IPO Analysis of Jyoti CNC Automation

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

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.