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MTAR Technologies Ltd - A strong player in booming high precision engineering... - Geojit

Posted On: 2021-02-28 03:34:13 (Time Zone: Arizona, USA)

MTAR Technologies is a leading national player in the precision engineering industry. Incorporated in 1999, their offerings are primarily served in the nuclear, space and defence, and clean energy sectors where they manufacture critical and differentiated engineered products customized to meet the specific requirements of the customers. They currently operate through seven manufacturing facilities, situated in Hyderabad, including an export-oriented unit (EOU). Some of the clients are ISRO, NPCIL, DRDO, Bloom Energy, Rafael and Elbit.

- MTAR manufactures hi-precision indigenous components with stress on low tolerance for errors (5-10 microns) to produce machinery and equipment of perfect dimension and size to serve projects of high national importance in nuclear, space & defence and clean energy sectors.

- For FY18-20, revenue grew at a CAGR of 17% while PAT grew by 140% CAGR. As on December 31st, 2020, 54% of the revenue amounting to Rs.94cr is generated from customers located outside India.

- For the nine months ended December 31st, 2020 the revenue from customers in the clean energy sector, nuclear sector and space & defence sectors accounted for 49.3%,27%,20.6% respectively, of the revenue from operations.

- MTAR has an aggregate order book of Rs.336.2cr, comprising Rs.80.2cr, Rs.93.2cr and Rs.160.6cr in the clean energy sector, the nuclear sector and the space & defence sectors respectively as on December 31st, 2020.

- An additional manufacturing facility at Adibatla in Hyderabad which is expected to become operational in FY22.

- Under Govt's policy to construct 10 units of nuclear reactors as a single project will increase opportunities for domestic suppliers like MTAR. Large refurbishment and maintenance market, expected to increase by 1.6x.

- Over the next five years, the private sector will receive the mandate for ~70% of all the upcoming space missions of ISRO which is positive for MTAR.

- MTAR will start manufacturing Hydrogen boxes and electrolyzers for Bloom Energy, a key player in fuel cell technology.

- At the upper price band of Rs.575, MTAR is available at a P/E of 47.3x (annualized basis on FY21E EPS of Rs.12.2) which is aggressively priced.

- With no listed peers and a positive sentiment in the space & defence sectors due to Make in India and Atmanirbhar Bharat with limited competition for the products they manufacture, we assign a Subscribe rating, with a long term perspective.

Source: Equity Bulls

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