How to Profit from India's Spacetech Boom

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At the start of 2024 when the world was counting down to the start of a new year , ISRO was running a different countdown, for the launch of the X - Ray Polarimeter Satellite (XPoSat) from Sriharikota, Andhra Pradesh.

Over five years, this mission is expected to help in understanding the radiation mechanism and geometry of celestial sources like blackholes, neutron stars and so on.

First Chandrayaan 3, then the Aditya L1 mission, and now this...

The strides we have taken in recent years in covering the distance to space are bolder and bigger than in the last few decades.

But this could just be the beginning of a space economy boom.

Consider this.

As per industry estimates, the global space economy grew 8% to US$ 546 billion in 2022. It is expected to grow 41% over the next five years.

Yet, at US$ 8.4 bn, Indian space economy is not even 2% of the global space economy.

I see the glass as half full rather than half empty.

India is slowly getting ahead of Western economies like the US and Russia and has been the first to successfully land on moon's south pole.

As per ISRO, by 2025, the Indian space economy could grow to US$ 50 bn, an almost six times gain.

So, what has changed for the Indian space economy to have these bold assumptions?

I believe it's the liberalization of the space economy. The government and concerned bodies have come up with the policy to open 'space' for all.

This could be as seminal for the space sector as liberalization of the Indian economy in the nineties was for the Indian economy.

Make in India, PLI schemes and indigenization have led to a level playing field and favorable regulatory environment for private players in the space ecosystem.

What's more, the PSUs and government bodies in space domain have been mandated to transfer technologies to the private sector players for the required momentum.

The wheels are indeed turning with the policy push.

There are almost 140 firms registered as spacetech startups.

And it's not a fad.

The PSU players like HAL, Midhani, Bharat Electronics and bodies like ISRO are as critical to realise space ambition as startups like Skyroot Aerospace, Satsure, Dhruva Aerospace, Pixxel, Agnikul or listed private sector companies like L&T, Avantel, MapmyIndia, Satsure, Centum Electronics, Data Patterns, Premier Explosives, Paras Defense and Space Technologies, Dynamatic Technologies, Astra Microwave, and MTAR Technologies.

But this is a theme to be tracked over a period and pick the winners early in the cycle.

With that purpose, today I want to talk in detail about an unusual suspect that is powering the space mission.

Macpower CNC Ltd, backed by first generation promoter, makes computerized numerically controlled machines and lathe machines.

It claims to be the lowest cost producer in the industry, which allows it to enjoy the highest profit margins and return ratios among its peers.

Its clients come from different sectors such as defense (DRDO, Indian Ordnance factory, etc.), government PSU /bodies (ISRO, Railways), education, agriculture and export sectors.

The company caters to 35 factories of defense and four factories for aviation, including ISRO and HAL.

Now I would not have associated this machine making smallcap company with spacetech, had I not come across the management's statement that the company participated in ISRO- Chandrayan 3 project. It has also catered to DRDO Brahmos project.

The management aims to grow at 18-20% CAGR for next three to five years with increasing opportunities in aerospace and defense sector. The debt on the balance sheet is nil.

As compared to a trailing 12-month revenue of Rs 2.1 bn, its order book at the end of September 2024 stands at Rs 2 bn. Further, the bids submitted are valued at Rs 5.5 bn, of which the ones in aerospace and defense sector stand at Rs 1.8 bn.

The company aims to grow at 18-20% CAGR for the next 3-5 years on the base of FY23, on the back of capacity expansion, premiumization and make in India policy push. And of course, with increasing opportunities in the space economy.

For a common investor, space tech startups won't be a vehicle to ride the boom in the space economy. You will have to be look for yet to be identified beneficiaries where the valuations haven't become unreasonable.

To stay updated with such opportunities and stock names, stay tuned.

Warm regards,


Richa Agarwal
Editor and Research Analyst, Hidden Treasure
Equitymaster Agora Research Private Limited (Research Analyst)