The premium listing was in line with expectations, which can be attributed to the company’s market leadership and a substantial presence in the global CNC machine manufacturing market.
The focal points in the company’s business model are its client base, healthy margins and a proxy play on the defense sector. However, the hefty valuations remain a concern.
“The market optimism appears contingent on the company’s anticipated profitability in the ensuing years. However, the steep P/E ratio of 324x based on the latest year’s EPS warrants scrutiny, especially when juxtaposed with the peer group,” said Dhruv Mudaraddi, Research Analyst, Stoxbox.
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The company plans to utilize the IPO proceeds to substantially reduce its long-term debt by 50%, and thereby improve the balance sheet.
Post the debut, analysts advised investors to book profits and those who wish to hold can keep a stop loss around the issue price.”Jyoti CNC’s listing debut was positive but overshadowed by concerns. Thus, we recommend investors to book profit and exit their position,” said Shivani Nyati, Head of Wealth, Swastika Investmart.
Jyoti CNC has a robust order book of Rs 3,300 crore, that will be executed over the next few years. Its other strengths include a diversified product portfolio and customer base, strong global outreach and the ability to use technology to good effect to capture growing market opportunities.
The company posted a revenue and EBITDA CAGR of 27% and 75%, respectively over FY21-23. From a net loss of Rs 70 crore in FY21, it posted a profit of Rs 15 crore in FY23.
In FY23, the company’s revenues rose 24% to Rs 929 crore. Profit for the same period was at Rs 15 crore as against a loss of 48 crore a year ago. In the six months ended September 2023, revenues stood at 509 crore and profit came in at Rs 3.3 crore.
“At the current juncture, we advise investors who have received allotment to book profits. Further investment in the stock can be done after evaluating its quarterly performance in the near term,” said Dhruv Mudaraddi, Research Analyst, Stoxbox.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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