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* Macpower is the 8 th largest CNC machines manufacturer in India. It recently operationalized 500 additional machines in July taking its total installed capacity from 1.5k to 2k machines.

* Proxy on industrial capex: Macpower caters to more than 2300 clients across almost all industries like auto, defence, aerospace, cap. goods, railways, EMS, pharma and others. ? CNC Machine industry is poised to grow at 20% CAGR owing to (i) strong industrial capex on the back of manufacturing boom across industries and (ii) import substitution.

* Industry size is approx. Rs. 25,000 Cr of which 60% is imported. Thus Macpower’s market share is at barely ~1% of total market and ~2.4% of domestic production.

* Macpower has witnessed a steep increase in its order book at Rs. 283 Cr (+60% YoY, +8% QoQ)

* We anticipate topline/bottomline growth of 28%/44% CAGR over FY24-26E. Over next 7 years, company anticipates to grow at 25% CAGR and expects capacity to reach 8k machines. ? We value Macpower at 36x FY26E EPS (in line with our fair valuation for Tier 1 domestic midcap Capital Goods basket) and arrive at a target price of Rs. 1,800.

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