Jyoti CNC Automation IPO opens for subscription, GMP points to premium position

Jyoti CNC Automation IPO is open for subscription on January 09 for Rs 315-331 per share. In the gray market, The shares are trading at Rs 85. The gray market is an informal market where shares are traded before allocation and listing.

The issue worth Rs1,000 crore is an entirely fresh issue, which will close on January 11, where investors can bid for at least 45 shares in a single lot.

For qualified institutional investors, approximately 75% of the offer is reserved. While 15% for high net worth individuals and 10% for retail investors. The company has reserved shares of Rs5 crore for employees. They will be issued at Rs 15 each.

The company will use these net proceeds for repayment of loans, financing long-term capital needs, and general corporate purposes.

Yoti CNC Automation is one of the world’s leading manufacturers of CNC metal cutting machines, with the third largest market share in India., about 10% in FY23. The company has a wide portfolio of CNC machines built over 2 decades of existence. Financially, the company reported a total revenue of Rs929 crore in FY23, up 24% from the same period last year.

“With improved market share, the industry is growing Demand, diversification, increased capacity in the regular period and improved financial risk profile by certain debt payments, strong orders of 3310 Crs to be executed over the next few years augurs well for the company. So we recommend booking ratings for the long term,” Reliance said securities.

“The CNC machine market is likely to set a CAGR of 10.3% (annual growth rate) over CY23-27F. This growth is expected to be driven by the growth of the manufacturing industry due to factors such as industrial automation, and the consolidation of computer-aided manufacturing.

To meet the growing demand, Indian players are focusing on manufacturing 5+ axis CNC machines with ‘Industry 4.0’ features in the domestic market. Moreover, government campaigns like Make in IndiaAatma Nirbhar Bharat and the manufacturing linked incentive or PLI scheme is a boon for the company,” InCred Equities said in an IPO note.