Jyoti CNC Automation Ltd Q3 FY25 concall analysis

Key Financial Highlights

  • Q3 FY25 Performance: Revenue reached Rs. 449.5 crores (19% YoY growth from Rs. 337 crores in Q3 FY24), EBITDA was Rs. 112.6 crores (17% growth), with a stable 25% margin. PBT grew 39% to Rs. 93.1 crores, and PAT surged 67% to Rs. 80.2 crores.
  • 9-Month FY25 Performance: Revenue was Rs. 1,242 crores (40% growth), EBITDA Rs. 313 crores (88% growth), PBT Rs. 271.2 crores (251% growth), and PAT Rs. 207 crores (304% growth).
  • Order Book: As of December 31, 2024, the consolidated order book stood at Rs. 4,360 crores, with Q3 order intake at Rs. 492 crores.

Industry Segment Contribution

  • Revenue (Q3 FY25): Aerospace (49%), Auto & Auto Components (16%), General Engineering (21%), EMS (10%), Others (4%).
  • Order Book: Aerospace (41%), Auto & Auto Components (16%), General Engineering (18%), EMS (16%), Die & Mould (4%), Others (5%).

Operational Highlights

  • Delivered 894 machines in Q3 FY25, with an average realization of Rs. 50.27 lakhs per machine.
  • Employee count increased to 3,277 by December 2024, with 390 added in 9 months.
  • Launched 7 new models in January 2025, targeting aerospace, EV, and high-precision machining.

Growth Strategy

Mr. Jadeja outlined four key strategies for the “next leap”:

  1. People Development: Emphasis on building a skilled workforce through a Center of Excellence in Rajkot to foster innovation, quality, and productivity. Approximately 390 employees were added in 9 months to support execution.
  2. Product Development: Launched 7 advanced machines at IMTEX 2025 (e.g., GU8, Tachyon Beta), targeting high-growth sectors like aerospace, EVs, and semiconductors. The company aims to reduce India’s 60% import dependency in machine tools.
  3. Market Expansion: Focus on untapped global markets like the USA and China, leveraging a strong sales network (29 centers in India, 11 overseas offices) and Huron’s European presence.
  4. Manufacturing Capacity Expansion: Current capacity stands at 6,000 machines per annum in India and 120 in France. An additional 10,000-machine capacity is planned within two years (3,000-4,000 by Q3 FY26), with Rs. 400 crores CAPEX, targeting Rs. 1,600 crores in sales at a 4x asset turnover ratio.

Future Outlook

  • Revenue and Execution: The company aims to accelerate execution of its Rs. 4,360 crore order book (currently 2.5 years at today’s run rate) within 18-20 months by enhancing capacity. Q4 FY25 is expected to show significant growth.
  • Industry Focus: Four growth engines identified—Automobile & General Engineering (fully operational), Aerospace (near equal strength), EMS (next year’s focus), and Semiconductors (long-term potential).
  • Margins: Stable EBITDA margins of 25% are expected to be maintained despite shifts in order mix, supported by high-value mid-range and high-end machines.
  • Huron Expansion: A new facility in France (SO2) will be operational by June 2025, boosting European market capture.

Market Situation

  • Global Machine Tool Market: Valued at $79 billion, with India ranked 6th ($3.9 billion consumption). By 2030, India is projected to be among the top three consumers.
  • Aerospace: Expected to reach $1.3 trillion globally by 2030 (8.2% CAGR), driven by geopolitical spending increases.
  • EMS: India’s EMS market is projected to grow at 34% annually to $54 billion by FY27-28, with CNC machine demand exceeding 100,000 units in five years.
  • Automobile (EV): Global EV market to hit $600 billion by 2028 (9.8% CAGR), with India’s EV car market growing at 56% CAGR to 2030.
  • Semiconductors: India’s semiconductor industry to grow at 19.7% CAGR, with Jyoti developing products for this emerging sector.
  • Competition: Despite aggressive competition from Fanuc and others, Jyoti’s cost-competitive, world-class manufacturing and superior technology (e.g., Tachyon Beta) position it strongly. India’s 20% market growth attracts global players, but Jyoti aims to capitalize on import substitution.

Detailed Question and Answer Session

  1. Akshay (AK Investments): Why was Q3 growth (19%) lower than Q1 (74%) and Q2 (43%)? How will Q4 shape up?
    • Answer: Q2 and Q3 faced capacity bottlenecks, resolved by September with new infrastructure. Q3 was a stabilization period, and Q4 will show good growth momentum.
  2. Akshay: What’s the timeline to execute the Rs. 4,300 crore order book, and can margins be maintained?
    • Answer: At current run rates, it’s 2.5 years, but customer expectations are faster (18-20 months), prompting capacity expansion. The 25% EBITDA margin is sustainable.
  3. Sandeep Jain (Baroda BNP Paribas): Why no EMS orders this quarter?
    • Answer: Last quarter’s large EMS order filled capacity. New orders will come as capacity increases and customers see delivery capability.
  4. Sandeep Jain: What’s the execution timeline for the Rs. 525 crore Q2 EMS order?
    • Answer: Expected completion by Q3/Q4 FY25, not tied to new orders, which will follow capacity enhancements.
  5. Sandeep Jain: What’s the domestic vs. overseas sales split and order book composition?
    • Answer: Aerospace (Rs. 1,800 crores) primarily from Huron (overseas). Q3 revenue growth was 19%, with 49% from aerospace (up from 38% in Q3 FY24). Capacity constraints at Huron are being addressed.
  6. Swanand Samant (Klay Capital): Why is the revenue run rate below the expected Rs. 550 crores from a 1.5-year executable Rs. 2,000 crore order book?
    • Answer: Capacity constraints slowed execution, but new facilities (post-September) will boost run rates in coming quarters.
  7. Swanand Samant: Why only Rs. 550 crores in aerospace orders vs. a Rs. 1,500 crore guidance?
    • Answer: Order intake is paused due to a 2.5-year backlog. Customers await visible capacity and delivery improvements before placing more orders.
  8. Swanand Samant: Will margins drop next year with aerospace at 41% of the order book?
    • Answer: No margin moderation expected. High-value general engineering orders (36% in Q3) and mid/high-end machines will sustain margins.
  9. Swanand Samant: When will new capacity come online, and how quickly can it ramp up?
    • Answer: Partial capacity (3,000-4,000 machines) by Q3 FY26, with full 10,000-machine capacity later. Ramp-up depends on execution speed.
  10. Sanidhya (Unicom Assets): How many machines were delivered in Q3, and why the high realization?
    • Answer: 894 machines delivered, with an average of Rs. 50.27 lakhs due to a strong aerospace mix.
  11. Sanidhya: Will EMS execution lower average realization?
    • Answer: Realization will stay between Rs. 45-50 lakhs, balancing EMS and aerospace capacity additions.
  12. Sanidhya: What’s the status of new capacity addition?
    • Answer: Construction is ongoing at Rajkot—machine shop by March, assembly by September. Equipment installation starts Q1 FY26.
  13. Kushal Mondal (Yashwi Securities): What’s Huron’s capacity utilization and Q3 sales?
    • Answer: Over 80% utilization, with 17 machines sold. Annual capacity is 35-40 million Euros (8-9 million per quarter).
  14. Kushal Mondal: What’s the ROCE on the Rs. 400 crore CAPEX for 10,000 machines?
    • Answer: At 4x asset turnover (Rs. 1,600 crores sales) and 15-18% PAT margin, incremental ROCE could be 60%, but total ROCE will be lower due to existing investments.
  15. Kamlesh Jain (Lotus Asset Managers): Does Q4 guidance imply 70% YoY machine growth (1,500+ units)?
    • Answer: Yes, that’s the target, aligning with capacity and order execution plans.
  16. Kamlesh Jain: How does Jyoti compete with Fanuc and others on pricing and technology?
    • Answer: Jyoti’s cost-competitive, world-class facility and advanced machines (e.g., Tachyon Beta, twice as fast as Fanuc) position it well against imports.
  17. Kamlesh Jain: Are EMS delays due to Chinese supply issues affecting execution?
    • Answer: No delays observed. Potential Chinese disruptions could benefit Indian manufacturers like Jyoti.
  18. Kamlesh Jain: What’s the Q3 breakup of entry-level, mid-level, and high-end machines?
    • Answer: Entry-level: 817, Mid-level: 22, High-end: 55.

Conclusion

Jyoti CNC Automation Limited showcased robust growth in Q3 FY25, underpinned by a strong order book and strategic focus on capacity expansion, product innovation, and market penetration. The management is optimistic about sustaining margins and capitalizing on India’s manufacturing boom, particularly in aerospace, EMS, EVs, and semiconductors, despite capacity constraints being a temporary bottleneck.

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