The initial public offering (IPO) of Jyoti CNC Automation continued to witness a strong response from the investors during the third and final day of the bidding process. The issue was subscribed 2.52 times by the end of day one, while it ended day two with 3.92 times subscription. The Gujarat-based Jyoti CNC Automation is offering its shares in the price band of Rs 315-331 apiece with a lot size of 45 shares and its multiples thereafter. The company is looking to raise a total of Rs 1,000 crore via its primary offering, which is entirely a fresh shares sale of up to more than 3.02 crore equity shares. According to the data, the investors made bids for 18,38,34,810 equity shares, or 10.48 times, compared to the 1,75,39,681 equity shares offered for the subscription by 12.45 pm on Thursday, January 11. The three-day bidding for the issue, which commenced on Tuesday, January 9, conclude today itself. The allocation for retail investors was subscribed 20.49 times, while the portion reserved for non-institutional investors saw a subscription of 18.41 times. The employee portion was booked 9.78 times. However, the quota set aside for qualified institutional bidders (QIBs) attracted 3.29 times bids for as of the same time. Jyoti CNC Automation, established in January 1991, is a manufacturer and supplier of CNC machines, which is specialized in a diverse range of CNC machines, offering 200 types across 44 series. CNC machines are computer numerical control machines, which play an important role in the manufacturing industry. Brokerage firms have a mixed view on the issue of Jyoti CNC Automation. A few suggest to bid for the issue in the longer run citing its strong business and market share, while others suggest to avoid the issue on the back of low profitability, loss making nature of business and mounting debt. The company is a leading CNC manufacturing company with an order book of Rs 3,320 crore, leading us to a strong revenue visibility. Out of the total order book, aerospace and defence contribute 57 per cent, said IndSec Research in its IPO note. "The company has grown its revenue and Ebitda at a 2-year CAGR of 27 per cent and 75 per cent, respectively backed by increasing utilization and operational efficiencies at play. We believe, Jyoti CNC is poised to benefit from the ongoing capex cycle and should see healthy growth over the medium term owing to strong order book," it added with a 'subscribe' rating to the IPO. Ahead of its IPO, Jyoti CNC Automation has raised Rs 447.75 crore from anchor investors as it finalized allocation of 1,35,27,190 equity shares at a price of Rs 331 apiece. 75 per cent shares have been reserved for qualified institutional bidders (QIBs), while 15 per cent shares shall go to non-institutional investors (NIIs). Remaining 10 per cent of the net offer shall go to retail investors. The steep P/E ratio of 324 times based on the last year diluted EPS of Rs. 1.02 warrants scrutiny, especially when juxtaposed with the peer group's P/E ratio. The market's optimism appears contingent on the company's anticipated profitability surge in the ensuing years, said StoxBobx by BP Equities, which has an 'avoid' rating for the IPO. SBI Capital Markets, Equirus Capital and ICICI Securities serve as the book running lead managers for the Jyoti CNC Automation IPO, with Link Intime India acting as the registrar. The company's shares are set to be listed on both the BSE and NSE on Tuesday, January 16, 2024.
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