JK Files submits IPO papers with Sebi to raise INR 500-600 crore, Auto News, ET Auto

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JK Files submits IPO papers with Sebi to raise INR 500-600 crore
Mumbai: JK Files and Engineering, a part of the Raymond Group, is eyeing a turnover of INR1,500 crore in the next few years on expectations of robust demand for precision automotive components. Having posted more than 50% growth in FY22 with a turnover of INR812 crore, the auto-parts arm now makes up nearly an eighth of the consolidated revenues at the Raymond Group. This was the second year of strong double-digit growth, something the company believes will endure.

ET learns that the company would be investing close to INR150 crore in the coming years, equally divided between auto and industrial tooling facilities where it makes files, drills, and hand tools. The capex is likely to be funded mainly by internal accruals and the company wants to maintain a debt-free status, added people in the know. An email sent to the company remained unanswered.

JK Files has asset turnover of three times, translating into incremental revenue of around INR450 crore. The company is soon set to hit the IPO route. According to the draft red herring prospectus filed with the market regulator, the company has an installed capacity of 8.2 million ring gears at the end of June 2021. The company plans to raise around INR500-600 crore that would primarily be used to bring down debt of its parent company Raymond.

The ring gear capacity is likely to increase 4-5 million in the next five years and on an average its realization ranges between INR150 and INR250 per unit.

Organic growth and new order wins for new passenger car programmes are likely to keep utilization of the ring gear facilities above 80% and returns of capital employed (RoCE) will likely be stable despite new investments. The share of the automotive division in the total revenue grew nearly 500 basis points to 39-40% over the last five fiscal years thanks to new order wins and rising penetration of automatic variants requiring flexiplates.

In the ring gear segment, the company has a market share of 52-56% in the passenger vehicle and 46-50% in the commercial vehicle segment in India.

The company supplies ring gears to Tata Motors, Mahindra & Mahindra and leading heavy off highway makers globally.