Macpower CNC Machines Limited ($MACPOWER)

Ladies and gentlemen, on behalf of Kaptify Consulting Investor Relations team, I welcome you all to the Q4 and FY '26 Post Earnings Conference Call of Macpower CNC Machines Limited. Today on the call from the management team, we have with us Mr. Rupesh Mehta, Chairman and Managing Director; Mr. Vishal Mehta, Chief Financial Officer; Mr. Kishor Kikani, Company Secretary; Mr. [ Riyan Mehta ], part of the Promoter Group; and Mr. Jay Acharya part of the finance team. As a disclaimer, I would like to inform all of you that this call may contain forward-looking statements, which may involve risks and uncertainties. Also, a reminder that this call is being recorded. I would now request the management to brief us about the business and performance highlights for the period ended March 2026, the growth plan and vision for the coming year, post which we will open the floor for Q&A. Over to the management team.

Thank you, Vinayji to arranging the conference. Good afternoon, ladies and gentlemen. I warmly welcome all of you to our Q4 FY '26 post result conference call. Thank you for taking time out of your busy schedule to join us. We truly value your continued interest and support. The financial results and presentation have been uploaded on the company's website and Kaptify website also. I hope you have had a chance to review them. I will bring you -- walking you through the key highlights of our Q4 and FY '26 performance, followed by an update of our strategic intensive and growth and outlook. After that, we will happy to take your questions. So the company delivered the highest ever quarter and annual performance in Macpower's history. I will go through the quarter results and after that annual revenue is increased by 25.34% in Y-o-Y INR 100.29 crores. EBITDA is Y-o-Y INR13.60 crores now it's INR16.24 crores in a percentage 13% and EBITDA margin and PAT margin is 10.15%. So these are the quarterly results and FY'26 withstood the highest ever revenue INR33 crores -- INR333 crores. The growth is 27.26% and the EBITDA margin growth is almost nearly 30%, it's INR 53.90 crores. And PAT has jumped by 33%. It's now INR 33.87 crores, almost INR 34 crores. We are pleased to report that Q4 FY '26, the company delivered its highest ever quarterly performance and annual performance also. In terms of the revenue, in terms of the EBITDA in terms of the PAT. So during last financial year, we added INR 15.36 crores CapEx with our own fund. Last to last, it was INR 12.41 crores. So we increased the CapEx now. So Y-o-Y 25% almost we increased the CapEx. Average machine regionalization is nearly INR 20 lakh. And as you know, the robust order book, strong demand in pipeline. Everything is in presentation, then also I will explain you that Q4, we have INR 406 crores opening order book. It reflects a 23% Y-o-Y growth in our order book and domestic bid, tender bid and everything included is INR 1,029 crores. So NEXA series contributes approximately 40% of the pending order book. So as we discussed that we'll focus now on the NEXA products. So our order book in this INR 406 crores, majority 40% share is the NEXA. We have also successfully supplied the machine to the customer, including BHEL, HL, Ordinance Factory, Polycab, Bhagat Forge, CAM, GNA Gears, Amic Forging, Emerald Tyre, Nifa and Kirloskar, which we already discussed about that now we are entering into the corporates also, which further your reference list and brand credibility higher-end segment. For product innovations. We continue to invest in R&D expenditure, our product portfolio. Recently, we have successfully delivered a new launch, several new model machines, Turn Mill Center TOM Y-Axis LX3000, is a bigger machine. The machine weight is 20 tons, LX1000 V-855 Super. These machines are well positioned to address the growing demand of the higher-end precision and technological advanced CNC solution. In line with our aggressive growth strategy and sustained movement in our order inflow, we are in the final stage of securing 13 acres of land on a 25 years long lease nearly our existing plant. It's nearby our existing plant. It will extend capacity and execution capability while supplying a timely delivery of pending order books. This new facility will enable the organization, backward integration and significant scaling of our operations to support our long-term growth ambitions. And this land is very nearby because of the coming future growth of these industries. Recently, we had one Indian Machine Tool Summit, and they forecasted the consumption and demand will be double in 2030. So averagely we are predicting 25% growth in this segment. So to match our growth journey and our plant capacity limitations, government land will take another 3 to 4 months. So we'll not wait for further -- for the government land. So meanwhile, we identified the very nice land nearby us is a 13 acre land where we will invest the INR 30 crore to IN R35 crore in this new land and after that government land, it's another expansion we are planning where we are adding another 10,000 capacity. So within very, very short time, we will acquire this land and almost our building and our construction plan and CapEx plan is ready with this 13 acre land. So currently we are we -- as I mentioned in my quarter 3 and quarter 2 con call that we are adding the more people in sales and we are adding the new branches. So recently 9 branches and 8 tech centers right now, we have recently opened a new branch office in Baroda and Gurgaon, upcoming branch within short time we are adding Nasik and Kolkata. Upcoming technology center in Pune, we already finalized and maybe this month we'll inaugurate Pune, Kolhapur and Mumbai. So industrial outlook of our market position. As per the IMTMA, Indian Machine Tools data released at the Goa Summit Indian Machine Tools industry's domestic consumption stood INR 35,000 crore approximately. And while India produced INR 16,000 crore in 2026, consumption is expected growth strategically INR 54,000 crores by 2030 and INR 2,30,000 crores in the 2049. These data's are available in Indian Machine Tools' site. India ranked 9th global in production and 4th in consumptions for the machine tools. While the global machine tools market is $82 billion India's share is only around 5% and Macpower share is production is a 2% of consumption and 1% -- 1% of consumption and 2% of production. So we have a plenty of opportunity and now we are aggressively adding the new tech center, roadshow exhibitions and we are adding the new plant also. Macpower currently hold approximately 2% share in domestic production and 1% is consumption. So guidance for FY '27 with the strong order book and expanding the higher end product portfolio because of 40% of NEXA order book and ongoing capacity we are confirmedly of delivering another year of robust growth. We expected 28% to 30% revenue growth in FY '27 which would make yet another strong performance for the company by maintaining EBITDA margin and we'll try to improve it. So we'll manage the EBITDA margin and we'll try to improve the sum of the percentage. We remain focused on profitable growth, operational excellence and long-term value creation for our stakeholder. I would now like to open the floor for the questions that you once again for your -- so we can start the questions.

[Operator Instructions] We'll take the first question from the line of [ Darshan ].

I just wanted to know about the CapEx. From our earlier interaction, what I understand is we expected to take up a land of around 50 acres from government and then expand our capacity from 2,500 to 10,000 machines gradually. So now you are saying that we are taking up 13 acres. So is it different? And what is the roadway or are these different things? I wanted to know this.

Both are the different things. First of all, right now, we have 2,500 capacity and some of the areas, this capacity is for the assembly. We have more than 1,000 different types of component we are using. And right now, we have a capacity of spindle, like 150 machines per month. We have a capacity of sheet metal 110. So I think we are adding some facility to complete the 2,500 machines. This 60-acre land plant is still in process. We already paid the token amount to government. But because of the local elections in Gujarat corporation and district administration, it's delayed by government policy. We are waiting for the government new policy and they suggested that this new policy is more advantageable than previous one. Right now, they are offering in the 50% market -- government rate. Now in new policy is 25%. So we are waiting. So they -- we have an information that it will take 3 to 4 months to complete the procedure for the new policy. After that, we'll sign to acquire the land. But meanwhile, as we -- and Board discussed that we have a huge opportunity of the business for the coming year, and next year also. So why don't we add one another unit. So this 13-acre land for 25 years long list, with a very amount we are almost in finalization stage, and we will announce within a short time. So we are adding another 3 lakh square foot construction and debottlenecking of some of the process. And after that, once this 2,500 machine capacity will consume, we'll add some more capacity in this plant, 13 acre. After that, once government land will clear with the new policy, we'll add another capacity and another facility in this new plant. So we have now -- instead of 2 plants, we are planning existing and new one. But now in future, we have 1, 2 and 3 plants.

Okay. Sir, so from this plant, the 13-acre plant, will -- is this just for capacity debottlenecking? Or to what extent will this increase our production capacity to how many machines can we make from this 13-acre plant?

Right now, we are putting some provisions for capacity expansion also. But our first focus is to debottlenecking the 2,500 machines capacity in this 13-acre land. But we have a sufficient provision for the next financial year. And once our 60-acre land will delay then we'll add another capacity also to achieve our continuous growth of 28% to 30% in the top line and revenue and everywhere in EBITDA. So in this new plant also we will add. But first phase we will add the debottlenecking and second phase for next financial year, yes, we'll add some capacity.

Yes, so also on the controller side, previously, what I understood was it was a white labeling, right? We were importing the controller from outside and we were white labeling under Macpower's name and selling it. Is it right? Is my understanding correct?

No. First of all we are 99% controls we are right now using with the world class control Fanuc, Siemens and Mitsubishi. For 1% some of the reputed brand. Right now, we are doing the white labeling to create our own brand. In future after 5 years, if we are planning to manufacture some kind of the controls so we can create the references. And we are -- this company is ready to build the some kind of the collaboration for technology also. But it is a long vision. But the practice we already started.

We move to the next participant. [ Garvit Goyal ].

Sir, my first question is on the margins. This quarter, we saw a dip in the margin. So what is the reason for that, sir?

First of all, the reason for the expenses, other expenses has increased due to 2 major reasons. One is the marketing. Now we -- as I told you that we are focusing to achieve the big goal for this year and next year also. So in Q4, we had participated in the Jamnagar, Kerala, Ludhiana and 3 roadshows. So our marketing cost is increasing this quarter 4. And second thing is, as I mentioned in my previous speech that some of the component manufacturing area, we have a limited capacity like spindles, enclosures, power coating, and other machining capacity. So in March, we had given the lots of job works to match our March production capacity. And secondly, I'm happy to announce that first time in history, Macpower have a finished goods inventory instead of 18 machines was displayed in our tech center in previous 2025. Now we have 80 machine opening inventory. This cost is added in -- this expense is added in this other expenses, but the billing realization is not possible because of the payment is not received. So job work cost is increased, because in first quarter, second quarter, we need to ramp up the production. So some of the limited capacity component we had given the job work to the other suppliers. And second thing is Q3, there is no marketing cost, no exhibition, no roadshows. So these two are, I think, added our expenses cost.

Got it, sir. So considering the commodity inflation environment right now in order to get the business, we are a bit more focused towards the marketing. How are we -- how we will be able to maintain these margins in FY '27, sir?

As you just go through our material consumptions, I think we improved our margin to sell the more higher-end product, like NEXA, our material consumption is reduced by up to 0.75%. So material will not give this much problem. But if we wanted to grow the market on quarter-on-quarter and year-on-year, so we have to focus on more recruitment, more tech centers and more roadshows and exhibition. Now as we decided, we'll participate in India's almost all the exhibitions. Tomorrow, we have a Baroda office inauguration and there is one customer summit. So we are inviting the customer for the dinner and presentations about the company. So we are now focusing aggressively in each and every city, each and every segment, each and every area. So this kind of marketing cost will add. But definitely, because of this, we will generate the 28% to 30% growth.

Overall margins will be same to FY '26 or what?

Margin will be -- we'll try to maintain the margin same but we'll try to improve also. But our top line and PAT margin definitely will improve.

Okay. And what will be the impact of this land that we acquire? You mentioned it will be on lease, right?

It will be on lease.

So some lease finance cost or somebody that accounting will be there, isn't it? So that will increase the interest.

Yes, yes. So it is with the rental base per month is less than 0.5% of the market value. And it is for the 25 years registered agreement.

We'll move to the next participant [ Kumar Sourav ].

Congrats on good set of numbers. My question is on NEXA and the 5XL machine. So average in the market the price of such machine is from INR 35 lakh, INR 40 lakh to even INR 2 crore. So my questions are last year, how many NEXA machines we sold around what price? And as you said almost 40% of our order book is NEXA machine. So what is the average rate of NEXA machine we expect to sell?

Just hold. So last year NEXA average price is INR 29 lakh. And I think this year also it will be remain in INR 29 lakh to INR 32 lakh average price of NEXA machines.

Okay, sir. And sir, my second question is, earlier, our competition was more in the MSME sector. But now as we will be selling more and more of NEXA machines, is our competitor going to change? And if they are going to change, like are we getting into import substitute market competing with some of the foreign companies? And if that is the case, what is our right to win in this new segment, sir?

I think we already win. You can say our -- out of our 400 order book 40% is NEXA. So we are focusing more on this segment and we don't have a competition with the imported machine right now we have a competition of the domestic player. As I mentioned that, our market share is compared to our domestic player is just 2% in terms of the value. So we have plenty of opportunity. Our machine is very, very robust and our performance, our accuracy is appreciated by our customer. That's why we are getting a good numbers of NEXA business. And that's why I think we don't have to compete with the imported machine. Right now up to 10%, we have a opportunity in domestic player from domestic player and domestic market. Because 25% market is growing and our market share is just 2%. So we are -- we don't have that much problem too. Our problem previously was the capacity and CapEx. So now within short time we will sort out this issue for the next financial year, we'll utilize this new plant also.

We'll take the next question from [ Pratik Srivastav ].

Congratulations Rupesh bhai for good set of numbers the company gave. [Foreign Language].

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We'll move to the next participant [ Bhargav Buddhadev ].

Congrats for the good set of numbers. [Foreign Language] Is that fair to assume?

[Foreign Language] 1800 to 1950.

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We'll take the next question from [ Shashank Nagar ].

Congratulations on crossing INR 100 crore revenue. [Foreign Language]

No, we are discussing [Foreign Language]

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[Foreign Language] now we are in aggressive mode. [Foreign Language]

We'll take the next question from [ Vikas Kasturi ].

Congratulations on a fantastic performance, sir. Sir, I had 2 questions [Foreign Language]

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[Foreign Language] which is create the one kind of the marketing strategy. [Foreign Language]

Got it, sir. [Foreign Language] INR 30 crores to 35 crores does that include machinery as well and working capital?

[Foreign Language] INR 30 crores to INR 35 crores.

We'll take the next question from [ Vishwas Singhal ]. We move on to the next participant [ Kushal ]. Once again, Vishwas has unmuted.

Yes. First of all congratulation for good set of number, highest ever revenue. [Foreign Language]

[Foreign Language] especially, Ball screws, LM Guideways, Rotary Tables, higher and encoders so many components. [Foreign Language]

Okay, sir. Very well explained. [Foreign Language] Operating cash flow is INR 14 crores. [Foreign Language]

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Okay, sir. Can I ask one more question or should I wait?

I request you to come back in queue please. We'll take the next question from [ Kushal Mundal ]. Can you speak up a bit louder?

Hello. Am I audible?

Yes.

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Sir, whether this rental land will be treated as operating lease or financial lease?

Expenses, it's a rent expense.

It's a rent expense, okay. [Foreign Language]

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We'll take the next question from [ Kanish ].

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Okay, sir. [Foreign Language]

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We'll first take -- give a chance to those who haven't had a chance to ask questions. [ Utkarsh Somaiya ], you can go ahead, please.

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[Foreign Language] after you consumer 2,500, correct?

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We'll take the next question from [ Ronit Kapoor ].

Congratulations on the great growth achieved in the quarter. So I have 2 questions. So in the balance sheet, I see intangible assets of INR 1.8 crores. So can you specify what is that?

That is the design pattern and design.

So that's your intellectual property, right?

Intellectual property plus some kind of the aluminum and wood and patents also.

Okay. And secondly, is about the new land of 13 acres. So approximately what will be the annual rental for that?

Nothing less than 1% annually compared to market rate. Say, for example, the rent value is INR 40 crores, the rental is just nearly less than 1% annually.

We'll take the next question from [ Piyush Jain ].

Hello. Am I audible?

Yes, Piyush.

Yes. Rupesh bhai, [Foreign Language] in past many times we have that we want to do backward integration and EBITDA margin will move towards 20% to 25% or something. In our current PPT, we are showing this that 3x to 4x revenue potential and even after the operating leverage will EBITDA is 18% and near to 18%. So are we saying in past what we have thought of backward integration with margin of 22% to 25% and now our guidance is around 18% only?

I think I told you about when that can be possible. 25% is possible after new plant and new capacity of this new 60-acre land. That time I think given you the idea. In EBITDA margin can increase by 2, 3 different way. As I told you that when you have a top line will increase, number two, some higher-end product, some defense product and some of the backward integration. So yes, in this industries, there is a chance to achieve the 25% EBITDA margin, but that we are focusing on EBITDA margin after this new 60-acre land will acquire.

Piyush, do you have a second question?

Yes. I'm asking. Am I audible?

Yes. You are audible.

Yes. We've also given one slide where we have shown that we have supplied some machines to ISRO and HAL for the Chandrayaan or some other. So can you just give some bifurcation how much percentage of our revenue comes from defense or specifically to HAL or something? Any light on this where the defense segment is heading towards and share of NEXA machines?

No. Right now, I think defense sector, our total business in terms of the revenue is in single-digit. But right now, we are focusing more on NEXA baskets. But yes, in future, once we have a capacity, because this defense and the government tender business machines are totally customized. Recently, we have a INR 3 crore machines order from HAL, but it will take 6 months. So if we focus more on defense only, then we cannot generate this much good revenue. But right now, in the new plant, if we have a separate defense assembly shop, we have a different NEXA shop, we have different turning shop. We have a different technical collaboration shop. So we are planning on this. But right now, we are focusing on more on NEXA and general engineering average price. But in future, in next financial year, we'll increase our market share for the defense sector also. But right now, if we manufacture only defense because of space constraint, one machine when we start the assembly, it will dispatch up to 5 to 6 months. So they can occupy the space. So in new plant, 13 acre plant we are putting the separate assembly shop. Right now our market share in the defense is less than single-digit.

We'll take the next question from [ Vishwas Singhal ].

Hello. Am I audible?

Yes, you are audible. Please go ahead.

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[Foreign Language] this customer's loan of INR 30 lakh is sanctioned and all the formalities is completed, we'll release the payment after 1-week, you may dispatch the machines. [Foreign Language]

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Thank you. We'll now take the follow-up question from [ Kumar Sourav ].

Yes. [Foreign Language]

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We'll take the follow-up question from [ Kanish ].

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Cash flow from operations.

Cash flow from operations. Cash flow from operations [Foreign Language]

Sir, FY '27 [Foreign Language]

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We'll move to the next participant [ Hiren Modi ].

Am I audible?

Yes. Hiren, you are audible. Yes.

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Am I audible now?

Yes. You are audible.

[Foreign Language] Congratulations for the great set of numbers. Sir, [Foreign Language] there are some points where I'm a little bit getting clarity -- I want the clarity from you. Sir, in March '24, you first announced that you are planning for 35-acre near Padrika, the land that was eventually increased to 60 acres. In the last con call, sir, in February, you mentioned that everything is clear and things are going to get signed up by March end. That is what you told at that time. So now you are telling that there is some election issues were there, so things are again delayed by 2 months. So one of your point is very much clear that there are low-hanging fruits over here. Indian economy is in a good shape and every manufacturing units requires CNC machines. So sir, I can't see that aggression within you, sir. That from past 2 years, the land is getting delayed. Now we are coming up with an option to where we are going for a 25-year lease. So why that aggression is not there, a company like us deserves much more to expand and to get more and more in a good way, in a good CAGR, you can move ahead, sir. So I just wanted some clarity. So I was confused with this, please.

Yes. First of all, 35-acre land we identified the first land for 35-acre after that 2 or 3 months because as you know that when you are asking the land from government, it will require more than 30, 35 different kind of clearance. So after so many clearance, we have some issues in this 35-acre land. So government said, this land we cannot offer you. We can show you the another land and they show us the 60-acre land. Now the process of the land start to end. A to Z is completed. After that, they've taken the token money also from us. After that, there is a policy of defense and aeronautic. The policy is like you can get this land with the token rate. And after that, this policy is expired on December, they extended this policy up to February. Now there is no policy because of election, Ministry of Industries and bureaucrats are very much busy. And that's why this new policy, the draft already they have shown me is more advantageable than any other defense policy in Gujarat. So I'm waiting for that policy, but if you can see my aggression is like that. I'm not waiting right now for this 60-acre land. This land will be coming once defense policy will announce within short time. But we are not waiting for this land right now. That's why we identified 13 acre land. And second thing is I'm not ready to buy the land of INR 40 crores. If I want one land for 1 acre, it's INR 4 crore market rate. So I cannot generate the ROI. I'm searching the land. I wanted -- I don't want to sell the machine. I wanted to earn the profit. So this land I identified the market value is INR 40 crores. So if I spend INR 40 crores in this land. So I'm searching the land, they are ready to give me for the long lease. So these are the one. And second thing is this 60-acre land I told you it's already all the department procedure is completed, file is ready. I can sign the tomorrow, but I have to pay according to the market rate because there is no policy from the defense. So I'm waiting for 1 or 2 months once this policy will announce, we'll sign and we'll pay the balance payment. So we are aggressive, and that's why we bought this 13 acres.

Since we are shooting ahead of time, we'll take the last question for the day from [ Darshan ].

Yes. Sir, we have a capacity of around 2,500 machines and the average is around INR 20 lakhs. So if you take a rough approximate, so our peak revenue can be about INR 500 crores. So when we expect the 3x to 4x of increase in revenue, so is it safe to assume that this growth will come only after FY '29? Because [Foreign Language] and to build up the plant, we'll also need 10, 12 months of gestation time. So is it safe to assume that the exponential growth that we are expecting that will come post FY '29?

[Foreign Language] resource management, manpower, technology, new product development. There are lots of expect we have to calculate. Supply chain [Foreign Language]

Sir, but the number doesn't add up, right? We expect the 3x to 4x of revenue by FY '30. So if we grow at a 30% CAGR, we would not be able to reach our target that we have shown in our presentation. So how do we plan to achieve that number?

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So let me answer this. Darshan, you're assuming INR 20 lakhs as the average realization per machine. The average realization is also moving up every year by year. So it is wrong to assume that we'll only do INR 20 lakhs per machine. On top of that, when we mentioned the capacity is based on the traditional machine capacity, while we are doing more and more NEXA machines, where the average realizations are also going up to INR 1 crore. So you -- it's only just for basic understanding that the capacity that we are defining.

Okay, Vinayji.

Sure. Sir, would you like to give any closing comment before we end this call?

Thank you very much, Vinayji to arrange this kind of nice con calls. And thank you very much, everyone who are participating in our con calls. And I'm assuring you about our growth journey will remain in same on each and every quarter and year-on-year. Thank you very much.

Thank you, sir. And thank you for all the participants for joining on the call. This brings us to the end of today's conference call. You can disconnect now.