High Conviction MTF Pick : Buy Jyoti CNC Automation Ltd For Target Rs. 984 by Bajaj Broking
About the Company
Jyoti CNC Automation is a leading manufacturer of simultaneous 5- axis CNC machines in India . The company operates across three primary product segments entry level, mid level, and high end CNC machines This broad product range enables Jyoti to address the needs of diverse end user industries such as EMS, aerospace, defense, semiconductors, automobile, healthcare, Bearings, Die and Mould etc . A key differentiator is its position as the only domestic manufacturer with 5 axis machine technology in India . This capability provides access to a wider range of applications and market opportunities compared to other Indian peers
Capacity Expansion by Q2 FY 27 - Focus on EMS
and ELM The company has vertically integrated manufacturing facilities and R&D centers in Rajkot, Gujarat and Strasbourg, France . As of Q1FY 27 the company has a cumulative manufacturing capacity of around 6000 machines per annum . Jyoti CNC is expanding its Rajkot facility by adding capacity for an additional 10,000 machines, taking the overall capacity to 16,000 units by September 2026 (foundry slightly delayed to October) . Management indicated that majority of the new capacity will focus on Entry Level machine (ELM) and EMS machines, which are expected to drive the highest growth .
Huron Investigation – Revenue Recognition Deferred Pending Export Licenses
Huron is currently undergoing an investigation by French export control authorities concerning export license approvals for a limited number of machines under the (Portal / Overhead Column Milling) POCM segment . The change to dispatch - based recognition, driven by longer timelines for end - user certificates amid geopolitical scrutiny (especially for dual - use/five - axis machines destined for sensitive geographies such as China and Turkey), resulted in lower recognised revenue in Q1 despite production continuing . Management expects Q2 to improve and the second half to be stronger as machines move out of work - in- progress . While the resolution of the investigation may take several years, revenue recognition is expected once the necessary export licenses are obtained and is not contingent upon the closure of the investigation itself .
Guidance and Outlook
The order book as of June 30 , 2026 stands at Rs 48 .48 bn . Management reaffirmed guidance of 25 –30 % consolidated revenue growth for FY 27 while maintaining EBITDA margins around 25 %. Historically the first quarter is seasonally softer ; the second half is expected to be robust once the new capacity is online . Working - capital intensity (especially inventory) is currently elevated to support the ramp - up but is expected to improve meaningfully once execution accelerates, supporting stronger operating cash - flow generation . Debt levels are expected to remain stable, with a disciplined debt - to- EBITDA ceiling of 1–2x.With nearly 50 % of India’s CNC demand still met through imports, the company sees a meaningful import - substitution opportunity ahead .
Q1FY 27 Result update
The company delivered a strong 24 % YoY revenue growth, with revenue reaching Rs . 5,085 mn , supported by healthy underlying business momentum . While reported profitability was impacted during the quarter, management highlighted that the numbers are not directly comparable owing to Huron's transition to dispatch - based revenue recognition . On an adjusted basis, consolidated revenue would have been over Rs . 300 mn higher, indicating that the core business performance remained robust and stronger than the reported figures suggest .
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Jyoti CNC Automation Ltd . caters to a wide range of customers across sectors, ensuring broad market reach and resilience . This diversified portfolio enables it to benefit from capex cycles across multiple industries in India and overseas . Ongoing investigations, regulatory scrutiny, or any adverse findings related to Huron could result in financial liabilities, reputational damage, and operational disruptions, potentially impacting Jyoti CNC's consolidated performance and investor sentiment . We have valued the company using the P/E valuation method, applying a 39 x multiple on FY 28 E earnings, arriving at a target price of Rs 984 .
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