Jyoti CNC Automation Limited analyst Q&A

Yes. So, I just wanted to understand the quarterly numbers. So, this quarter also , we have showed good growth. But if we compare the first 2 quarters of this fiscal year, then growth was even more compared to the Quarter 3 year-on-year growth. So, can we have some color on that front? And second on the , quarter four, how do we see the quarter 4 shaping up in terms of growth, year-on-year growth?

I could not understand your first question.

Sir, after the robust first 2 quarters, in the first quarter we had year -on-year growth of 74%. And in the second quarter we had 43% growth. But in this quarter , we have only 19% growth, year-on-year growth in the Quarter 3. So, can you put some light on that? And how is shaping up of quarter 4 is going to be a part? Thank you.

I understood now. So, basically, in Quarter 2 and Quarter 3, we have, let's say, in past call also, I told you that we have reached to some bottleneck area to be there in terms of growth. And that's why we are removing this. And we have removed in September, we have put up all infrastructure into place over there on Quarter 2 end. And this is, let's say all the systems and procedures and everything is separate into this one quarter. And you will see, this all the additional facility comes in picture, that you will see in the coming quarters to be there. So, Quarter 2 and Quarter 3, we were completely utilized , almost our good level of capacity to be there. And there were bottleneck was there, it has been removed , but that we have a long manufacturing process involved. So, that we will see the color in coming quarters. And in terms of the quarter 4 compared to this Quarter 3 , you will see a good growth to be there. Momentum will be maintained there.

Okay, sir. And secondly, my question is on the order book front. So, currently we have the order book of around Rs. 4300 crore. So, what is the expected timeline to execute the same and can we maintain the same current EBITDA margin of 25% in this order?

Yes, so in terms of what order we have in there, okay? So, based on that, definitely we are able to maintain the margin level over here from going forward up to this order book level also to be there. Today, based on our today's run rate, this order book is close to 2.5 years, but none of our customers are expected to be like that. So, that's why we are expanding our capacity and furthermore expanding. And we would like to finish this order as soon as possible. So, today's run rate, this order book is close to 2.5 years. But our customer expectations to deliver faster , then we are also enhancing our facility. So, we are also expecting to deliver much faster.

Thank you. The next question comes from the line of Sandeep Jain from Baroda BNP Paribas Mutual Funds. Please go ahead.

Yes.

Any specific reason or are we expecting further order from here kind of?

Yes, so basically, let's say last quarter we got a big order and all and today , our order book has reached to the place where there is less than 2.5 years of delivery time there. Once the light will come, our manufacturing capacity will increase. And our customers also will feel that we have a now capacity in place. We will see furthermore orders on EMS sectors.

Okay, so the Rs. 525 crores of order which we have got in quarter two, the execution timeline for that is 2, 2.5 years kind of?

No, that is we have to, the expectation is to this, this entire order we have to release before, let's say December, the last quarter of 3rd Quarter and 4th Quarter we have to finish this.

Okay and then only you will get the new order that is the correct?

It's not like that, but as the capacity becomes in line, there will be some more orders will come by.

Okay, and in this quarter if I look at the revenue growth was around 19 % right? So, I expect that the overseas there would be outside India, there would be a less sales kind of .. So, what is the situation there? What is the India sale? What is the outside India sale and how the overall order book which is of Rs. 4300 -Rs. 4400 crores, how much are the overseas orders and ho w much are the domestic orders?

Yes, so basically our aerospace order book, that mainly comes from Huron.

Okay, Rs. 1800 odd crores?

Yes, so that is there. In France, we have one of the best order book situations today. Today, we are facing only one challenge over there. It's a really we are clumping on a capacity size there. The full floor is jammed there b ecause we have all these manufacturing that these machines are very high value machine , each machines are more than 10 crore plus like that and occupying a more space are there and our infrastructure is still, let's say, is under enhancement there. Once that will be in a place, the Huron, we will see much bigger growth in the next coming after 2 to 3 quarters there.

Okay, so in this quarter if I look at, I mean...

Just in my speech I have covered that we have added almost 24 people, okay, because parallelly we need people also. So, there's all people also is under training and everything has been done now. So, almost 15% of the people also have been added on there. And we still we are putting other people parallel to our infrastructure.

And the growth in the revenue is 19% for this quarter only, year -on-year growth. But aerospace and defense is contributing around Rs. 220 odd crores. So, where is the kind of, I feel that it is below our guidance kind of thing. Whether this will be bunched up in the quarter four or what is we can understand about it?

So, in terms of the aerospace and the execution of aerospace, if you look at that, in this quarter, close to 49% execution is the aerospace industry.

Correct.

And that is compared to Quarter 3. Quarter 3 was 38%. So, it improved a lot there.

No, so the revenue growth guidance of what will be the revenue growth guidance for the full year then? Means are we on track to achieve Rs. 2000 crore of revenue?

Based on let's say we have not made any guidance like that over here in a call anywhere. But we are let's say in terms of this execution will improve. Definitely , we will march towards to all our target values.

And the mess in this quarter is largely due to?

Let's say execution side, the capacity just came in September and that's the first quarter only we have seen. So, all the settlement and everything was going on and paralle lly we were developing many new products, the participation over here.

Okay, fine. Thank you.

Thank you. The next question comes from the line of Swanand Samant from Klay Capital. Please go ahead.

Hi sir, congrats on the good set of numbers. So, my question again is on the revenue side. So, if I remember correctly, at the start of the year, we had an order book of somewhere about Rs. 2000 plus crores and at that point of time we decided that this is executable over a period of 1.5 years. So, if I back calculate it, our revenue run rate should have been somewhere about Rs. 550 crores, which has not been the case for the past 3 quarters. So, just wanted to understand, you said that the one of the bottleneck was the capacity. But do that guidance still kind of holds to be can we increase this revenue run rate going forward? That's my first question. I mean, what is your sense, how quickly we can ramp this up? And secondly, on the order inflow side, especially on the aerospace and defense, so we have got somewhat about Rs. 550 crores in the 9 months in terms of order inflows. But if I remember, we were guiding about Rs. 1500 crores of order inflow at the start of the year. So, just wanted to get a sense from you what's happening there, why have we kind of underperformed on that? And secondly, the mix of the order books are related question to that, that the mix of the order, aerospace and defense in the closing order book has gone down to somewhere about 40%, which I think has the highest margins for us. So, kind of when we started getting this Rs. 4,000 crores of order book, do we expect that the margin next year would or could be slightly lower than financial year 25? Yes, those are my questions, thanks.

So, there are many questions in queue there, in one queue of questions. So, let me start with the first, to be a capacity. Let's say, we left it today also. I mentioned in my previous answer that today based on this Rs. 4,360 crores of the order book, in terms of today's run rate, let's say it will take 2.5 years. And we are fully committed to our customers to way early . Their expectation also is to be within 18 to 20 months like that. So, we are increasing our capacity. The first benchmark we have finished on September. The things are in place into, in a ground reality. We will see this in coming quarter to see the numbers there. Parallelly, we have started to expand further more there to overcome over here. And that's now the story behind that. We are also aggressively behind that on our capacity because this is today is the capacity constraint is only is a blocker for us to increase the run rate over here. And even in my call, in my speech, I covered that because the people is a key. This is all our quality executions like that. And these are all very high precision assemblies and all like that. We have added 400 people over 9 months. We have trained them, we put onto that, and many people feel more on that. So, we all are trying to fulfill our quality commitment to our customers and to reach out their del ivery at target date like that. Number two, you have asked that about aerospace and defense. Today, let's say we are not aggressively taking the orders because already we have reached 2.5 months out there. And until these customers are not seeing that the deliveries are happening and then the plant capacity comes into place, there are big fights out there. Many inquiries are online there on our future of this meant to be there . I think this is your two. What is your further third and fourth question or that? Can you remember me that?

Yes, so thirdly on the, again, on the margin side, the aerospace and defense, if I am not wrong, has the highest margins for us. So, on the closing order book pages, that has gone down to 40% versus on the 9 months run rate is about 45% plus. So, do we expect some kind of moderation in margins for next year as compared to this year?

No, in terms of today's closing order book, our order book still in aerospace is close to 40% plus there, revenue side. In terms of the closing order book, it is still as an aerospace as a 41% in there, a combination of these two. We don't see any, this is not only the value is not defined only the aerospace. Even in general engineering and all, I say that our business model divided into three categories; entry level product, mid-range machine, and high-end machine. So, mid- range and high -end also, in general engineering role, this is increasing. Even this quarter , we have seen a 36% over there. So, we don't foresee in the next two years in any challenges in terms of a margin area to be there.

Okay, got it. Just a follow up on the CAPEX side. So, when is the kind of new capacity coming in and how quickly can we ramp up? Because I think that's the only bottleneck we are talking about right now. So, how, when is it coming in, how quickly can we ramp it up?

So, basically we are enhanced the pool capacity is in 10,000 machine, but partially we are expecting to first support will come in terms of half the capacity, or let's say 3,000 to 4,000 further machines in this 3rd Quarter of this financial year, FY26.

Okay, so for the next year also, we will be at the same capacity is what you are saying?

Close to. On the 3rd Quarter , we will see some more lights on the 10,000-machine extra capacity will come in a picture. So, out of that, close to 3,000, 4,000 machines, partially we are able to see the capacity support will come on December quarter.

Got it. Thanks.

Thank you. The next question comes from the line of Sanidhya from Unicorn Assets, please go ahead.

Good evening and good set of numbers. So, my first question sir is on the execution side. So, can you highlight the number of machines that we deliver this quarter?

Thanks. So, a number of machines in this quarter we have delivered is to be 894 machines. With the highest ever value, average has reached to 50.27.

Yes, understood. So, this is likely because of the mix of from aerospace and defense.

Correct.

Okay, great. So, could we see this dip a bit because of the EMS getting into the deliverables in the next few quarters? Or do you think this is manageable on the overall order book?

So, based on the order book, I think we will go near in between around 45 to 50 lakhs of a range to be there, average machine line.

Okay, and when do you think the execution from the EMS will push in?

No, I was explicitly interested was asking into that. Is there any slowdown in the demand from the EMS or what are we hearing from the customer?

Not at all. Not at all there. In fact, we are now expecting to more capacity come much faster so we can participate on a bigger way there.

Great. And on the new capacity addition, so what's the status? What have we tried this quarter?

So, basically, all the construction of building is going on. The machine shop building is already, let's say it is going to be completed the first day before the March, the assembly building we are expecting to finish somewhere in September and then all the equipment and everything will be start fitting over there on a first phase there. All the equipment and all , the machinery is already, it is going to start to be on a first quarter it will reach to us over here.

This facility is in Rajkot, near our existing or somewhere?

On existing building only. We have an existing , l et's say we have a large extra land was available. So, Phase one was 6,000 machine. And second phase, we are doing close to 10,000. Everything is on the same place.

And the images you have shared in the presentation are from the new building or they are from the old capacity?

No. These are the new building is under construction now.

Could you highlight which one among the, I guess, on the page #35, there are four images?

Yes, so what you are seeing in a newly developed assembly line, on page #35, that is the part has been constructed in September and that has already been put to use there. In the left side, what you see the green is not today the green now. This new building is almost about to finish there now. What I said that will be ready in March and April. So, similar way will be the next left side. On the same picture, there is left side. This building is almost now is on a final stage. So, almost a double building has been ready. And in terms of assembly, what you see that in a picture in near bottom is returned to be new sub -assembly under construction. So, that was the part of our, the first bottleneck removal that has been over and it is put to use there now. Then you see the newly developed assembly line. In the left side, it's not a cool picture there. There's another assembly line under construction. That will be finished in somewhere in September.

Excellent, we will do that. And I invite you to visit our plant also, then only you can verify that very well. You are most welcome.

Sure, thank you. Thank you.

Thank you. The next question comes from the line of Kushal Mondal with Yashwi Securities Private Limited. Please go ahead.

So, what is the current capacity utilization of Huron and how many machines were sold in this quarter?

So, in terms of Huron, where our capacity close to this year is 35 to 40 million Euro to be executable there. It means 7 to 8 million Euro is an 8 million, 8 to 9 million on a per quarter like that. And we are running right now more than 80% capacity.

And what is the number of machines used in this quarter?

We have made close to 17 machines to be there.

Okay, and the 10,000 additional capacity will come in December 2026. So, what will be the utilization level for additional capacity for the full fiscal?

Until today, we have made close to 2,800 machines in three quarters, particularly 2,723. And we will touch close to 4,000 and 4 ,500 in between in this year, FY 25. And FY 26, but your question is FY26. FY26 numbers will see how the capacity utilization or capacity will be ready and utilization will be.

Okay, and you have said that Rs. 400 crores of CAPEX were announced for this additional capacity and I remember that in one of the interviews, you said the asset turnover ratio will be 4x which means Rs. 1600 crores of sales. So, now currently the PAT margin is at 15% to 18% which means that you will make around Rs. 240 crores of profit from the additional capacity that is Rs. 1600 crores of sales, which means that Rs. 400 crore of CAPEX you are making Rs. 250 crores which means an ROCE of 60%?

So, yes, we are going to do Rs. 400 crores of CAPEX. And based on this CAPEX, the capacity will reach out to be 16,000 machines there total. It means additional 10,000 capacity will be there. And based on that, all your questions I have given an answer at the time. It is absolutely right.

So, you are going to make around 60% of ROCE, right?

And calculated the add-on value?

And then you have to calculate it based on the today's plant , the investment because this is an incremental investments are there.

So, like on Rs. 400 crore of CAPEX, the ATR you said that it will be 4x, means 1600 crore of sales. So, what will be the timeline for this sales revenue number?

So, that's what you do. Once the capacity comes in a picture and all I told you in past also that entire 16,000 capacity will be utilized in 3years.

Okay sir, thank you sir.

Thank you. The next question comes from the line of Harshit from Green Investments LLP. Please go ahead. Harshit, your line has been unmuted. Please go ahead with your question. As there is no response, we move to the next participant. The next question comes from the line of Kamlesh Jain from Lotus Asset Managers. Please go ahead.

Yes, thanks for the opportunity. And sir just congratulations on one of the best exhibition we had from the Indian companies in IMTEX. So, very well.

Thank you, Kamlesh bhai. Have you visited?

Yes, I have been there, sir.

Thank you. Thank you very much.

So, just based on your guidance, so it suggests that in last quarter, Q4 , we would be doing roughly around 70% growth year -over-year in terms of machine sold, which would be around 1500 plus and 54% quarter over quarter, 54% to 55% quarter over quarter growth?

That's the target we are running with today.

And just more on the competition side because we have been hearing all your competitors have become much more aggressive, seeing the growth in India, particularly in the CNC. So, how are we seeing the competition? And are we in terms of pricing compared to, like, say, Fanuc or any other counterpart particularly on the pricing side?

See, Kamlesh bhai, let's say first of all, it's a great opportunity to everyone because the Indian market is growing more than 20%. And the way manufacturing is going to grow, the whole world people are targeting to India today. Anyhow, there is a 60% still the machines are coming from abroad there, particularly companies like Fanuc and everyone like that. And most of the supplies are coming from Japan, Germany, Europe, US, and all these areas. Taiwan and particularly Korea also. Again, these are all the competitors. The way Jyoti has been positioned in terms of our plant capacity, the capacity installation and like that, we are one of the most competitive manufacturing landscape. I know you yourself have visited and you have seen our facility. How competitive and still we are making this factory, it's one of the world -class factories to be here. I think we are very much prepared to compete with all the brands. Only they are here and they will increase the load. We are also growing very well over here and we are able to compete them very nicely in terms of the pricing there. In terms of the technology also, have you seen that in IMTEX that we have now, until today we all were always talking to like this, our machines are competing to Japanese, we are able to maintain them, we have the same accuracy level or we have the same technology on all like that. Until today all , we Indians are talking to be like this. Now and if you have visited their exhibition, so you have seen that, we have over crossed this boundaries now. Now we have made this machine, what we say this is better, is twice faster than the Fanuc robot there and many other Japanese machine tool builder there. So, we have lived, we have gone ahead there in terms of technology demonstration also to be there. So, we are fully equipped for this competition in terms of technology, in terms of execution and cost competitiveness.

Secondly, on your operation side in the EM S division, actually there has been a lot of media reports that delivery of Chinese labor or the Chinese machinery that has been getting delayed over the last 6 months, 9 months. So, how are we seeing the execution on that particular side? Because the reports have been too much on that particular side. So, are we seeing the delay in execution or in the delivery of your machines?

No, we have not seen any disturbances like that. Because these are the still there are all the few we have just everything is looking from the media and all. And if these kind of things will happen in future, I think that will be the great opportunity for all Indian machine tool builder to make similar products. If the machines are not coming from China and they are not allowing their people to hear. So, the space is open for us there.

And lastly sir, will you please give the breakup between entry level, mid level and high end machines?

Kamlesh bhai, your voice is very...

Your audio is not clear, so maybe request you to use your handset.

Can you please provide the break up between entry level, mid level and high level machines?

So, Quarter 3, so basically Quarter 3, the number of machines in entry level was 817. The mid- level machine was close to 22 and high-end machine was close to 55.

Thank you. The next question comes from the line of Partha Mazumde r from Eastern Financiers Limited. Please go ahead.

Hello, sir. Am I audible?

Yes.

I just need to know, I mean, in aerospace and overall areas that are, machines are actually fabricated using our CNC machines? Overall parts are actually manufactured in aerospace?

Beg your pardon, please tell me your question clearly.

Yes, in aerospace, our CNC machines are deployed in which parts are actually manufactured using our CNC machines?

So, basically, the Jyoti Huron machine is basically being used into all structural part machining and our core competencies and maximum machines are going into engine manufacturing.

So, for instance, if I want to add this into engine parts or?

Yes, engine parts.

Engine parts, right?

Yes, the maximum machin es are going into engine parts. Even structural, we have a product that's going into structural machining also.

So, I mean, for instance, like another Indian Company, which Azad Engineering actually manufactures critical engine parts, so Azad would be one of our customers?

Azad is a prime customer. This year also we have supplied many machines and they are expanding further more capacity and we are supplying all the machines from Jyoti.

Thank you, thank you, sir. That will be it, sir.

Thank you. The next question comes from the line of Kushant Arora from Baroda BNP Asset Management Limited. Please go ahead.

Thanks for taking my question. Sir, just a bookkeeping part of, I mean, I just wanted to understand that what is the contribution of Huron on nine months basis and for this quarter?

Okay.

And for this quarter, it was close to Rs. 65 crores.

And what would be the EBITDA contribution for this?

Great. So, EBITDA in Huron is reached to 15.75%

All right. It's on 9 months basis.

In 9months basis. In a past, last year nine months basis, it was a loss.

Right. Okay, thank you.

A substantial improvement has been seen in Huron level there.

Understood sir. Thank you.

Thank you. Ladies and gentlemen, that was the last question for the day. I now hand the conference over to the management for closing comments.

Thank you very much to all of you. The way your enthusiasm and participation in the questions and the way right now all the additional facility is coming up. I am inviting you all of you to visit our plant and to be a presence over here. Thank you very much.

Thank you. On behalf of Equirus Securities , that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.