Macpower CNC Machines Limited — Q1 FY26 earnings call

Call held 7 Aug 2025

Management summary

Macpower CNC reported its best-ever Q1 performance in FY26, with record revenue, EBITDA, and PAT, driven by strong order book growth. The company is expanding capacity with a larger land acquisition and focusing on higher-end products and the defence sector. While depreciation increased and working capital days may extend due to government orders, management remains confident in achieving its annual revenue and margin targets.

Highlights

  • Revenue for Q1 FY26 stood at ₹61.03 crores, marking a 21.53% YoY growth and the highest ever for any Q1 in Macpower's history.

  • EBITDA for Q1 FY26 was ₹7.92 crores, a 20.53% YoY growth, also the highest ever for any Q1.

  • PAT for Q1 FY26 reached ₹4.56 crores, growing 13.42% YoY, a Q1 record.

  • The pending order book is at ₹346 crores, representing a 22% YoY growth compared to ₹283 crores in Q1 last year.

  • The company secured a larger land parcel of 50+ acres for expansion, replacing the previously planned 30 acres, with government support.

Concerns

  • Depreciation increased by ₹46 lakhs in Q1 due to last year's CapEx.

  • Working capital days are expected to increase from 125 days to 130-135 days due to longer payment cycles for government orders.

  • Potential spillover of ₹50-60 crores of revenue to the next financial year due to customer payment delays and execution timelines.

Key financials

  1. Revenue ₹61.03 Cr +21.5%YoY
  2. EBITDA ₹7.92 Cr +20.5%YoY
  3. PAT ₹4.56 Cr +13.4%YoY
  4. Depreciation Increase ₹0.46 Cr
  5. Gross Margin 38.5%
  6. EBITDA Margin 13%

What they filed

Q1 FY27: revenue up 56.1%, net profit up 110.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue71 60 80 61 86 +21%86 +43%100 +25%95 +56%
EBITDA13 8 14 8 14 +11%16 +99%16 +14%15 +95%
Net profit8 4 9 5 9 +13%10 +119%10 +18%10 +110%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

high confidence

Total value

₹346 Cr

as of 2025-06-30 quantified

22% YoY

Inflow this quarter

₹75 Cr

Execution

typical execution cycle is 4 to 6 months, but can extend due to loan processing (3-6 months)

Composition

  • Defence Sector (client type) 6%

Pipeline

L1 awaiting loa

Total bids submitted including domestic and tender business.

Cancellations & deferrals

  • deferred: Some orders will spill over to next year due to long lead times, payment delays, and customer issues.
Management expects all quarters to break all-time high records due to strong order book, new product development, and focus on higher-end products.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex Capex disclosed New plan — government offered larger land parcel for expansion · Preference for debt over equity due to 50% government interest subsidy.
    • Capacity expansion to 2,500 machines initially, with potential for over 10,000 machines on new 50+ acre land.
    So if I'm getting the fund from bank, it may charge 8%, 9% and then half of the interest I can get as a reimburse. So we not discussed that much seriously that. We'll discuss with our IR, our merchant banker and our charter accountant firm about the finance management. But in initial stage, if government is giving the 50% subsidies, then I think compared to equity, debt is the cheaper.
  • Debt Debt disclosed
    we have that working cash credit CC facility available and we have not utilized it yet because you know that we have kept it debt-free till now.
  • M&A Foreign Joint Venture Partners Joint venture · Announced

    To support new capacity expansion and product basket development.

    So now we have a few foreign joint venture partners also. Already we completed the few meetings and tomorrow also we have one more meeting and it will take time for the joint venture because some of the condition they are agreed, some of the condition we are not agreed. But before starting this new plan, we'll come out with some conclusion about the joint venture, particularly my visit to the September German exhibition where Macpower is also participating.
  • Liquidity Undrawn ₹30 Cr Company has an available limit of INR 30 crores for working capital, bank guarantee, and LC, which has been utilized very little.
    So we have that bank facility available for short-term and we still have working capital plus bank guarantee plus LC. For these three, the limit of INR30 crores is available. We have utilized it very little.

Guidance & targets

Revenue

  • FY26 Revenue Target Revenue · FY26 · High confidence ₹300-350 crores
    In a broader view, I am targeting INR300 crores to INR350 crores in between that.

    — Rupesh Mehta

Profitability

  • FY26 EBITDA Margin Profitability · FY26 · High confidence 18%
    Yeah, we are trying to maintain EBITDA margin 18% in this financial year.

    — Rupesh Mehta

Order Book

  • Quarter-on-quarter Order Book Growth Order Book · Quarter-on-quarter · High confidence minimum 20%
    our target is to increase the order book quarter-on-quarter minimum by 20%.

    — Rupesh Mehta

Capacity

  • Short-term Capacity Increase Capacity · September 1st week · High confidence 2,500 machines
    So from 1st, this 1st September, we are adding another 500. So now for a short term capacity increase will be 2,500 from the September 1st week.

    — Rupesh Mehta

Working Capital

  • Working Capital Days Working Capital · Near-term · Medium confidence 130-135 days

    Previously 125 days → 130-135 days

    I think we will manage the working days around 130 days. But as you said, the government's order has increased a lot. So, their process time is 5 to 6 months. So, it may increase by 130 to 135.

    — Rupesh Mehta

What to watch in Q2 FY26

Land acquisition and new construction announcement

December 2025
Current 50+ acre land offered, formalities in process
Target Announcement of new facility and construction work

Why it matters

This is crucial for the company's long-term capacity expansion and backward integration plans.

So we hope that in a broader view, in December, I think we'll announce about the new facility and new construction work and new backward integration planning.

Risks & concerns

  • Order book execution delays

    medium

    Execution of orders can be delayed due to customer loan processing, construction delays, and power issues, potentially leading to revenue spillover to the next year.

    Management acknowledged

  • Increased working capital requirement

    medium

    Longer payment cycles for government orders (5-6 months) may increase working capital days from 125 to 130-135 days.

    Management acknowledged

  • Revenue spillover to next year

    medium

    INR 50-60 crores of potential revenue from the current order book might spill over to the next financial year due to execution and payment challenges.

    Management acknowledged

Q&A highlights

5 direct, 1 evasive
Volume growth and NEXA machines split Evasive
That break up, we are not putting right now in our display. Sometimes we observe that this data is very helpful for some of our peer's company. But I will share this data after.

Management declined to provide specific volume growth data or the split for NEXA machines, citing competitive reasons, which limits transparency on key growth drivers.

Asked by Arnav Sakhuja

Funding for INR 100 crore expansion Partial
So I think in this government scheme, there is a 50% of interest cost reimbursed from the government. So if I'm getting the fund from bank, it may charge 8%, 9% and then half of the interest I can get as a reimburse. So we not discussed that much seriously that.

Management indicated a preference for debt due to government subsidies but stated that the specific funding mix for the expansion is not yet finalized, leaving uncertainty about capital structure.

Asked by Dhaval Shah

Discrepancy in EBITDA margin targets (18% vs 22-25%) Direct
You asked me about the how much highest we can get, but once our capacity utilization will increase, if we add another 2,000-2,500 machine and our capacity utilization is 4,000-5,000 machines, and if we focused on the higher end machine through our NEXA market, so maximum we can stretch that EBITDA margin up to 22% to 25%.

Management clarified that 22-25% EBITDA margin is a long-term potential with increased capacity and higher-end product focus, while 18% is the target for the current financial year.

Asked by Dhaval Shah

New order inflow growth (7% vs 20% target) Direct
No, it has grown 7%. Okay, I will take it. ... So the private order received was about INR74 crores, and the government order received was about INR1 crore, INR75 crores.

An analyst pointed out that new order inflow growth was 7% YoY, despite management's target of 20% minimum order book growth, leading to a clarification on the current quarter's new order value.

Asked by Bhargav Buddhadev

Execution timeline for the ₹346 crore order book Direct
Normally, most of the client has applied for the loans because of government scheme. They can get 15% to 25% capital subsidy plus 7% interest subsidy. So their loan process is little bit 3 to 4 months or maybe it is 5 to 6 months. But maybe this order book will complete in this financial year.

Management confirmed that the entire ₹346 crore order book is expected to be completed within the current financial year, despite potential delays from customer loan processing.

Asked by Saumil Shah

Direct sales vs. distributor sales split Direct
From the distributor, we are getting the business less than 10%. So, it is not more than double digit. Directly, we are getting more than 90%.

Management clarified that over 90% of sales are direct, with less than 10% coming through distributors, indicating a direct-to-customer business model.

Asked by Aniket Jain

Timeline for JV partner finalization and new project implementation Direct
We may sign the agreement but the implementation will be start from the new project. ... In first phase we will target that with the turnkey project contract after receiving all the formalities for the land acquisition and fund arrangement we will target within one year we will start the operation.

Management provided a timeline for JV finalization (after December) and new project operation (within one year after land acquisition and funding), indicating key milestones for future growth.

Asked by Arpit Agrawal

2 min read 6 chapters

Detailed narrative

Q1 FY26 Performance Highlights

Macpower CNC reported its highest-ever Q1 performance, with revenue reaching ₹61.03 crores, a 21.53% YoY increase. EBITDA also hit a Q1 record of ₹7.92 crores, growing 20.53% YoY. PAT stood at ₹4.56 crores, up 13.42% YoY. The gross margin for the quarter was 38.5%, an improvement from 37.3% in Q1 FY25 and slightly higher than Q4 FY25's 38.3%.

Order Book and Growth Strategy

The company's pending order book reached an all-time high of ₹346 crores as of June 30, 2025, reflecting a 22% YoY growth from ₹283 crores in Q1 last year. New order inflow for Q1 FY26 was ₹75 crores (₹74 crores from private and ₹1 crore from government orders). Management aims for a minimum 20% quarter-on-quarter order book growth and targets FY26 revenue between ₹300-350 crores. The total bid submitted, including domestic and tender business, stands at ₹1,102 crores.

Capacity Expansion and Land Acquisition

Macpower is set to increase its short-term capacity to 2,500 machines by the first week of September 2025 by adding 500 machines. For long-term expansion, the company has secured a larger land parcel of over 50 acres, replacing the previously planned 30 acres, with support from the government. This new land will allow for a maximum capacity of over 10,000 machines. The company expects to announce new facility construction and backward integration plans by December 2025, with operations starting within one year of land acquisition and funding.

Funding and Working Capital Management

For its expansion projects, Macpower indicated a preference for debt funding, citing a 50% interest cost reimbursement scheme from the government. The company currently has a working cash credit (CC) facility and bank guarantee/LC limits of ₹30 crores, which are largely unutilized, maintaining a debt-free status. However, due to longer payment cycles for government orders (5-6 months), working capital days are expected to increase from the current 125 days to 130-135 days.

Defence and Aerospace Sector Focus

The defence sector currently contributes 6-7% of the company's order book. Macpower is actively participating in naval warship projects, having executed one for Mazagaon dockyard and bidding for Cochin shipping yard. The company is also focusing on the aerospace sector, with a potential order for 260 machines from a major Indian aerospace manufacturer. Management expects defence business to almost double this financial year.

Market Share and Product Basket Expansion

Macpower currently holds a 4% market share in India's production and 2% in consumption. The company is aggressively working to increase its market share by expanding its distribution network to 39 cities, doubling its sales and service force to 234 people, and continuously adding new products to its basket. The focus is on higher-end products, including NEXA machines, which contributed 27% to Q1 sales, and double-column machining centers, with more than double-digit sales expected this year.

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