Some PAN India big orders in MSME round the corner worth Rs. 400 crores.Shows push for training in manufacturing for the new crop.
Also, they open the next day, that way we get the name of the successful bidder right away in Q4 hopefully.
This also coincides with the announcement of the new land parcel which is probable in Q4 and the possible addition of order book from the imptex exhibition in banglore in where companies are happy to give out great discounts in search of new orders.
Good info on Machine tools industry
Comprehensive report on indian machine tool manufactures association - August 2024 edition ( A report that gets created each year )
Comprehensive Report on Indian Metal Working Machine Tool Industry 2024.pdf (6.0 MB)
Very dismal numbers. Nothing explains the dip. Though not shocked but very much surprised that both on YOY & QOQ the numbers have taken a beating.
Need of the hour is the concall. Hope the management doesnât ghost around & comes up with a clear communication as to why didnât things pan out well this quarter.
Disc: Invested. No buy or sell recommendation
Dismal numbers indeed, especially after very bullish commentary in Q2. Looking forward to Q3 con call ( they have not announced date for Q3 con call, which is a bit of worry).
While Jyoti CNC topline growth moderated in Q3 FY25, they talked about certain capacity bottleneck rather than demand moderation. In fact Jyoti talked about entire market growing at 20% and ample opportunity for all players (similar to what Macpower has been saying in the past).
with this it is all the more intriguing as to what caused this outcome for Macpower. Let us wait for investor presentation and con call.
I had my apprehensions post Q2 concall as well & being a devilâs advocate thereâs been a period in past when Management went completely away from doing concalls when results werenât great.
Hope the trend doesnât repeat & being very honest I wasnât expecting this scenario to play out even as it seemed a trend to me. The biggest problem is the very optimistic tone in Q2 call & even claiming that some revenue is getting pushed to Q3.
Also now that the investor presentation is released a very important point to ask whyâs there so much slowdown in YOY order inflow in Q3. And with more centres what are we doing to improve our reach. Prudent to say that orders have been missing & there might be some brainstorming the management needs to do to grow the order book. Attaching last year Q3 snapshot where order intake both Nexa & total was visibly higher.Had pointed to management that in Q2 also their order inflow had not grown handsomely compared to last year. Directional view needed here as well.
Dismal numbers with no concall will certainly raise some questions about managementâs integrity, as harsh it might sound, of not facing the investors when thereâs been a tough quarter.
P.S I would very happy to be proven wrong about my doubts for the concall though. A call should help clear everything & way forward.
I think quarterly miss for a small microcap is not unusual, I think sectoral tailwind is a great benefit.
If the clarifications are reliable, next quarter can be large , considering seasonally high. Journeys in these micro cap investment can be volatile, if the concall can address concerns, it will be fine for the stock.
As of now no announcement of Con call.
I used to hear from these kind of echo chambers about 10-15 years back mostly about China, I think these signs are good for Indian manufacturing. I know ACE is the most known machine tool company⌠
I feel the management has always been under promising & over delivering & this quarter has been a break from the template & that too in a quarter that was positioned to do well. No problem with that & happens in business & only thing that can lessen the concern of investors is a concall 
with a transparent communication regarding how things stand.
I think enough explanation is in the PPT âŚ
It is there but honestly in Q2 concall management told that top line hadnât grown much as dispatches had spilled over to Q3 due to payment issues & festival holidays.
So a decline as to whatever the issues doesnât sit right & theyâve been doing concalls consistently. So in my humble opinion they should do another one even as the results arenât that great. But then itâs my view In Good times we get the appreciation, bad times we take it with a smile even if it comes at the cost of unwarranted criticism from stakeholders.
P.S. Con-call schedule just announced. Attaching it here
MACPOWER_14022025134746_Q3n9MFY25ConcallInvite.pdf (2.8 MB)
In my view Q3 result is not as bad as it looks because of following reasons:-
1, It is already indicated by an industry expert @bhavenshah in his post that
Same is also highlighted in Q3 Investors Presentation by the management.
2, In imtex exhibition, macpower displays 10-12 nos. of higher end new technology CNC Machines. For developing or manufacturing these machines it takes a lot of time, space, manpower and money. In Q2 concall management mentioned that some production capacity was used in Q2 for manufacturing these new technology CNC machines.
So,I assume that, also, in Q3 significant amount of time, space and manpower are used for manufacturing of these higher end CNC machines ( instead of making products to sell) to display in imtex in January25.
I think because of these two main reason there was a loss of sales figure around 10-15 crs in Q3 result.
Concall was helpful, detailed, many things were clarified. But I could sense they have some challenges , may be market conditions. Also some short term billing , exhibition disruptions. They are evolving, it might play out well, they are doing few things that will help topline , capacity and margins. But I think they need lot of inhouse technology development to be large and to build a sustainable moat. The expansion of machine tools industry is what they are banking on.
Contrary to what management thinks, if they can onboard a technology partner (while they parallelly build good R&D inhouse) , they might emerge fastâŚand I cant imagine any short term triggers
It was a good concall yesterday and some really good questions from the participants.
Does anybody have any idea, whats the usual conversion rate historically of the orders to revenues basis receipt of payments? As Rupesh ji mentioned that the total available capacity ( Finished goods + production capacity etc+ spillover) of 125 Cr available for Q4. While the entire amount might not be booked, any idea how much we can expect basis historical conversions?
Donât think anything has changed in the business fundamentally, if anything exhibition at IMTEX + increase in staff hired in the sales department should technically act as a shot in the arm for sales as they have participated in it after 6 years and helps generate future enquiries for FY25. I was happy to hear that next year expenses are more or less fixed( about 10-12% higher than this FY), as it tells me that there may be operating leverage build in for FY25 - as capacity to manufacture has increased.
The sales need to come through for operating leverage to kick in and EPS to grow.
The land from Gujarat vibrant is certainly coming through, sooner or later while JV continues to be a powerful optionality.
Till then, watching the sector and company execution, like a hawk.
One addition that, i assume risk reward now is truly now in the favour of the investor. With 100% delivery in the last trading day someone who truly wanted this business may look at getting some sooner than later knowing revenue could show up at 100 cr+ in the last quarter with 18% operating margins in a business where ROCE is north of 25%.
Few new development in Macpower and in machine tool industry discussed in Q3 concall:-
The Management discusses about BIS certification for the industry. By August or September 25, BIS standards will be compulsory. For this, Macpower has started the training through the IMTMA (Indian Machine Tool Manufacturersâ Association) and internally. Also, Imports from other countries must also obtain BIS certification. Currently, Indiaâs import is almost 50%.
After strenthening manufacturing and distribution capacity, the company is now focusing on execution capability because of increasing order book. So, management is planning to implement a double shift in some assembly areas starting from April 25.
Previously, Macpower primarily served Tier 3 and Tier 4 customers, but after the development of 5 axis and higher end CNC machines, there will be more focus on corporate clients who gives order in bulk. Macpower currently holds 4% of the market share in the Indian machine tool industry and aims to reach a minimum 10% market share in future.
