Macpower CNC Machines Ltd Q1 FY26 Conference Call Highlights

Macpower CNC Machines Limited is a leading Indian manufacturer of CNC turning centers, vertical machining centers, and advanced machine tools. Established in 2003 and headquartered in Rajkot, Gujarat, the company serves diverse industries including automotive, defence, aerospace, education, and engineering. With a growing footprint across 39 cities, a strong order book, and focus on innovation through its premium NEXA division, Macpower continues to expand capacity, enhance technology, and strengthen its market leadership.

Key Financial Highlights:

Revenue: ₹61.03 crore (highest-ever for any Q1 in company history), 21.53% YoY growth.
EBITDA: ₹7.92 crore (highest-ever for any Q1), 20.53% YoY growth.
PAT: ₹4.56 crore (highest-ever for Q1), 13.42% YoY growth.
Depreciation rose by ₹46 lakhs due to previous year’s capex.

Order Book:

₹346 crore pending order book (highest-ever), compared to ₹283 crore last year (22% YoY growth).
Bids submitted:
- Domestic: ₹608 crore
- Defence/PSU/Education: ₹494 crore
- Total bids: ₹1,102 crore

Management expects 20% order book growth and strong execution in coming quarters.

Expansion & Capacity:

Current short-term capacity to increase from 2,000 to 2,500 machines (effective September 2025).
Planning a new plant on 50+ acre land (instead of 30 acres), offered by government.
Gradual capacity expansion, targeting 10,000+ machines over time.
Exploring foreign joint ventures, with discussions ongoing; further progress expected during September’s EMO Germany Exhibition.

Strategic Focus:

Higher-end product basket through the NEXA division (premium machines, corporate clients). Already contributing significantly.
Backward integration planned in the new facility to boost margins.
EBITDA margins expected to improve to 22–25% once capacity utilization rises and premium products scale up.
Targeting 20%+ order book growth each quarter and record-breaking performance through FY26.

Sectoral Growth:

Defence: Strong traction, ~80% of tender bids focused here; defence business expected to be highest ever.
Aerospace: Early-stage, with opportunities (one large Indian aerospace manufacturer evaluating 240–260 machines).
Naval sector: Participating in Cochin Shipyard and executed projects for Mazagaon Dockyard.

Guidance:

FY26 revenue guidance: ₹300–350 crore (vs ₹260 crore in FY25).
EBITDA margin: ~18%, with potential upside as NEXA and defence contributions rise.
Company remains debt-free, but will use government subsidy-backed debt for funding expansion before considering equity dilution.
Export focus to begin post-Germany exhibition, though domestic market remains priority.

Question and Answer Session Highlights

Q1: How will Macpower fund its expansion and what is the long-term roadmap?

A: Government provides 50% interest reimbursement under schemes, making debt cheaper than equity. Initially, no equity dilution planned. JV partners may come in strategically. Capacity will gradually rise from 2,500 machines to 10,000+ machines. EBITDA margins expected to improve to 22–25% via backward integration and premium product focus.

Q2: What is the current order book and execution timeline?

A: Pending order book stands at ₹346 crore (~1,751 machines). Execution cycle is 4–6 months, but most of it should be executed within FY26, except some spillover due to customer loan delays or complex machines.

Q3: What about defence and aerospace sector opportunities?

A: Defence orders have doubled, forming ~80% of tender pipeline. Aerospace discussions underway with a major Indian manufacturer for 240–260 machines. Naval sector also promising – bids submitted for Cochin Shipyard after executing Mazagaon Dockyard order.

Q4: What is the contribution from NEXA premium machines?

A: NEXA contributed 27% of Q1 sales. Dedicated senior VP and team in Pune managing corporate clients. Focused on higher-end machines, which will improve margins.

Q5: How will the 50-acre land parcel impact capacity planning?

A: Originally planned for 30 acres, now government allocated 50+ acres at a single site. This gives room to scale beyond 10,000 machines over phases, but expansion will be gradual depending on demand and ROI.

Q6: Can FY26 revenues cross ₹400 crore given strong order book?

A: Management is conservative, guiding ₹300–350 crore, as some large defence/aerospace orders may spill into next year. Execution depends on inspection cycles, customer financing, and complex product lead times.

Q7: What are margins and realizations per machine?

Gross margin: 38.5% (vs 37.3% YoY).
Average realization per machine: ~₹20 lakhs.
EBITDA margin target: ~18% in FY26, with potential improvement to 22–25% as premium machines and backward integration scale up.

Q8: How does Macpower compare to competitors like Jyoti CNC and Lokesh Machines?

A: Industry dominated by 6–7 players holding 85–90% share. Macpower ranks among the top five. Product basket, distribution, and scale comparable to peers. Focus remains on expanding distribution (39 cities, doubled sales team) and adding new product categories.

Q9: What is the export outlook?

A: Currently negligible exports. Focus on Middle East and UAE from Q2 FY26. Germany exhibition will be a platform for both exports and JV discussions.

Q10: What about working capital requirements given higher defence exposure?

A: Working capital cycle ~125–130 days, may extend slightly due to defence orders. Bank facilities of ₹30 crore (CC, BG, LC) remain underutilized, available to support requirements.

Q11: Any update on BIS regulations for CNC machines?

A: BIS compliance extended by one year (till Aug 2026). Macpower has already started the registration process.

Q12: What is the split between direct vs distributor sales?

A: >90% sales direct, less than 10% via distributors.

Q13: Which new sectors or opportunities are being explored?

A: Exploring EMS sector (developed machines ready, but not focus area yet). Defence (land, air, naval) remains priority. Also supporting clients supplying to defence indirectly.

Q14: Revenue potential at 2,500-machine capacity?

A: At 85–90% utilization, current capacity can generate ₹400–450 crore annually.

Q15: When will the JV partnership be finalized?

A: Meetings ongoing; more clarity expected post-Germany exhibition. JV likely to be announced by December 2025, aligned with land acquisition and new plant project.

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