Jyoti CNC Automation Ltd Q2 FY26 Earnings Analysis

- The company expects to maintain strong growth momentum, with a historical 35% CAGR over the last 3 years and confidence to sustain it going forward. - First quarter FY '26 revenue grew 13.4% YoY, with a strong order book of INR4,412 crores supporting growth. - Capacity utilization is currently around 75-90%, with plans to expand capacity to 10,000 machines by September 2026 to meet rising demand. - Revenue growth is anticipated to be stronger in the second half of the year (Q2 better than Q1, Q3 better than Q2, and Q4 the strongest), consistent with seasonal trends. - Aerospace, defense, and EMS sectors are key drivers, with EMS and entry to mid-level machines expected to see the fastest growth. - New facilities, such as in Huron and Karnataka, will support increased production and customer proximity, fueling growth. - Organic growth funded by internal accruals is expected, with no external capital raising planned.

- Jyoti CNC expects to maintain strong growth momentum in revenues and profits over the next 2-3 years, driven by a healthy order book and expansion in aerospace, defence, and EMS sectors. - EBITDA margin guidance: Company aims to sustain current EBITDA margins (~24%) despite increased manpower costs, with potential margin improvement as operating leverage plays out. - Gross margin varied by product segment: Entry-level machines deliver 35-40% gross margin, mid-range 40-47%, and high-end 55-57%. Margins expected to hold or improve with mix changes. - PAT growth was strong at 40.2% YoY in Q1 FY26; management highlights confidence in continuing profitable growth aligned with revenue increases. - Capacity expansion to 10,000 machines/year by September 2026 supports revenue growth and improved utilization (~90% targeted). - No external capital raising planned; growth to be funded via internal accruals and debt. - Execution challenges (skilled manpower) acknowledged but being addressed to enable sustained earnings growth.

- Planned capex of INR 400-450 crores to be completed by September 2026; primarily funded through internal accruals and debt, with no external capital raising planned. - Board approved purchase of 20 acres in Tumakuru Machine Tools Park, Karnataka, for setting up support centers, technology, demo, and warehouse facilities, primarily for EMS sector customers in Southern India. - Possible assembly plant setup in US and China in future phases, currently focused on sales and service network expansion in these regions. - Eligible for government PLI scheme with potential 25% subsidy on capex from central and state government. Proposal under discussion, especially for EMS-related incentives. - Capacity expansion ongoing to increase annual machine production from 6,000 to 10,000 machines by September 2026, focusing on small and mid-level machines.

- The company has clearly stated that it will not raise any external capital through equity. - Growth and planned capex will be funded organically through internal accruals and debt. - No plans for large capital expenditure that require external fundraising as of now. - The Board-approved 20 acres land purchase and sales/service expansions are being funded internally. - The company aims to maintain a healthy financial position through disciplined investment. - Current plans do not envisage any need for equity capital; debt may be used alongside internal accruals to fund organic growth and capex.

- Current order book stands at INR 4,412 crores. - Industry-wise order book breakup: - Aerospace and Defence: 39% - General Engineering: 19% - Auto and Auto Components: 17% - EMS: 16% - Dyes, Molds, Others: 4% - Order intake for Q1 FY '26 was INR 451 crores, with a similar industry mix. - Large machines in the order book are characterized by longer manufacturing cycles (12-15 months). - Capacity utilization is expected to reach around 90% by the end of the year. - Execution challenges exist due to skill and workforce scaling but no orders are being declined or deferred beyond reasonable timelines. - Orders are being addressed with short delivery commitments, maintaining growth momentum.