August 9, 2024
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Stock Market

Is Jyoti CNC’s High PE justifiable? Check its Future Plans

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Stock Market

Is Jyoti CNC’s High PE justifiable? Check its Future Plans

CNC machines are at the heart of modern industry, serving as the foundation for innovation. These precise tools will influence the future of the automotive, aerospace, and electronics sectors. CNC machines transform raw materials into complex components with amazing accuracy. They bring engineering plans to life, creating components that power our planet. As technology advances, CNC machines adapt to meet new difficulties.

They enable businesses to produce products more quickly and with superior quality. CNC technology has an impact on practically every element of life, from smartphones to spacecraft. This hidden revolution in manufacturing is driving developments across industries. In this article, we are looking at the major manufacturer of CNC machines, Jyoti CNC Automation Limited’s segments, financial analysis, future plans, and IPO success.

Industry Outlook

India is the third most popular place for manufacturing in the world. Manufacturing is becoming a crucial component of the nation’s economic development. Its robust performance is fueled by important sectors, including consumer durables, automotive, engineering, chemicals, and pharmaceuticals. Manufacturing exports have grown from $422 billion in FY22 to $447.46 billion in FY23. India will expect to export goods worth $1 trillion by 2030.

The expanding manufacturing industry is likely to boost the machine tool market in the future. Technological advancements in machine tools, such as multi-axis systems and robotic arms, are key factors driving the global growth of the machine tool industry. The Indian machine tools industry is expected to increase from $1.5 billion in FY23 to $3.2 billion in FY32, which will grow at a CAGR of 8.2%.

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India consumed $3 billion worth of CNC machines in 2023, which includes 65% imported and 35% domestic products. This CNC machine consumption is expected to grow by 20% over the next 5–7 years. The global consumption of CNC machines is expected to grow from $67.5 billion in FY23 to $80.4 billion by 2028, which will grow at a CAGR of 3.5% during the period. Jyoti CNC Automation Limited is one of the leading manufacturers of CNC machines in India.

Company Overview Of Jyoti CNC Automation

Jyoti CNC Automation was originally established on January 17, 1991, as AMB Engineering Company Private Limited. Later in 2012, it changed its name to Jyoti CNC Automation Limited. Since its incorporation, the company has expanded significantly from manufacturing gearboxes for machines to developing precision all-geared head lathe machines. Later onwards, Jyoti CNC Automation identified a shift from conventional machines to highly sophisticated CNC machines.

Jyoti CNC Automation Limited is a leading manufacturer of CNC machines and automation solutions, based in Rajkot, Gujarat, India. It is the third-largest CNC manufacturer in India and the 12th largest in the world market, which is approximately 10% of the domestic market for CNC machines in FY23 and 0.4% of market share globally in FY22.

It is also one of the world’s top producers of metal-cutting CNC machines and for the sixth consecutive time, received the Best Metal-Cutting Brand award from the Economics Times Group. Its main services include providing customized automation systems and machining solutions to various sectors, including automotive and aerospace.

Segment Analysis Of Jyoti CNC Automation

Jyoti CNC offers a wide range of CNC solutions for industries including aerospace, defence, automotive, and general engineering. The company diversified over 200 variants across 44 series across CNC turning centers, CNC turn-mill centers, CNC vertical machining centers (VMCs), CNC horizontal machining centers (HMCs), CNC 3-axis machining centers, CNC 5-axis machining centers, and multi-tasking machines, along with industry 4.0 and artificial intelligence (AI) solutions. Jyoti CNC Automation has installed more than 130000 machines across more than 60 countries.

The company has supplied over 8400 CNC machines to more than 3500 customers in India and across Asia (excluding India), Europe, North America, and the rest of the world. Jyoti CNC’s vertically integrated operations allow advanced technology and customized solutions for clients such as ISRO, Tata Advanced Systems, and Bharat Forge.

It operates three manufacturing facilities, which include 2 in Rajkot, Gujarat, India, and 1 in Strasbourg, France, which are equipped with capabilities to design, develop and manufacture a business product portfolio. In FY23, the company could manufacture 4400 machines per year in India and 121 machines per year in France. The company generated revenue from India by 58% and outside India by 42%, which is INR 450.1 crore in Q4 FY24.

IPO Success And Stock Performance

Jyoti CNC Automation Limited went through an IPO to raise ₹1000 crore, entirely a fresh issue. Out of these, ₹475 crores are used for the repayment of certain debts of the company, ₹360 crores to be used for the funding long-term working capital requirements of the company, and the rest of the capital is to be used for general corporate purposes.

Jyoti CNC Automation Limited was listed in the stock market on January 16, 2024, at ₹370. Later, the stock moved significantly to reach an all-time high of ₹1449.95 as of June 20, 2024. After being listed, the company has given a return of 291.89% in 156 days, reaching an all-time high. Now, the company is trading at around ₹1130, which is almost 22.07% below the all-time high.

Financial Analysis Of Jyoti CNC Automation

Coming into the financial parts of Jyoti CNC Automation Limited, the company’s revenue has increased over the last four consecutive financial years. The revenue has increased from ₹929 crores in FY23 to ₹1338 crores in FY24, which has grown by 44.03%. Jyoti CNC Automation Limited’s revenue mainly comes from aerospace and defence (40%), auto & auto components (25%), general engineering (19%), EMS (5%), dies and moulds (5%), and others (6%). The company’s revenue growth has had a compound annual growth rate (CAGR) of 32.13% for the last three years.

Jyoti CNC Automation Limited’s net profit has improved over the last 3 years. The company turned its net loss of ₹70 crore in FY21 into a net profit of ₹151 crore in FY24. The net profit of the company has increased by 906.67% as compared to the previous year, 2023, which was from ₹15 crore to ₹151 crore in FY24. EBITDA margin has increased from 8.3% in FY23 to 22.5% in FY24.

Jyoti CNC Automation Limited’s operating profit margin has improved from 9.37% in FY23 to 20.52% in FY24. The company’s net profit margin has risen from 1.62% to 11.27% in FY24. In FY24, the company’s ROE and ROCE were 11.05% and 18.75%, respectively. Jyoti CNC Automation Limited is an almost debt-free company, although it has massively reduced its debt-to-equity ratio from 10.17X to 0.22X in FY24.

Order Book Of Jyoti CNC Automation

Jyoti CNC Automation Limited had an order book value of 3242.4 crore in December 2023. In Q4 FY24, the company received an order value of 635.8 crore, which includes aerospace and defence (21%), auto & auto components (29%), general engineering (35%), dies & moulds (4%), EMS (2%), and others (9%).

Jyoti CNC has made machine sales of 439.9 crore in Q4 FY24. At present, the company has a 3438.3 crore order book value as of March 31, 2024, which is classified into various segments. We can understand this through the below chart of the order book of Jyoti CNC Automation Limited.