Macpower CNC Machines Q3 FY26: Robust Growth Momentum Continues Amid Margin Expansion

The stock responded positively to the results, rallying 10.32% on February 10, 2026, to close at ₹935.00, outperforming the broader Sensex which gained just 0.23% on the same day. This sharp uptick reflects renewed investor confidence in the company's operational trajectory, despite the stock remaining 27.99% below its 52-week high of ₹1,298.35.

The Gujarat-based CNC machine manufacturer, founded by Mr. Rupesh Mehta in 2003, has demonstrated consistent improvement across key financial parameters. With promoters holding a stable 73.17% stake and zero pledging, the company maintains a solid ownership structure that provides operational stability.

Financial Performance: Record-Breaking Quarter Signals Operational Strength

Macpower CNC Machines delivered its strongest quarterly performance in Q3 FY26, with net sales reaching ₹86.15 crores—a record high for the company. Operating profit (PBDIT) stood at ₹15.58 crores, translating to an impressive operating margin of 18.08%, the highest the company has achieved on a quarterly basis. This margin expansion demonstrates improving operational efficiency and better cost management.

The profit before tax (excluding other income) reached ₹12.98 crores, whilst net profit after tax came in at ₹9.79 crores, marking the company's best quarterly bottom-line performance. The PAT margin for the quarter stood at a healthy level, reflecting the company's ability to convert top-line growth into meaningful profitability.

On an annual basis, the company has demonstrated consistent growth momentum. For FY25, net sales reached ₹261.00 crores, representing 8.3% year-on-year growth from ₹241.00 crores in FY24. Operating profit (PBDIT excluding other income) expanded to ₹41.00 crores with a margin of 15.7%, up from 14.5% in the previous year. Net profit for FY25 stood at ₹25.00 crores with a PAT margin of 9.6%.

Operational Excellence: Superior Capital Efficiency Drives Performance

Macpower CNC Machines' operational metrics reveal a company firing on multiple cylinders. The return on equity of 17.75% significantly outperforms many peers in the industrial manufacturing space, demonstrating management's ability to generate superior returns on shareholder capital. This high ROE is particularly noteworthy given the company's minimal leverage, indicating genuine operational strength rather than financial engineering.

The company's return on capital employed (ROCE) of 23.86% further underscores its operational efficiency. With an average ROCE of 21.84% over recent years, Macpower has consistently generated healthy returns on the capital deployed in the business. The average EBIT to interest coverage ratio of 25.24 times provides substantial cushion, though interest expenses remain negligible given the company's debt-light balance sheet.

From a balance sheet perspective, Macpower maintains a fortress-like financial position. As of March 2025, shareholder funds stood at ₹142.82 crores, comprising ₹10.00 crores in share capital and ₹132.82 crores in reserves. Long-term debt remains minimal at just ₹0.14 crores, resulting in a net debt to equity ratio of effectively zero. Current assets of ₹157.17 crores comfortably exceed current liabilities of ₹69.89 crores, providing strong working capital coverage.

Growth Trajectory: Impressive Long-Term Expansion

Macpower's growth story is particularly compelling when viewed through a multi-year lens. The company has achieved a five-year sales compound annual growth rate (CAGR) of 30.68%, demonstrating consistent top-line expansion. More impressively, operating profit (EBIT) has grown at a five-year CAGR of 54.38%, indicating improving operational leverage as the business scales.

This growth trajectory becomes even more evident when examining the annual progression. From FY20 to FY25, net sales expanded from ₹81.00 crores to ₹261.00 crores—a more than three-fold increase. Operating profit (PBDIT excluding other income) surged from ₹4.00 crores to ₹41.00 crores during the same period, whilst operating margins improved from 4.9% to 15.7%.

The cash flow statement reveals a business investing heavily for future growth. Whilst cash flow from operations has been variable—ranging from negative ₹6.00 crores in FY22 to positive ₹22.00 crores in FY21—the company has consistently invested in fixed assets, with investing cash flows of ₹10.00 crores in FY25. This capital expenditure demonstrates management's commitment to building long-term capacity.

Peer Comparison: Competitive Positioning in Industrial Manufacturing

When benchmarked against peers in the industrial manufacturing sector, Macpower CNC Machines occupies an interesting position. The company's return on equity of 16.49% (average) compares favourably to peers like Eimco Elecon at 4.92% and Indef Manufacturing at 12.97%, though it trails OSEL Devices' impressive 34.31%.

Macpower's P/E ratio of 30.85 times sits in the middle of the peer range, appearing reasonable given its superior ROE relative to most peers. However, the price-to-book value of 5.48 times is on the higher side, second only to OSEL Devices at 5.22 times. This premium valuation suggests the market is pricing in continued growth and operational improvements.

The company's minimal leverage (debt-to-equity of 0.00) provides a significant competitive advantage in terms of financial flexibility. Whilst dividend yield of 0.18% lags peers like Indef Manufacturing (0.65%) and Kabra Extrusion (1.00%), this reflects management's preference to retain capital for growth investments rather than distribute earnings.

Valuation Analysis: Premium Pricing Reflects Growth Expectations

Macpower CNC Machines trades at a P/E ratio of 31 times trailing twelve-month earnings, representing a premium to its historical averages. The current valuation grade of "Expensive" reflects this elevated multiple, though it's worth noting that the stock has oscillated between "Fair" and "Expensive" ratings throughout 2025.

At a price-to-book value of 5.48 times, the stock commands a significant premium to its book value of ₹142.76 per share. This premium is partially justified by the company's superior return on equity of 17.75%, which exceeds the cost of equity for most investors. The enterprise value-to-EBITDA multiple of 19.38 times and EV-to-EBIT of 22.89 times indicate that the market is pricing in continued operational improvements.

The stock's 52-week range of ₹601.20 to ₹1,298.35 reveals significant volatility, with the current price of ₹935.00 sitting 27.99% below the peak. This correction from highs may present a more attractive entry point for investors who believe in the company's long-term growth story, though the valuation remains stretched on absolute metrics.

Shareholding Pattern: Stable Promoter Base with Minimal Institutional Interest

The shareholding structure of Macpower CNC Machines has remained remarkably stable over recent quarters. Promoter holding stands firm at 73.17%, unchanged across the last five quarters from December 2024 to December 2025. This stability signals strong promoter confidence and long-term commitment to the business.

Foreign institutional investors hold a modest 1.03% stake, down marginally from 1.32% in March 2025. The gradual decline in FII holding—from 1.32% to 1.03% over the past year—suggests limited interest from global institutional investors, likely due to the company's micro-cap status and lower liquidity.

Notably, mutual fund holding remains at zero, indicating that domestic institutional investors have yet to discover this story. Other domestic institutional investors hold just 0.35%, down slightly from 0.36% in the previous quarter. The absence of mutual fund participation represents both a risk (lack of institutional validation) and an opportunity (potential for future institutional buying if the growth story continues).

With zero promoter pledging and total institutional holdings of just 1.39%, Macpower remains largely a promoter-driven and retail-owned company. This ownership structure can lead to higher volatility but also provides upside potential if institutional investors begin accumulating positions.

Stock Performance: Recent Volatility Masks Long-Term Gains

Macpower CNC Machines' stock performance presents a tale of two timeframes. Whilst the stock has delivered exceptional returns over the long term—with a five-year return of 873.96% compared to the Sensex's 64.22%—recent performance has been challenging. The stock is down 27.14% over the past year, significantly underperforming the Sensex which gained 8.98% during the same period.

The stock's beta of 1.50 indicates it is 50% more volatile than the broader market, which explains the sharp swings. With a volatility of 56.50% over the past year—nearly five times the Sensex's 11.54%—Macpower is clearly a high-risk, high-reward proposition. The negative risk-adjusted return of -0.48 over the past year reflects the painful correction from the 52-week high.

However, recent momentum has been encouraging. The stock gained 10.32% on February 10, 2026, following the Q3 results, and has delivered positive alpha of 9.67% over the past week. The three-month return of 17.80% (versus Sensex's 0.87%) and six-month return of 14.19% (versus Sensex's 5.51%) suggest the stock may be finding its footing after the year-long correction.

Technical indicators present a mixed picture. The stock trades below all key moving averages—5-day MA at ₹840.48, 20-day MA at ₹866.70, 50-day MA at ₹944.61, and 100-day MA at ₹901.84. The overall technical trend is classified as "Mildly Bullish" as of February 9, 2026, having recently shifted from "Sideways," suggesting early signs of a trend reversal.

Investment Thesis: Growth Story with Execution Risk

Macpower CNC Machines presents a compelling investment thesis built on three pillars: consistent operational improvement, strong capital efficiency, and a long runway for growth in India's manufacturing sector. The company's five-year sales CAGR of 30.68% and EBIT CAGR of 54.38% demonstrate genuine operational momentum, whilst the ROE of 17.75% and ROCE of 23.86% indicate efficient capital deployment.

The company benefits from India's manufacturing push and the government's focus on domestic production capabilities. As a CNC machine manufacturer, Macpower is well-positioned to capitalise on the capital expenditure cycle in sectors like automotive, aerospace, and general engineering. The minimal debt burden provides flexibility to invest in capacity expansion without financial strain.

However, the investment case is not without challenges. The premium valuation at 31 times earnings and 5.48 times book value leaves little room for execution missteps. The absence of institutional investor interest—with zero mutual fund holding and just 1.03% FII ownership—raises questions about whether sophisticated investors see value at current levels. The high volatility (beta of 1.50) and recent underperformance versus the Sensex also warrant caution.

Key Strengths & Risk Factors

Outlook: What Lies Ahead

The outlook for Macpower CNC Machines hinges on the company's ability to sustain its growth momentum whilst managing the expectations embedded in its premium valuation. The positive financial trend designation and record Q3 FY26 performance provide encouraging signals, but investors should monitor several key factors that will determine whether the stock can justify its current multiples.