Saturday, February 6, 2021

JAY KAY ENTERPRISES - MOVING INTO 3D PRINTING SPACE

 Many investors are ready to take higher level of risk for multi bagger return. It is not only a game of risk taking but testing our patience and conviction too. Though we are always looking for such opportunities, it came rarely in a market like India due to various reasons. Advanced technology is one sector many such multi baggers may born in future. But unlike US market, number of listed companies operating in upcoming futuristic sectors like Robotic Process Automation ,3D Printing, Genomics ..etc. are rare in India in listed space  .In this background let us look into a listed company which seems seriously venturing into 3D printing space . 3D printing is supposed to be the disruptive technology which will revolutionize ‘how the world manufacture’ in the future. In every bull market many companies change their line of business and attach the tag of hot sectors with their name  to lure investors for higher market cap . But why I look into this company is – It belongs to a business group with more than 100 years of tradition and their other listed company trading at a market cap of more than Rs.17000 Cr. 

The JK Group

The JK group founded by Singhania family in 1918. The family is currently divided into three main groups headed by Dr. Gaur Hari Singhania based in Kanpur, Shri Hari Shankar Singhania based in Delhi and Shri Vijaypat Singhania based in Mumbai .  The three men are cousins who now run independent businesses, which are technically and legally separate entities and have no cross-holdings or common directors and employees, sharing only the family history .( Courtesy : Wikipedia) .The company we are discussing belongs to  Gaur Hari Singhania group  and this group’s only other listed company is JK Cement which currently trading  with a Mcap of over Rs.17000 Cr. There are two other unlisted companies namely JK Technosoft and JK Cotton also belongs to this management.

Recent Developments in JAY KAY Enterprises .

 JK Enterprises ( FV.Rs.1)  may termed as a penny stock till the company announce its new plans  and its 52 week low price is less than Rs.3 with promoter stake of 32 %. Now management decided to hike their stake from 32 % to 52 % by subscribing additional shares and warrants through a preferential offer @ Rs.10. This fund infusion is for the purpose of setting up a 70:30 joint venture with EOS Singapore Pte ( Ultimate holding company is ElectroOptical Systems (EOS) GmbH – Germany.) EOS is one of the world leaders in 3D printing technology especially in metal and polymers. They are well known for Metal additive manufacturing, that is used in 3D printers to produce metal based products. The newly formed joint venture (70% stake with Jay Kay Enterprises and 30% with EOS) will be  named as NuMesh Labs and it is aiming to enter the business of 3D metal design, design optimization, 3D Consulting services, product prototyping and design for bulk printing.  In addition to this ,Jay Kay Enterprises also decided to invest in a print farm and the assets and infrastructure of this print farm will be directly under Jay Kay Enterprises itself .As per company press release “   With this new venture, Jaykay Enterprises will become an integrated player in the 3D Metal Printing market through its cutting-edge manufacturing technology.”

As per study and analysis done by E&Y for the company, In India,  metal 3D printing market is growing at  a CAGR of 33% to reach around Rs.1200 Cr by 2025, and sectors like Defence ,Aviation,Medical equipments ..etc which need high precision will contribute maximum to the growth of this Industry going forward. I believe this is the first listed company in India that took a bold and serious  move to serve 3D printing technology in India .

Points to Remember

Industry is at nascent stage in the world or at least in India .Though there is great hope about 3 D printing, technology is fast changing around the world and disruptions may happen even beyond our imagination. How our businesses adapt this technology for production  is a point to wait and watch , but I feel increasing wages and government’s aim to make India as a manufacturing hub for the world will aid faster adaptation of such technologies here. JK group not jumped into 3D printing technology overnight, in 2018 they acquired 27% stake in Nebula 3D services which is operating in 3D design , scanning and modelling services. I feel ,they studied the potential of this industry during past few years and now this  decision  for forward integration is a well thought one seeing the future potential . Promoters hiking stake substantially and the joint venture partner’s credibility and experience in this field are added positive points . Considering the huge potential of business (once more are more companies turn to  3D printing route in India) , support of well known JK group, personally I prefer to take some risk on Jay Kay corporation. With long business experience  of promoters, I believe , after gaining sufficient experience in component manufacturing using 3D printing technology , the print farm under the direct control of company may utilized for supplying parts for end user industries in future.

Whether this is worth at Rs.70 Cr market cap is upto you .Personally I believe  this stock is not for faint hearts or those checking the results on a quarterly basis (at least for next few quarters/years)  or taking investment decisions based on past performance , but only for those willing to forget even  the entire capital invested and with lot of patience for a potential multi bagger in an emerging industry in India. 

You can read recent company announcements in the following links :

Link 1 ( 4 Pages) 

Link 2

Since 3D printing is relatively a new technology , at least few of you may think  it is printing something on paper but it is a new production technology for manufacturing different things in a different way . Lot of articles and videos available in web about this and I am attaching link of few below.

Link 3

Link 4

Link 5

This is my personal thoughts on this company and not at all a buy recommendation. Do own due diligence /consult a SEBI registered advisor before any action.

Discl: Holding few shares , hence my views may be biased. All information (otherwise specified as personal views) taken from publicly available documents and company filing to stock exchange .



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