resr 5paisa Research Team 7th September 2023

Macpower CNC Machines rallies 10%; what’s cooking?

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On Monday, shares of Macpower CNC Machines rallied more than 10% upper circuit recording an all-time high of Rs 418.75 on the bourses. The scrip soared like an eagle over the last six, furnishing returns of more than 80%.

Established in 2003, Macpower CNC Machines Ltd is engaged in the manufacture of computerised numerically-controlled (CNC) machines with nine product categories, 27 variations, and over 60 different models. The company has the widest range of offerings among its peers. It has a CNC machine manufacturing unit in an area of around four acres at Metoda GIDC, Rajkot, Gujarat (India). It has sales & services in 37 cities serviced through 107 qualified engineers and 10 business associates.

The company kicked off FY23 on a strong note with a robust order book of Rs 146.8 crore. They have continued to build on it in Q1FY23. Their order book as on 30 June 2022 stands at Rs 154 crore, which is nearly 5% higher than their order book at the end of FY22.

Currently, the company can manufacture 1,300 machines per annum and is trying further debottlenecking to manufacture 1,500 machines per annum. They aim to gradually increase their production capacity and productivity every month and have also maintained their status as a debt-free company having strong liquidity.

Macpower CNC Machines is one of the few net debt-negative companies in the sector that has generated positive free cash flow since FY17-18.

To quote Rupesh Mehta, Chairman & Managing Director from the company’s recent annual report, “We will continue backward integration that will play a pivotal role to leverage cost effectiveness through which higher profitability can be achieved. We expect margins to keep improving year on year, as we keep growing. Gradually increasing our capacities, improvement in our capacity utilisation, higher execution of machines, increasing mix of high end machines and developing skilled manpower will play significant role in our growth strategy.”

Considering the company’s commendable growth and bright future outlook, investors should keep a close eye on this scrip for the upcoming sessions.

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