Undiscovered Stock | Market Cap < 200 Cr | Best Proxy Play to Manufacturing Sector | Sales/Profit Growth (5Y): 12% & 65% | Trusted, Efficient, Committed & Visionary Management.
Mentoring Pick (Micro Cap Multibagger Stock Idea) of Aug'21 : Macpower CNC Machines Ltd (NSE: MACPOWER) - Report made public today!!!
Note: Macpower CNC stock idea was published in Aug’21@ Rs 162 per share, as on today it is trading around Rs 338 (Up 100%) to all our PAID subscribers of Mentoring Program where we identify 12 best-in-class micro-cap multibagger stocks in a year. Today we are making this report public for the benefit of all those clients who wish to join us. This is a niche business run by honest & ethical management, there is long runway of growth left for this company. It’s buy & forget for next 3-5 years with 5-6x upside from CMP. To join WhatsApp to +91 9354179604 (Sanjay Gupta)
Below mentioned write-up was shared with the clients in Aug’21…
🌟🌟🌟 Macpower CNC Machines Ltd (NSE: MACPOWER) 🌟🌟🌟
📢📢📢 Mentoring Pick (Micro Cap Multibagger Stock Idea) of Aug'21 : Macpower CNC Machines Ltd (NSE: MACPOWER)
🏆🏆🏆 Undiscovered Stock | Market Cap < 200 Cr | Best Proxy Play to Manufacturing Sector | Sales/Profit Growth (5Y): 12% & 65% | Trusted, Efficient, Committed & Visionary Management.
📌 Total market size of CNC machines in India is around – Rs 23,500 Cr, India produces Rs 11,500 Cr worth of machines and 55-60% imported.
📌 Only 8 to 9 prominent players (E.g. ACE Micromatic, Bharat Fritz Werner, HMT Machine Tools, Jyoti CNC Automation, Macpower CNC, Lokesh Machines etc.) in the CNC manufacturing business enjoy ~70% of the total market share.
📌 Few listed peers are HMT Ltd, ITL Industries, Marshall Machines, Lokesh Machines & Macpower CNC Machines. Considering the financial stability & strength of the balance sheet, Macpower CNC seems to be the clear winner than its peers.
✅ Know more about Macpower CNC Machines Ltd ✅
📌 Macpower CNC Machines Ltd (www.macpowercnc.com) was established in 2003 and is engaged in the manufacture of Computerized Numerical Controlled (CNC) machines.
📌 Listed in 2018 at NSE SME Exchange (IPO at Rs 140 per share) and proceeds of the issue were used to backward integrate into the manufacture of Machining components.
📌 Company is looking to further backward integrate, using internal accruals, to develop state of the art patterns for different machine models.
📌 It is also looking to make casting in house through a new foundry, which will lead to cost reduction, further quality improvement, productivity and help increase overall production.
📌 Macpower currently has the widest range of machines offering 9 product categories, with 27 versions and 60+ different models servicing more than 27 industry segments.
📌 The company today has a capacity to manufacture 1000-1200 machines per annum, and is further debottlenecking to manufacture 1300-1400 machines per annum.
📌 Around 580 qualified engineers workforce, 115 working across 37 cities under sales & services.
📌 Launched a separate vertical called “NEXA” for the import substitution of high end premium products such as HMC, VTL etc. which have already been developed by their R&D Team.
✅ Watch Videos of Macpower CNC Machines ✅
📌 IPO Project Completion Video - www.youtube.com/watch?v=Q9KPpQDXKwg
📌 Corporate Video of Macpower CNC Machines Limited - www.youtube.com/watch?v=dpXq3t_gfg4
📌 Macpower CNC Machines Ltd (2021-06-30) Q4FY21 Conf Call - www.youtube.com/watch?v=Km6mUVv22PA
✅ FY20 & FY21 - Worst period for Manufacturers of CNC Machines; But Expect FY22 & FY23 to be the BEST years ahead. ✅
📌 In FY20, there was a sharp decline of about 50% in the demand for CNC machines & FY21 was impacted by Covid-19.
📌 During FY21 (Covid-19 year) they manufactured ~ 650 CNC machines. In fact they have capacity to produce double the FY21 numbers (~1200 Machines).
📌 Revenue growth for Q4FY21 has been the highest ever. This is in spite of the challenges faced due to (national) lock-down at the beginning of FY21 and (state wise) lock-downs towards the end of FY21.
📌 They are planning for the next leg of growth, which will allow them to grow at +25% CAGR over the next 5 years.
📌 Operations continue to be low cost, lean and working capital efficient (debt/equity is NIL)
📌 They are currently operating at 75% of capacity utilization, and gradually increasing their capacity at a higher rate quarter on quarter.
✅ Expect ~200% growth in sales & ~400% growth in net profit during next 3 years due to capex & margin expansion. ✅
📌 Fixed assets increased from 6Cr in 2019 to 38Cr in 2021, a jump of ~ 500% in the last 2 years. The company has shown tremendous growth in output, they have doubled their capacity to 1200 machines from 600 machines.
📌 Capacity doubled (completed) through backward integration & in house manufacturing. Because of the expansion, operating margins are expected to rise by 5% to 6% at the same level of output.
📌 FY21 Sales was 113Cr, NP 6Cr & EPS 6.03; during FY22 if they are able to deliver 900+ CNC Machines they can do sales ~200 Cr, due to increase in operating margin by 5-6bps, net profit will be around 15-20Cr hence EPS 15-20.
📌 FY22 expected EPS of 15-20 with average PE of 20-25, we can expect stock price ~ 300-500 in next 12 months.
📌 Asset turnover for the company currently stands at 3x and can go up to 5x in the current plant.
📌 They get an advance payment on the orders and get their remaining payments before the delivery of the machines. Continuous flow of order book month on month.
📌 Big boost in EPS growth & PE re-rating will push stock price up by 500% in next 3 years.
📌 Zero Debt; Avg. PE ~ 12/14; PEG ratio < 0.5%; After 2 years of sectoral downtrend, now is the best time for this company.
✅ High Promoter holding (Skin in the Game) + Descent FII/DII holding in this tiny company of Mcap < 200 Cr ✅
📌 Promoter holding increased by 3.1% from 69.5% in Sep'18 to 72.6% in Jun'21. FII holds 6.9% & DII holds 4.1% while Public holds 16.4%.
📌 Vantage Equity Fund (Fund manager Kenneth Andrade of Old Bridge Capital Management) holds 5.9% (Source AR 19-20)
📌 FII (Massachusetts Institute Of Technology ~6%; Roha Emerging Companies Fund ~2.11% & Micro Strategies Fund ~2%) holds 6.92%
📌 Reputed investors & institutions are already endorsing this micro cap stock, it shows credibility of management & sustainability of business.
🌟🌟🌟 "Capacity Expansion + Backward Integration" - Long runway of growth for this company where operating leverage will play out. This opportunity you should not miss out. 👍👍👍
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