About the Company:

Incorporated in 1991, the Company is one of the world’s leading manufacturers of metal cutting computer numerical control (CNC) machines with the third largest market share in India accounting approximately 10% of the market share in India in Fiscal 2023 and twelfth largest market share globally accounting for 0.4% of the market share globally in calendar year 2022.

They are a prominent manufacturer of simultaneous 5-Axis CNC machines in India and supply a diverse portfolios of CNC machines including CNC Turning Centers, CNC Turn Mill Centers, CNC Vertical Machining Centers (VMCs) and CNC Horizontal Machining Centers (HMCs).

Images of the products for better understanding: -

Companies functioning in the Aerospace and Defence, Auto and Auto Components, General Engineering, Dies and Moulds, EMS and other industries are the end users of the CNC machines manufactured by the company. Some of the prominent customers of the company are ISRO, Hindalco, HAL, Bharat Forge, Tata Group, Rolex Rings, Siemens, and many other domestic and international clients. Industry wise bifurcation of revenue for FY2022-23 is as follows:-

For FY 2022-23, 87.22% of the revenue from the sale of Machinery was generated from India, and the balance 12.78% was generated from exports. The geographical bifurcation of revenue for the FY 2022-23 is as follows:

The company has 2 manufacturing facilities in Rajkot, Gujarat and 1 manufacturing facility in France, 2 distributors in India and 11 distributors outside India and 29 sales and service centres in India.

Industrial Overview:

• The Engineering goods sector accounts to 3% of the total GDP of India and the sector contribute nearly 27% to India’s total exports and is the largest foreign exchange earner for India. 

• The Global CNC Machining Center Market is expected to grow at a CAGR of 10.3% from 2023-27 and the Indian CNC Machining Center Market is expected to grow at a CAGR of 10.97% for the same period, slightly higher than the global market. 

• Measures like production-linked incentives (PLI) scheme, state incentives by way of tax refunds, Capital subsidy (based on investment and employment generation), single window compliances and approval mechanism may push the manufacturing sector growth in India. 

• India’s ease of doing business ranking has improved significantly from 142 (out of 190 economies) in 2014 to 63 in 2020. 

• This has led to a reduction in import of CNC Machines from 65.8% in 2010 to 45.9% in 2023 and is further expected to reduce to 40.5% in 2027.

IPO Objectives: 

 The Objects of the Fresh Issue Our Company proposes to utilise the Net Proceeds from the Fresh Issue towards the following objects: 

1. Repayment and/ or pre-payment, in full or part, of certain borrowings availed by our Company; 

2. Funding long-term working capital requirements of our Company; and 

3. General corporate purposes.

Financials:

The Company’s revenue from operations increased from Rs. 580.06 crores in FY 2020-21 to Rs. 929.26 crores in FY 2022-23 indicating a CAGR growth of 26.57%.

The company's EBITDA expanded from Rs. 31.69 Crores in FY 2020-21 to Rs. 97.39 Crores in FY 2022-23, with a CAGR of 75.29%.

The company's Net Loss was Rs. 70.03 Crores in FY 2020-21 to Net Profit of Rs. 15.06 Crores in FY 2022-23.

The company's Net Loss was Rs. 70.03 Crores in FY 2020-21 to Net Profit of Rs. 15.06 Crores in FY 2022-23.

The company's ROCE has improved from 0.47% in FY 2020-21 to 9.50% in FY 2022-23.

The ROE has been ranging from FY 2020-21 to FY 2022-23 being -62.20% in FY 2020-21 to 17.56% in FY 2022-23.

Valuation:

The company's price-to-earnings ratio stands at 324.51, while the industry's PE ratio is 49.54. Additionally, the company's price-to-book ratio is 59.43, whereas the industry's PB ratio is 9.87.

Peer Comparison:

Key Risks:

1. High Debt to Equity Ratio:-
The company incurred significant indebtedness and carry substantial debt servicing obligations. Further the company has high debt equity ratio and a low debt service coverage ratio.

2. High Attrition Rate:- Company has a large workforce and employee benefit expense is a major component of fixed operating cost of the company. For FY 2022-23 the employee benefit expense was 17.40% of the total expenditure incurred. Further the operations of the company could be adversely affected by work stoppages, increased wage demand or any other kind of dispute with the employees.The company also has a high attrition rate as mentioned in the table :

3. Dependant on Third Party Logistics:-Being a manufacturing company, they are completely reliant on third-party logistics service providers for transport of input materials and finished products. The company relies on third-party logistics providers for the transportation of materials and distribution of finished products. While lacking formal contracts, potential discontinuation of services by these providers poses a significant risk to business operations. 

4. Outstanding Legal Proceedings There are certain outstanding legal proceedings (including criminal proceedings) involving the Company, Promoters, Directors, and Subsidiaries which, if determined against the company, could have a material adverse effect on the business, cash flows, financial condition, and results of operations of the company.

IPO Details: