Jyoti CNC IPO debuts at 12% premium; surges 22% post debut

Jyoti CNC Automation, the country’s largest CNC machine manufacturer, made a stellar debut on the stock market on Tuesday. The shares of Jyoti CNC debuted at ₹370 apiece on the NSE, a premium of 11.8% over the issue price of ₹331 per share. On the BSE, the stock opened 12.4% higher at ₹372 over the IPO price.

Post listing, Jyoti CNC shares touched a high of ₹405 on the NSE, up 22.3% over the IPO price, while the market capitalisation climbed to ₹9,132 crore.

The debut of the Gujarat-based company was broadly in line with market expectations as the stock was commanding a grey market premium (GMP) of ₹38 in the unofficial market. With a price band of ₹331, the listing price was estimated to be around ₹369 (IPO price + GMP price) in the grey market. The GMP of CNC machine manufacturers has witnessed a downward trend despite a robust response for the IPO, falling from the peak of ₹100 on January 8 to ₹38 as of today.

“While Jyoti CNC's strong brand presence and robust market share are undeniable, the financial concerns and hefty valuation necessitate a cautious approach. The listing debut was positive but overshadowed by concerns. Thus we recommend investors book profit and exit their position; however, those who still want to hold it should keep a stop loss at around issue price,” says Shivani Nyati, Head of Wealth, Swastika Investmart Ltd.

The ₹1,000 crore IPO of Jyoti CNC Automation received an overwhelming response from investors, which opened for subscription between January 9-11 at a price band of ₹315-331, with a discount of ₹15 for all eligible employees. The issue was overall subscribed 40.49 times amid strong demand on the final day of the issue. The IPO of Jyoti CNC Automation got fully booked on the first day with a total subscription of 2.7 times at end of day 1, followed by 4.14 times on day 2.

The portion reserved for retail individual investors was subscribed 27.50 times, while the quota for non-institutional investors (NIIs) and qualified institutional buyers (QIBs) was booked 38.33 times and 46.37 times, respectively. The quota reserved for employees was subscribed 13.14 times.

As per the offer document filed with capital market regulator SEBI, the company had reserved 75% of the issue for QIB, 15% for NII, and 10% for retail investors, including employees. The lot size was 45 shares and multiples thereof, which means the minimum investment amount was ₹14,895 for 1 lot and the maximum was ₹193,635 was for 13 lots (585 shares).

The IPO of the Rajkot-based company was entirely a fresh issue of 3.02 crore shares and it intends to use net proceeds to finance long-term working capital needs and repay some of the loans, as well as to meet general corporate purposes.

Ahead of the IPO, the company raised ₹447.75 crore from 37 anchor investors, which saw participation from some marquee players such as 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, and others.

Jyoti CNC Automation is one of the world’s leading manufacturers of metal-cutting computer numerical control (CNC) machines, accounting for around 10% of the market share in India in FY23 and the 12th largest market share globally. It operates out of three manufacturing facilities, two in Rajkot, Gujarat and one in Strasbourg, France, which are equipped with capabilities to design, develop and manufacture a product portfolio.

The company caters to customers across various industrial areas such as aerospace and defence, auto and auto components, general engineering, EMS, dies and moulds, and others.  ISRO, Tata Advances System, Tata Sikorsky Aerospace, BrahMos Aerospace, Turkish Aerospace, Uniparts India, Bharat Forge, Shakti Pumps, Shreeram Aerospace & Defense, Rolex Rings, Harsha Engineers, Bosch Limited, and National Fittings are among its key customers.

In H1 of FY24 and the last three financial years, it has supplied over 8,400 CNC machines to over 3,500 customers in India and across Asia, excluding India, Europe, North America and the rest of the world. As of H1 FY24, the company had an order book of ₹3,315.3 crore, including an order of ₹305.2 crore from an entity in the electronics manufacturing services industry.

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