Shares of Jyoti CNC Automation Ltd, which has already surged over 300% from its IPO price of ₹331, still have room for further upside, brokerage firm Equirus said after initiating coverage on the stock on Monday, December 30.
Equirus has now assigned an ‘add’ rating to the CNC (computer numerical control) machine maker with a price target of ₹1,450. The brokerage’s price target implies a potential upside of 5% from Friday’s closing levels.
The brokerage wrote in its note that the company is well positioned to benefit from several regional tailwinds domestically and globally.
Going forward, Jyoti CNC Automation is actively developing and expanding its capabilities to capitalise on significant opportunities.
The brokerage also pointed to a significant capex plan including backward integration initiatives as a key driver of growth. Equirus forecasts a strong CAGR of 40% in sales, 47% in EBITDA and 66% in PAT during FY24-FY27, while RoE is estimated at 27% by FY26. In a conversation with CNBC-TV18 last month, Jyoti CNC Automation Chairman and Managing Director Parakram Jadeja said the company has met its 2024-25 (FY25) order inflow target within the first half of the financial year.
Jyoti CNC has a capex plan of ₹400 crore over the next two financial years to ramp up its production capacity. It plans to add an annual capacity of 10,000 machines at its Rajkot facilities.
Additionally, the infrastructure upgrades already completed have increased the capacity by 1,600 machines per annum. After these expansions, the total installed capacity will increase from 4,400 machines to 16,000 machines annually. As of September 2024, the company has a capacity utilisation of 83.40%.
Jadeja expects margins to remain stable in the range of 25-27% this year.
Jyoti CNC Automation was the first mainboard IPO listing of the year. The stock listed at a 12% premium to its issue price of ₹331.
The company is one of the world’s leading manufacturers of metal-cutting CNC machines. It has an impressive customer base from the defence sector and includes Space Applications Centre (ISRO), BrahMos Aerospace, Turkish Aerospace, Tata Advanced Systems, Tata Sikorsky Aerospace, Bharat Forge, Shri-Ram Aerospace & Defence, Harsha Engineers, Bosch Ltd, etc.
On Friday, Jyoti CNC Automation Ltd shares rose 2.54% to close at ₹ 1,379. After listing, the stock has hit a peak of ₹ 1,504.30.
