IPO Analysis of Jyoti CNC Automation

Tanushree Jaiswal Tanushree Jaiswal

Last Updated: 4th January 2024 - 04:43 pm

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What they Do? 

Jyoti CNC Automation Limited is a CNC machine manufacturer & supplier. The business is headquartered in India & focuses on producing & distributing CNC machinery.

What are their Product Range? 

What are their Customer Base? 

Along with the clients mentioned above, the clientele is Shreeram Aerospace & Defense, Rolex Rings, Harsha Engineers, Bosch Limited, HAWE Hydraulics, Festo India, Elgi Rubber, National Fittings & others.

Jyoti CNC Automation Limited Financial Summary

Analysis

Assets: The company's total assets have fluctuated over the periods, reaching a peak at ₹ 1,706 crore as of September 2023. This suggests potential growth & investment but may also indicate increased financial risk.

Revenue: Revenue has shown a positive trend, rising from ₹ 590 crore in March 2021 to ₹ 953 crore in March 2023. However, a dip in September 2023 to ₹ 511 crore requires scrutiny to identify potential factors affecting sales.

Profit After Tax: Despite initial losses in March 2021 & 2022, the company has turned a profit, albeit modest, with ₹ 3 crore in September 2023. The positive trajectory signals improving financial health but highlights a need for sustained profitability.

Net Worth: The company's net worth has experienced a significant turnaround, growing from a negative ₹ 30 crore in March 2022 to a robust ₹ 206 crore in September 2023, indicating successful efforts in strengthening the financial position.

Reserves & Surplus: Reserves & surplus have shown consistent growth, reaching ₹ 213 crore in September 2023. This signals financial stability & a strong foundation for future expansion or strategic initiatives.

Total Borrowing: The company's borrowing remained relatively stable around ₹ 800 crore, indicating a cautious approach to leveraging. 

Jyoti CNC Automation IPO Peer Comparison

Company Name EPS (Basic) EPS (Diluted) NAV (per share) (₹) P/E (x) RoNW (%)
Jyoti CNC Automation Limited 1.02 1.02 5.57 N/A 18.35
Elgi Equipments Limited 11.72 11.71 43.27 44.3 27.04
Lakshmi Machine Works Limited 359.47 359.47 2,189.04 37.69 16.42
Triveni Turbine Limited 5.97 5.97 23.92 67.76 25.32
TD Power Systems Limited 6.23 6.22 38.74 46.66 16.01
Macpower CNC Machines Ltd 12.89 12.89 96.61 51.31 13.34
Average 66.22 66.21 399.53 49.54 19.41

Analysis

EPS (Earnings Per Share): Jyoti CNC's EPS (Basic & Diluted) at 1.02 indicates moderate earnings compared to peers. This suggests a steady but not exceptional profit performance.

NAV (Net Asset Value) per share: Jyoti CNC's NAV per share at 5.57 is significantly lower than the peer average of 399.53. This could imply a comparatively smaller asset base or potential undervaluation.

P/E Ratio (Price-to-Earnings): With a P/E ratio of 18.35, Jyoti CNC is below the average of 49.54, suggesting a relatively lower valuation compared to peers. This might be appealing to investors seeking undervalued stocks.

RoNW (Return on Net Worth): Jyoti CNC's RoNW at 19.41% is close to the peer average, indicating a reasonably efficient utilization of equity. However, it's crucial to assess if the RoNW is sustainable & competitive in the industry.

Interpretation

Strengths: Jyoti CNC appears to have a conservative valuation (lower P/E) & a relatively efficient utilization of equity (comparable RoNW).

Weaknesses: The lower EPS & NAV compared to peers might suggest a smaller scale of operations or potential challenges in generating higher earnings & building substantial assets.

Recommendation: Jyoti CNC should emphasize strategies to boost earnings & enhance its asset base to attract investors. Communicating a clear growth plan & addressing any underlying challenges will be essential for a successful IPO.

Investor Caution: Potential investors should carefully evaluate the company's growth prospects, industry position, & competitive advantages, considering the lower NAV & EPS compared to industry peers.

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