Any current/future new fundraising through debt or equity?

There is no primary discussion on fundraising for the joint venture (JV) at this stage. The JV partners have past experience in India and are cautious about sharing technology before building trust. Funding considerations will be discussed only after technology transfer discussions progress. Macpower is currently a debt-free company and aims to remain so. No immediate plans for debt or equity fundraising have been indicated. Expansion and CapEx plans (₹10-15 crore for capacity addition) are being met internally. Any future funding related to JV or capacity expansion will depend on JV progress

Any current/future capex/capital investment/strategic investment?

₹2 crore CapEx executed in Q1 for production, productivity, backward integration, including machines, crane, fixtures, and tooling. Additional CapEx of ₹10-15 crore planned in FY '25 and '26 to add 500 machines capacity in existing premises. New plant and land acquisition underway; awaiting ministry clearance expected before January. Expansion involves backward integration to improve margins and add higher-value production. New R&D center started in Bangalore on August 1, targeting advanced machines like 5-axis, EMS, PCB, and semiconductor machining. Discussions ongoing for JV with G

Future growth expectations in sales/revenue/volumes?

Macpower expects a 20% to 25% year-on-year growth in revenue and volumes over the next five years. They plan capacity expansion, targeting an increase from current 2,000 machines to add another 500 machines in FY25-26 with ₹10-15 crore CapEx. Sales force has expanded by 30-35%, supporting order book growth and improved realization, especially from higher-value machines. Order book showed a 20-25% quarter-on-quarter increase; new orders continually added. The average realization per machine is targeted around ₹25 lakhs by FY26, driven by premium products like Double Column, HMC, and 5-axis mach

Future growth expectations in earnings/operating earnings/profits/EPS?

Macpower expects 20% to 25% year-on-year growth in revenue and capacity over the next five years. The company is focused on increasing production capacity (currently 2,000 machines with plans to add another 500 in FY25-Q26). EBITDA margin is expected to improve from the current 17% with potential for an additional 5% to 7% room for margin expansion. Margin growth is anticipated through backward integration and increased top-line growth. Expansion in R&D, new technology adoption (e.g., 5-axis machines, EMS, PCB, semiconductor manufacturing) and distribution network will support earnings growth.

Current/ Expected Orderbook/ Pending Orders?

As of June 30, 2024, the pending order book stands at ₹283 crore, the highest in Macpower's history. The company is experiencing a healthy order book, with quarterly additions of 20% to 25% new orders. Orders are dispatched steadily, with about 4 to 5 machines dispatched daily against new orders. Execution of the order book is planned over 6 to 9 months, but not all orders are taken onto the shop floor simultaneously; only orders with at least 25% advance payment are executed. The order book is sustainable and continually growing due to ongoing new orders and a strong sales team. The managemen

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Macpower CNC Machines LtdQ2 FY24Industrial Manufacturing

Macpower CNC Machines Ltd Q2 FY24 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹1,169P/E: 33.1Market Cap: ₹1.1K CrSector: Industrial Manufacturing

Management growth scorecard

Revenue

Category 2

Margin

Category 1

Fundraise

N/A

Order

Yes

Capex

Yes

3 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 2

→Macpower expects a 20% to 25% year-on-year growth in revenue and volumes over the next five years.
→They plan capacity expansion, targeting an increase from current 2,000 machines to add another 500 machines in FY25-26 with ₹10-15 crore CapEx.
→Sales force has expanded by 30-35%, supporting order book growth and improved realization, especially from higher-value machines.
→Order book showed a 20-25% quarter-on-quarter increase; new orders continually added.
→The average realization per machine is targeted around ₹25 lakhs by FY26, driven by premium products like Double Column, HMC, and 5-axis machines.
→Growth is supported by backward integration, new technology, increased distribution network, and R&D initiatives.
→The company expects sustained demand with no significant risks impacting growth, including stable political environment and increasing domestic manufacturing focus.

Margin guidance

Category 1

→Macpower expects 20% to 25% year-on-year growth in revenue and capacity over the next five years.
→The company is focused on increasing production capacity (currently 2,000 machines with plans to add another 500 in FY25-Q26).
→EBITDA margin is expected to improve from the current 17% with potential for an additional 5% to 7% room for margin expansion.
→Margin growth is anticipated through backward integration and increased top-line growth.
→Expansion in R&D, new technology adoption (e.g., 5-axis machines, EMS, PCB, semiconductor manufacturing) and distribution network will support earnings growth.
→Margin improvement opportunities arise from premium product sales and enhanced realization due to backward integration.
→Profit after tax (PAT) grew 98% YoY in Q1 FY25, indicating strong earnings momentum.
→Continued focus on capacity ramp-up and order book growth to sustain profit and EPS growth.

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Fundraise plans

→There is no primary discussion on fundraising for the joint venture (JV) at this stage.
→The JV partners have past experience in India and are cautious about sharing technology before building trust.
→Funding considerations will be discussed only after technology transfer discussions progress.
→Macpower is currently a debt-free company and aims to remain so.
→No immediate plans for debt or equity fundraising have been indicated.
→Expansion and CapEx plans (₹10-15 crore for capacity addition) are being met internally.
→Any future funding related to JV or capacity expansion will depend on JV progress and ministry approvals for new land.

Order book

Yes

→As of June 30, 2024, the pending order book stands at ₹283 crore, the highest in Macpower's history.
→The company is experiencing a healthy order book, with quarterly additions of 20% to 25% new orders.
→Orders are dispatched steadily, with about 4 to 5 machines dispatched daily against new orders.
→Execution of the order book is planned over 6 to 9 months, but not all orders are taken onto the shop floor simultaneously; only orders with at least 25% advance payment are executed.
→The order book is sustainable and continually growing due to ongoing new orders and a strong sales team.
→The management aims to keep increasing the order book quarter-on-quarter, aligned with capacity expansions and production ramp-up plans.

Capex plans

Yes

→₹2 crore CapEx executed in Q1 for production, productivity, backward integration, including machines, crane, fixtures, and tooling.
→Additional CapEx of ₹10-15 crore planned in FY '25 and '26 to add 500 machines capacity in existing premises.
→New plant and land acquisition underway; awaiting ministry clearance expected before January.
→Expansion involves backward integration to improve margins and add higher-value production.
→New R&D center started in Bangalore on August 1, targeting advanced machines like 5-axis, EMS, PCB, and semiconductor machining.
→Discussions ongoing for JV with German and Japanese players for technology transfer, funding, and global distribution network to support expansion.
→Solar power capacity to be increased with an additional 600-kilowatt solar plant for energy cost reduction.

How does Macpower CNC Machines Ltd rank vs peers in Industrial Manufacturing?

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