The initial public offering (IPO) of Jyoti CNC Automation opened today and will close on January 11, 2024. The CNC machines maker has fixed the IPO price band in the range of ₹315-331 per equity share.
About the issue: The offer is entirely a fresh issue of 3.02 crore shares amounting to ₹1,000 crore. There is no offer-for-sale component in this issue.
Lot size: Jyoti CNC Automation IPO lot size is 45 equity shares and in multiples of 45 equity shares thereafter. At the upper end of the price band, retail investors will have to invest ₹14,895 for one lot.
Reservation: Jyoti CNC Automation IPO has reserved not less than 75 percent of the shares in the public issue for qualified institutional buyers (QIB), not more than 15 percent for non-institutional Institutional Investors (NII), and not more than 10 percent of the offer is reserved for retail investors. A discount of ₹15 per equity share is being offered to eligible employees bidding in the employee reservation portion.
GMP today: Shares of Jyoti CNC Automation Limited were quoting at a premium of ₹95 in the grey market today (January 9). This is down from ₹100 in the previous session (January 8).
However, one must note that grey market premium is only an indicator of how the company's shares are performing in the unlisted market and can change quickly.
Subscription status: The public issue was fully subscribed, 1.08 times, by 12:20 pm on the first day of bidding. It received bids for 1.79 crore shares as against 1.65 crore shares on offer. Its retail portion was bid the most, 4.35 times, followed by the NII category, which was also subscribed 100 percent. However, the QIB part had not yet received any bids till this time.
Anchor investors: Ahead of the IPO, the firm raised over ₹448 crore from anchor investors on January 8. The company allocated 1,35,27,190 equity shares to anchor investors at ₹331 per share. Anchor investors included Goldman Sachs, Nomura Funds, Natixis International Funds, Neuberger Berman Emerging Markets Equity Fund, Optimix Wholesale Global, The Master Trust Bank of Japan, Prudential Hong Kong, Carmignac Portfolio, Allianz Global Investors Fund, and Eastspring Investments India Fund.
Objective: The company plans to use the net proceeds from the fresh offering for the following purposes: to finance the company's long-term working capital needs; to pay back and/or prepay, in full or in part, some of the borrowings that the company has taken out; and for general corporate purposes.
About the firm: Incorporated in January 1991, Jyoti CNC Automation Limited is a manufacturer and supplier of CNC machines. The company is based in India and specialises in manufacturing and supplying CNC machines. The product range includes CNC turning centres, CNC turning-milling centres, CNC vertical machining centres (VMCs), CNC horizontal machining centres (HMCs), simultaneous 3-axis CNC machining centres, simultaneous 5-axis CNC machining centres and multi-tasking machines.
Financials: In the fiscal year 2023, Jyoti CNC Automation achieved profitability, reporting a profit of ₹15.06 crore compared to a loss of ₹48.3 crore the previous year. During the same period, the revenue from operations increased by 24.5 percent to reach ₹929.3 crore.
Book running managers: The Jyoti CNC Automation IPO's book running lead managers are Equirus Capital Private Limited, ICICI Securities Limited, and SBI Capital Markets Limited, and the registrar is Link Intime India Private Ltd.
Important dates: In the wake of the T+3 listing schedule, share allocation is expected on 12th January, 2024 i.e. on Friday next week. The book build issue is proposed for listing on BSE and NSE on January 16.
With an improved market share, growing industry demand, diversified presence, augmenting capacities at regular intervals and improving financial risk profile by repaying certain debt, a strong order book of ₹3,310 crore to be executed over the next few years augurs well for the company. Hence we suggest a SUBSCRIBE rating for the long term.
At the upper price band, the company is valued at a P/E of 374.22x, EV/EBITDA of 85.59x with a market cap of ₹7,527.4 crore post issue of equity shares.
Since the company will use the majority of its IPO proceeds to repay its debt which is going to reduce interest costs and hence it will have a positive impact on profitability going forward. Apart from that, there is revenue visibility for the company due to its order book size and and majority of the revenue is from the aerospace and defence industries which are high-growth sectors. We believe that the issue is fairly priced and recommend a ‘subscribe-long term’ rating.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decision.