Jyoti CNC Automation Ltd

  • Jyoti CNC Automation Limited is one of India’s largest CNC machine tool manufacturers.

  • The Company’s range of products that includes CNC Turning Centres, Turn-Mill Centers, Vertical Machining Centers (VMC), Horizontal Machining Centers (HMC), and advanced 5-axis Machining Centers, along with solutions for Industry 4.0 and Artificial Intelligence (AI).

  • Vertically integrated company with in-house manufacturing of machine components such as spindles, tool-changers, pallet changers, rotary tables and universal heads in-house. The company has its own R&D Centers, Foundry, Machine Shop, and Sheet Metal Unit. Also has in-house design capabilities.

  • Focus on R&D with dedicated R&D facilities at Rajkot and Strasbourg.

  • diverse customer base. Some of the marquee customers include ISRO, Brahmos, Harsha Engineers, Bosch, Tata Advanced Systems etc.

  • Exports constitute ~ 40% of revenue.

  • Catering to Aerospace, Defence, Auto, EMS, Dies and Moulds and General Manufacturing Industry

  • Orderbook as on 31 Dec 2023:

  • Vertically Integrated Company

Industry Size:

  • As per management, India consumed $3 billion worth of CNC machine last year (approximately 24,000 crore). of this 65% was imported while 35% was domestic over the next 5–7 years the consumption is expected to grow at 20%.

    • The company eyes that the proportion of imports will decrease in the next 5-7 years that is import substitution is likely to happen. Secondly, the market itself is growing at 20%.
  • 85% of the total market is metal cutting and 15% metal forming. Jyoti CNC status metal cutting

  • Overall market the entry level is domesticated 80–85% is domestic while in high end machines 90% is imports. the company is focusing on this high end of the market, where competition is mainly from Germany and Japan.

  • The Company operates in a niche growing sector. But a good business is not always a good investment if the valuation is not in favor.

Crude Valuation:
Last Quarter EPS of 2.44. If we assume this is the run rate then full year eps comes out to be approx 10 i.e. on PE basis it is valued at 75X i.e. a lot of growth is already priced in.

The main risk in my opinion is the execution risk i.e. whether their products will find traction among manufacturers pitched against tried and tested suppliers from Japan and Germany.

I think this is a good stock to discuss on this forum

Disclosure: Tracking position


Very good analysis Pankaj. HAL is also planning to procure huge no of 5 axis CNC to ramp-up Tejas production. HAL is not listed in customers list.

HAL listed as customer in the latest presentation

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Key takeaways from Q4 / FY2024 results:

Muted execution in Q4 (YoY) but the full-year results are great:

  • Turnaround in FY 2024, from loss-making entity to profit. A huge jump in EBITDA margin.
  • The growth in Q4 (YoY) is just 1% but the whole FY24 is 44% up compared to FY23
  • Because of the IPO and strong performance, the company has become a Net Cash entity

Strong Growth in Orderbook:

The order book, on the base of over 3200 crore grew by 635 crore (~20% Growth)

This growth in order book is backed by increased capex to fulfill the orders


Foraying into Semiconductor Space


Investing for Growth

  • Jyoti CNC is foraying into new products and new markets
  • To support this growth increasing manufacturing capacity

Market Reaction - Cautious

Retracement to breakout zone on avg volume after results

Pankaj Garg

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Jyoti CNC Automation Ltd (updated as of 24th May/24)


  • Jyoti CNC Automation Ltd, est. 1989, currently operates with two manufacturing facilities in Rajkot (Annual capacity of 4400 machines p.a.) and one in Strasbourg, France (121 p.a.).
  • Offering one of the most diverse CNC portfolios in the country, its products include CNC Turning Centers, CNC Turn Mill Centers, CNC Vertical Machining Centers (VMCs), CNC Horizontal Machining Centers (HMCs), simultaneous 3-axis and 5-axis CNC Machining Centers, as well as multi-tasking machines.
  • The end users are Defense, Automobile, Electronics & Aerospace co’s.
  • The company’s clientele includes prominent organizations such as the Indian Space Applications Center–ISRO, BrahMos Aerospace Thiruvananthapuram Limited, Turkish Aerospace, Uniparts India Limited, AVTEC Limited, Tata Advances System Limited, Tata Sikorsky Aerospace Limited, Bharat Forge Limited, C.R.I. Pumps Private Limited, Kalyani Technoforge Limited, Shakti Pumps (India) Limited, and Bosch Limited. [clientele]
  • 3rd largest in india at 10% market share at 12th largest globally with 0.4% share. (as of 2023 & 2022 respectively)
  • 2,538,822 sq. meter manufacturing facilities in Rajkot, India and Strasbourg, France.
  • Acquisition of Huron Graffenstaden in 2007. This also indicates co’s long term approach and its ability to prepare for future dynamics. (as the acq. aided Jyoti to enter into Central Europe market and gain insights into 5-axis machines which caters to defence and aerospace)
  • Order book at Rs. 3300Cr as of Feb/24, and delivery of Rs. 3200 is expected to be delivered in next 18 months.
  • Estimated base growth rate of CAGR ~20% for next few years for 5-axis CNC’s.
  • Capacity increased to 5000 with De-bottlenecking this year.
  • To be increased to 6000 by next FY.
  • Vertically integrated; with their own foundry, machining facilities, sheet metal, robotic, welding and paints shops.
  • Around 140+ engineers dedicated solely on R&D.
  • Direct sales and marketing in case of Indian market.
  • IPO proceeds worth of Rs. 475Cr used to pay off debt. (Debt/Equity @ 0.22). Reduced interest cost upto 55-60 Cr.
  • Planning to go debt free in next 2-3 years.
  • Inventory turnover to decrease from 300 to 210-220 days by 2024 and 170 by 2025.
  • About 20-25% price competitive than ones that are imported.
  • Focus on gaining market share through import substitution.
  • N0. Of machines manufactured in FY23-24 @ 3495 units. (indicates a capacity utilization at ~80%)
  • Closing Order Book of ₹3438 Cr.
  • Expecting INR 1,500 to INR 2,000 crores of orders in FY’25.

OrderBook Composition


  • India consumed $3 Billion worth of CNC machines, whereas global consumption is around $80 Billion annually.
  • Of which 65% is imported and 35% manufactured domestically.
  • Majority of imports from Germany (around 30% of global output from Central Europe) and Japan.
  • Industry divided into Metal Cutting (85%) and Metal Forming (15%).
  • Jyoti, focuses on Metal Cutting, and has been awarded “Best Metal Cutting Brand in India” multiple times.
  • Prominent player in 5-axis CNC machine.
  • Offers solutions suited for transitioning towards ‘Industry 4.0’, including their flagship multifunctional solutions package viz. ‘7 th Sense’ – which is geared towards automating sophisticated diagnostic and analytical functions enabling seamless management of productivity, health and tool life of the CNC machine.
  • The 4 Stallions that Jyoti CNC bets on :
  1. The Global Aerospace and Defence market size is expected to reach as ~US$ 1388 B (@ 8.2% CAGR) by 2030.
  2. The potential CNC Machine demand for EMS industry in India is over 1,00,000 machines within the span of next 5 years.
  3. The Electric Car market in India is expected to grow at a 56.0% CAGR during 2024–2030.
  4. The Indian semiconductor industry is expected to grow at a CAGR of 19.7% from 2022-23 FY to 2026-27 FY.

CNC Machining Center Production Share by End User CY22 (%)

Industry 4.0 is changing the CNC machining (excerpt from DRHP)
Industry 4.0 is the latest in industrial revolution and it is changing how CNC machine shops run on a day-to-day basis. With all the smart technology and integrated software available, quicker turnaround times and decreased downtime all result in increased productivity. Data collection and analysis from sensors and other instruments help CNC shops test out new products or study product use. With the application of Industry 4.0, Data helps inform CNC machine shops and manufacturers to make better products and allows business owners to examine their supply chain management process and delegate tedious tasks to the machines.
Industry 4.0 basically refers to a more complex manufacturing setup that includes IloT (Industrial Internet of Things) that monitors and measures manufacturing processes and reacts autonomously to errors. This ability helps CNC machines self-diagnose problems and correct errors in the manufacturing process faster than employees can detect and respond to errors or diagnose the reason for machine malfunction.
For the industry specific example, the medical products industry demands perfection in manufacturing processes because life depends on fail-safe components. CNC machines and Industry 4.0 technology together ensure the production of high-quality components for medical devices. CNC and CAM (Computer Aided Manufacturing) machines are a combination that produces top quality, flawless products, regardless of the industry a manufacturer serves.

Qualitative Factors

  • One of the leading CNC machine manufacturing companies globally as well as in India with presence across the CNC metal cutting machinery value chain.
  • Well diversified customer base.
  • Constant focus on R&D and new product development.
  • Vertically integrated.
  • Experienced promoter group.
  • Provides an extensive range with over 200 variants across 44 series.


  • The end-user industries are growing at a faster pace.
  • Strong order book providing revenue visibility.
  • Financial Strength improvement. To be debt free in nest 2-3 years.
  • Addition of new customers.
  • Focus on EMS rising as the industry is getting groomed.
  • Multiple Engines of growth:
  1. CNC sector to grow at around ~10% CAGR.
  2. Base growth rate 20% CAGR for 5-axis CNC’s.
  3. Capturing market share through import substitution on high-end machines.
  4. Capturing market share in Central Europe through Huron. (turned EBITDA +ve, and expected EBITDA margin of 20% at optimal capacity)


  • The growth probably is already priced in, as evident through its current valuation.
  • Material cost is a huge chunk of COGS, and can further increase due to underlying raw goods prices.
  • Business is highly dependent on skilled workers, and attrition rate was around 25% in 2023 as stated in its DRHP.
  • Customers (even the larger ones) don’t usually go forward with long term contracts, and it can take away a huge chunk of revenue if a price competitive player enters in the market.

Disc: Invested. DYODD. Not a Buy/Sell Recommendation.