 crore with a margin expansion of 74 bps at 10.47 percent for FY23. Debt to equity ratio stood at 10.17x in FY23.

As of September 30, 2023, the total sanctioned and outstanding indebtedness was Rs 1,280.5 crore and Rs 976.8 crore, respectively. Net profit for the six months ended September FY24 came in at Rs 3.35 crore on a revenue of Rs 509.8 crore. As of September 2023, the company had an order book of Rs 3,315.33 crore.

Also Read: Jyoti CNC Automation IPO to hit D-St on Jan 9 with Rs 1,000-crore fresh issue

8) BRLMs & Promoters

The book-running lead managers of the IPO are Equirus Capital, ICICI Securities, and SBI Capital Markets while Link Intime India is the registrar. The promoters of the company are Parakramsinh Ghanshyamsinh Jadeja, Sahdevsinh Lalubha Jadeja, Vikramsinh Raghuvirsinh Rana and Jyoti International LLP.

9) Risks

(i) The company’s dependence on the top 10 customers increased from 20.08 percent in FY23 to 39.92 percent during the 6 months ended September 30, 2023.

(ii) Subsidiaries, Jyoti SAS incurred losses during 6 months period ended September 30, 2023, Fiscals 2023, 2022 and 2021 due to fixed finance cost on borrowings and Huron Graffenstaden SAS incurred losses during 6 months period ended September 30, 2023, and Fiscals 2022 and 2021 primarily due to the long working capital cycle coupled with fixed costs.

(iii) Debt to equity ratio stood at 10.17x in FY23.

(iv) As of September 30, 2023, Jyoti CNC had one of the lowest RoE and RoCE in its peer group which includes Elgi Equipments, Lakshmi Machine Works, Triveni Turbine, TD Power Systems and Macpower CNC Machines.

(v) The price-to-earnings (P/E) ratio based on diluted EPS (Rs 1.02) for FY23 at the upper end of the price band comes at 324.51 times and at the lower end, it stands at 308.82 times.

10) Listing Date

The basis of allotment will be finalised by January 12, shares will be credited to demat accounts by January 15 and the stock will be listed on the NSE and BSE on January 16, as per the RHP.