Macpower CNC Machines Limited Q3 FY26 Earnings Call Summary

Summary

Macpower CNC Machines Limited - Q3 FY26 Earnings Call Summary Wednesday, February 11, 2026 2:00 PM IST

Event Participants

Executives 3 Kishor Kikani (Company Secretary), Rupesh Mehta (Chairman & Managing Director), Vishal Mehta (Chief Financial Officer)

Analysts 7 Abhijit A, Aniket Jain (Yes Securities), Arnav Sakhuja, Ayush, Dhaval Shah, Mahek Talati, Naman Jain, Ronit Kapoor, Shashi Kant, Zubin C

Financials & KPIs

Geographic & Segment Commentary

• Nexa Segment: This premium product line now contributes 39% to the order book, up from negligible levels last year. The segment focuses on higher-end machines with average prices ranging from ₹30 lakhs to ₹1.5 crores, significantly higher than the ₹15-16 lakh average for non-Nexa products.
• Defense & Aerospace: Management is intensifying focus on this segment due to its highest-ever historical margin levels for the company. Current bids under evaluation include tenders from HAL, BHEL, and HVF, with high-value orders (e.g., ₹3.5 crore HAL tender) expected to open in Q4.
• Exports: Currently in a trial phase with recent supplies to Gulf and European markets following the EMO Germany exhibition. While margins are 5-7% higher due to government incentives and pricing, aggressive expansion is deferred until new capacity is commissioned.

Company-Specific & Strategic Commentary

• Capacity Expansion: To address the current execution bottleneck, the company has leased 10,000 sq. ft. of industrial space and is negotiating for an additional 50,000–100,000 sq. ft. These temporary rentals will bridge the gap until the new plant (Phase 1: 2,500 machines) is operational.
• New Land Acquisition: Management has cleared 18 government approvals and paid the token advance for a new site. Final signing is delayed until March to take advantage of a pending new, more beneficial state industrial policy.
• Product Innovation: Launched three major products this quarter: DCM 4222 (30-ton double column machine valued at ₹2 crore), Turn-Mill Center with Y-axis (₹1 crore value), and GX 100 Super.
• Technology Partnerships: Discussions are at the finalization stage with 5 European companies for technology transfer and buyback arrangements. These will involve producing import-substitute machines for the Asian market, with Macpower paying a royalty rather than diluting more than 5% equity.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Order Book & Defense

• Question: What is the timeline for the ₹318 crore defense tenders to flow in? (Shashi Kant)
• Answer: Tenders typically have a 90-day SOP, but Q4 is historically the strongest period for openings; one ₹3.5 crore HAL tender recently opened (Rupesh Mehta).

Margins & Realization

• Question: How much of the margin gap (18% to 25%) is from backward integration? (Dhaval Shah)
• Answer: It is a mix of fixed cost absorption on higher revenue, backward integration, and the rising share of premium Nexa and defense products (Rupesh Mehta).

Infrastructure & Land

• Question: Is the rented 1L sq. ft. space additional to the new 10k machine capacity plant? (Arnav Sakhuja)
• Answer: No, the rental is a temporary 12-18 month solution to smoothen the jump to 2,500 machine capacity while the new building is under construction (Rupesh Mehta).

Foreign Collaboration

• Question: Will you give up a majority stake in the joint venture? (Ronit Kapoor)
• Answer: I have denied large investment; it will likely be a technology transfer/buyback system with 0-5% equity share or royalty payments (Rupesh Mehta).

Key Takeaway

Macpower CNC Machines Limited delivered a record-breaking Q3 FY26, with revenue growing 43% YoY to ₹86.15 crores and EBITDA margins expanding significantly to 18.08%. The strategic pivot toward the “Nexa” premium segment (now 39% of order book) and high-margin defense contracts has successfully raised average machine realizations to ₹20 lakhs. While current operations are physically constrained by plant capacity, management is mitigating this through short-term space rentals and is poised to finalize a new land deal in March 2026. The company maintains a robust bidding pipeline of ₹958 crores and a pending order book of ₹375 crores. Looking ahead, Macpower guides for a 25-30% growth trajectory across all financial metrics, with a long-term goal of 25% EBITDA margins supported by technology transfers from European partners and the commissioning of a new 2,500-machine capacity facility. Management remains confident in achieving significant growth over the next five years as they target import-substitution and increased domestic market share.