#JyotiCNCAutomation lists at premium of nearly 12% on NSE.
Hiral Dadia in conversation with Chairman and Managing Director Parakramsinh Jadeja on 'Market IQ'. #NDTVProfitLive
Hiral Dadia in conversation with Chairman and Managing Director Parakramsinh Jadeja on 'Market IQ'. #NDTVProfitLive
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01:40 - Hello and welcome to MarketsIQ.
01:45 I'm Hiral Dhadia.
01:46 Clearly, we have a Jyoti CNC,
01:48 which has listed on the bourses currently 18 to 19% up move.
01:53 We've listed at a premium for around 12.4%,
01:57 and this is on BSE.
01:58 So that's with regards to where the new listing is concerned,
02:03 Jyoti CNC, an interesting move coming in on that one.
02:06 370 rupees is what the price is
02:10 with regards to where NSE goes.
02:12 Now, clearly the markets were absolutely upbeat as well,
02:15 if you talk about in terms of where listing goes.
02:18 The price band at the upper end was around 331.
02:21 So those are visuals that we're getting from NSE
02:24 where the listing has taken place.
02:27 So live visuals coming in from the National Stock Exchange.
02:31 But that's Jyoti CNC currently trading
02:33 at levels of around 421%.
02:36 So a good move coming in there.
02:37 The total offer size was almost
02:39 around thousand crores overall.
02:42 So that's with regards to Jyoti CNC automation.
02:45 Clearly, it's very interesting because the management
02:47 had clearly indicated that the money that they have raised,
02:50 majority of it will be reused to repay debt.
02:54 And one of the clear positive that you see out of that is
02:57 that the finance cost, which was absolutely high
03:00 over the last couple of years, that goes down
03:03 and clearly translates into profitability.
03:06 So that's one of the key positives
03:08 that the street has been watching out for
03:10 in terms of where Jyoti CNC goes.
03:12 The order book absolutely is healthy.
03:14 So the revenue recognition over the next two to three years
03:17 is expected to be strong.
03:19 And the sector that they are concentrating on
03:22 is aerospace and defense.
03:24 And as we all know, that is a sector
03:26 which is an absolute high growth sector
03:28 with the kind of focus that the government has on it as well.
03:32 So that's with regards to Jyoti CNC,
03:34 a premium of little over 12% on BSE
03:38 is what we've seen currently.
03:40 The volumes are at around 10.3 million,
03:42 400 is where the stock is trading at.
03:46 But before we head across to the management,
03:48 let's quickly take a look at the overall markets
03:50 as well at 10 a.m.
03:51 What's it looking like?
03:52 Let's just pull up Nifty 50 on the screens.
03:55 A pretty flattish move, but it's interesting to see
03:57 how we are maintaining above those 22,000 levels
04:01 as well in trade today.
04:03 Let's pull up Bank Nifty as well,
04:04 because clearly it's the IT pack,
04:07 which is driving the rally.
04:08 So a five-day chart of the IT index
04:10 also will be interesting.
04:11 But Bank Nifty above 48,200
04:14 with gains of around 1/10 of a percent coming in there.
04:17 So mild outperformance from Bank Nifty
04:19 with the benchmark indices in trade.
04:22 Broader markets are also interesting.
04:24 So mid cap and the small cap index,
04:26 if we can have that one on the screens
04:28 and see what's happening on that front.
04:29 And a five-day chart of the Nifty IT index
04:31 to see the kind of gains,
04:33 because that is what is propelling the rally in the markets.
04:36 But is it time to see profit booking?
04:38 That's the key question that everyone is asking.
04:40 And what next after 22,000?
04:43 IT index in today is down around 1%.
04:45 So some bit of profit booking coming in
04:47 in today's day of trade.
04:48 But let's just quickly pull up a five-day chart as well.
04:51 There you go, 5.5% up move coming in
04:53 with regards to Nifty IT as well.
04:57 Overall, in terms of contributors,
04:59 if we can have the contributors of Nifty 50,
05:01 that will tell you what's happening with the stocks.
05:04 You have HDFC Bank that will be reporting numbers
05:06 as well in today's day of trade.
05:08 So that is going to be an interesting counter
05:09 to watch out for.
05:10 But if we can have the components, there you go.
05:14 Major contributors to today on the downtake,
05:16 you have HCL Tech Infosys, HDFC Bank,
05:18 ahead of numbers is trading under pressure.
05:20 Reliance Industries as well is seeing some marginal cuts.
05:23 However, Bharti Airtel is an interesting one today.
05:26 You have a report on that one.
05:27 Bajaj Finance, ONGC, as well as Tata Motors
05:30 are a few of the other counters which are upbeat.
05:33 Moving from here on, let's quickly pull up
05:35 the broader markets, the mid-cap and the small-cap index.
05:38 Those are interesting ones to watch out for
05:40 because clear out performance coming in
05:41 on that front as well.
05:43 In terms of stock-specific action,
05:45 overall, the railway pack is looking absolutely strong.
05:48 Second consecutive session where we are seeing
05:50 some smart moves coming in on that one.
05:52 So names like Atithagar, Texmaco, IRFC, IRF,
05:57 IRCTC, all of these names are seeing
06:00 some pretty good moves in today's day of trade.
06:02 There you go, smart moves.
06:04 In fact, Atithagar Rail as well,
06:05 you have a systematics which has initiated coverage
06:07 on the counters, so a target price upgrade
06:10 that has come in on that one.
06:11 ITI is interesting, 14% up move coming in
06:14 with regards to where ITI goes as well.
06:17 Aster DM is another one which is in focus.
06:20 So that's with regards to where the markets are concerned.
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06:28 - Hello and welcome to LEDB Prophet.
06:29 I'm Hiral Dhadia and one of the IPO that has listed today
06:33 is Jyoti CNC Automation.
06:36 Joining us on the show is Parakram Singh Jadeja
06:38 to discuss more, who's the chairman and MD.
06:42 Parakram, good morning and congratulations for the listing.
06:46 - Very good morning and thank you very much, Hiral.
06:53 - Parakram, my first question coming to you is,
06:56 clearly with regards to where the IPO goes,
06:59 the object was repayment or prepayment
07:02 with regards to borrowings,
07:04 funding the working capital requirement of the company.
07:07 Now, if you talk about the prepayment and the repayment,
07:11 how much have you paid
07:12 and or how much are you gonna pay out of it?
07:15 And secondly, what does that take your debt to equity to?
07:22 - So, Hiral, basically out of this IPO prospect,
07:27 we are going to pay close to 475 crores to debt.
07:32 And after this paying of the debt,
07:34 our debt to equity ratios is 0.25,
07:36 less than a 0.25 percentage over there.
07:40 - Okay, and is that a comfortable number
07:43 or there will be future plans to repay further
07:45 and become debt-free completely?
07:50 - It's quite a comfortable number,
07:52 but our direction is to be a completely debt-free company
07:56 in the next two to three years there.
07:58 - Right, another question I have is,
08:01 because majority of the proceeds
08:03 are going to be to repay the debt,
08:06 now that certainly will reduce your interest cost as well.
08:10 What's the kind of impact it could have on the profitability
08:13 because I'm sure it's gonna be a positive.
08:16 So how much upside are you seeing?
08:20 - So basically, in terms of our finance cost,
08:23 if you look at that in a past year,
08:25 it's close to 90 crores.
08:27 And largely we are paying almost,
08:30 let's say 60 to 70% debts we are paying over here
08:33 in this end of this year.
08:35 So definitely you can calculate based on close to,
08:38 we have an annual base,
08:40 we have close to 55 to 60 crore savings
08:43 will come over there.
08:44 - Okay, and what about the debt to equity ratio?
08:48 And with regards to the order book,
08:50 where does it stand
08:51 and what's the kind of revenue visibility
08:53 that you have from the current order book?
08:56 - So basically our order book is very robust.
09:02 We are close to 3,300 crores of order book
09:06 and that our commitment towards to deliver to our customers
09:10 within a two years time of that.
09:12 - Okay, so will the entire
09:17 little over 3000 crores translate into revenues
09:20 in FY25, 26?
09:23 What will that breakup look like?
09:25 - So basically, let's say this year,
09:33 we will have some numbers will visible to be here.
09:36 FY25, we will have a large number will be executed there.
09:41 And some of the numbers will be, let's say,
09:45 out of this order book close to 20, 25%
09:47 will be left out for FY25, 26 there.
09:50 - Got it.
09:52 Overall, if you see in terms of the order book
09:54 and the segments that you operate in is pretty niche,
09:57 and majority of your revenues come in from the aerospace
10:00 and defense industry,
10:01 which is absolutely robust at the current juncture
10:03 with the way the government is increasing their spending,
10:07 the growth sector, you know,
10:09 the sector is absolutely growing.
10:12 Overall, what does the bid pipeline then look like?
10:15 - Yeah, the pipeline is very robust.
10:22 We are discussing with the many of countries
10:25 are coming in terms of investment is going on
10:29 on a different sectors there particularly.
10:32 Even after the COVID factor,
10:34 like let's say all the aerospace industries
10:36 are is coming up very nicely
10:39 and all the worldwide people are increasing their fleets
10:41 and all.
10:42 So we are expecting, let's say,
10:44 this momentum will be at least minimum five to seven years
10:47 are clearly visible on aerospace and defense area.
10:50 - Got it.
10:52 Another question, Paragram, I have is that
10:55 on the back of the losses that have been incurred
10:57 in the past,
10:58 the return of equity in the past has been negative as well.
11:02 What's the trajectory expected to look like, number one?
11:05 And secondly, if the losses continue to an extent,
11:10 you know, how will the dividend policy shift?
11:15 - See, basically, already you have seen
11:22 our half year numbers.
11:23 We already breakeven and we are becoming profitable
11:27 there on H1 number itself.
11:29 And the way we have a robust order book
11:32 and we are going to execute in coming this quarter
11:34 and quarter,
11:35 the numbers will, you will see that some good numbers
11:39 in the coming days over there.
11:41 - Okay.
11:42 - And we will set accordingly to our future
11:45 to be all policies to be there.
11:47 - Got it.
11:48 Overall, from the cashflow perspective as well,
11:51 what is that expected to look like?
11:53 Are we in the positive already?
11:55 And you will be able to maintain a free cashflow
11:57 positive number for a longer period?
12:00 - Absolutely.
12:05 The way we have a capacity inbuilt over here,
12:08 capacity utilization will come in the next
12:11 two years completely.
12:12 And we don't have a much on a CapEx side.
12:16 And we'll, even though we are improving
12:18 the working capital cycle also.
12:20 So there are going to be a free cashflow available
12:22 and that will be available for the future growth funding
12:24 to be there.
12:26 - Okay.
12:27 And from the agreements that you have as well
12:30 with your customers,
12:31 what is the, you know, what are the kind of contracts
12:36 you have?
12:37 Are they long-term or short-term?
12:39 That's number one.
12:40 And overall, from a capacity perspective,
12:42 where does the utilization stand for you?
12:44 - So basically this, all the customers in a,
12:51 always to be in a capital goods
12:52 and particularly the machine tools,
12:54 the customers are a very long-term based customers.
12:57 Let's say today, I have a customers who has bought
13:00 a first machine also in 1999.
13:04 And since they are our customers,
13:06 so it's a long history.
13:07 And even let's say, I have a subsidiary company,
13:10 we have a customer relationship with more than 100 years
13:12 with the customers there.
13:14 So it's a very long relationship to be there basically.
13:17 - Okay.
13:18 And what's the current capacity
13:19 and where does the utilization stand?
13:21 - So basically in our current capacity,
13:27 we have close to 4,400 machines
13:31 and we are demotivating, we are doing in this year
13:34 and going to reach out to be a,
13:35 in a within a let's say one next one year time,
13:38 we are reaching out to be close to a 6,000 machines.
13:41 And we are going to utilize close to 85 to 90 percentage
13:46 in the next one and a half year now.
13:49 In H1 we were at a 50 percentage of utilization
13:54 so we're there, near to 50 percent.
13:56 - Okay.
13:56 So at what level do you think you will have to look
13:59 at a capacity expansion number one?
14:02 What is the plan on that front?
14:04 And two, how do you plan the capacity expansion
14:08 as and when you will look at it?
14:09 - So basically you have to look at this way
14:15 that the plant has such a way has been installed.
14:17 This is phase one.
14:18 In phase one also, after some of the bottleneck
14:22 been removed, we are going to reach out
14:24 to close to 6,000 machines and we are going to execute
14:27 in the next, based on this our art book,
14:30 we are going to execute close to a 90% of executions
14:33 are going to be happening in the next one year time there.
14:37 And this is a phase one and based on that,
14:41 the way the EMS industries are growing,
14:44 the way the art book is growing on EMS industries,
14:48 we are fully prepared to further grow
14:50 and expand our capacity on 25, 26 from this level
14:54 to another different level to be there.
14:57 - Right.
14:57 And very lastly, Parakram, what's the outlook looking like
15:02 in terms of growth for top line and bottom line
15:05 and the margin picture?
15:06 If you have to look at FY 24, 25 and 26.
15:10 - So, thank you.
15:17 You know, the growth numbers are going to be,
15:22 let's say now within three weeks,
15:25 you will see the third quarter number,
15:26 you will able to visualize how the percentage of growth
15:29 and how the things are going forward over there.
15:33 - Right, but will you be able to maintain
15:35 the last three years CAGR
15:36 or will it be better than the last three years CAGR growth?
15:40 - Yeah, we are able to, we are expecting based on this,
15:46 if you look at them based on our order book,
15:48 we are going to cross that numbers physically.
15:51 - Got it.
15:52 Thank you Parakram so much for joining us
15:54 on the show at NDTV Profit.
15:55 And once again, congratulations for the listing.
15:59 So that's the management of Jyothi CNC Automation
16:02 on the day of listing.
16:03 - Thank you, thank you very much.
16:05 - Always a pleasure to speak to you.
16:06 So that's the management of Jyothi CNC Automation
16:09 giving out their view with what the future holds
16:13 for the company and the sector.
16:15 That's all that we have on this session at NDTV Profit.
16:18 Thanks for watching.
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