MTAR Technologies Share Price Hits All-Time High Ahead of Aditya L1 Launch

On Friday, 1 September 2023, the share price of MTAR Technologies spiked sharply and surpassed its previous all-time high touched in January 2022.

It could be due to the hype surrounding India's first solar mission.

The sharp rally could also be due to MTAR recently receiving the 'Defence Industrial Licence' for production of various mechanical and electronic subsystems.

Ahead of the launch of India's first-ever solar mission Aditya L1, scheduled for 2 September 2023, shares rose 10% and ended near their highest level since listing.

In 2023 so far, shares are up over 65%.

Ever since the success of Chandrayaan-3 last month, shares have been on a roll.

For Chandrayaan-3, MTAR made core parts of the rocket engines and core pumps of cryogenic engines required for the take-off.

MTAR's role in space technology

The company offers high-tech products for PSLV and GSLV like liquid propulsion rocket engines, cryogenic engine sub systems, electro pneumatic modules, among other things.

According to the company, these products would be used for the upcoming Aditya L1 mission.

Apart from these, MTAR is also manufacturing critical structure like grid fin for the Gaganyaan mission.

Here's what it shared in the latest investor presentation -

License approval

On 30 August 2023, MTAR Technologies received the much awaited defence industrial licence for production of various mechanical and electronic subsystems in the defence sector.

In a press release, the company's MD said,

• Defence licence will enable MTAR to partner with global MNCs to address various electronic and mechanical sub-systems. The company will not only be able to increase the revenues from defence but also be able to work on some of the complex sub system level projects by collaborating with MNC customers.

In an interview back in June 2023, the company's MD had highlighted that the defence segment could see strong momentum going forward as currently MTAR has just 5% market share. This could go up to 15-20% or even more.

Strong growth prospects

In FY23, the company's revenue growth of 78% was driven by a strong order book and the addition of new customers. MTAR continues to do the same as it expects high growth in the coming years, till FY28.

Financial Snapshot

Rs m, consolidated	FY19	FY20	FY21	FY22	FY23
Revenue	1,836.70	2,137.70	2,464.30	3,220.10	5,737.50
Growth (%)	-	16.40%	15.30%	30.70%	78.20%
Operating Profit	559.6	623.3	843.9	1,031.80	1,734.50
OPM (%)	30.50%	29.20%	34.20%	32.00%	30.20%
Net Profit	392	313.2	460.7	608.7	1,034.20
NPM (%)	21.30%	14.70%	18.70%	18.90%	18.00%
Dividend (Rs)	0	3	6	3	0
Debt to Equity (x)	0.1	0.1	0	0.2	0.2

Data Source: Ace Equity

For the quarter ended June 2023, MTAR Technologies reported strong growth across segments.

Its revenue spiked 68% to Rs 1.5 bn while EBIDTA jumped 38%.

The net profit saw a 25% growth year-on-year and came in at Rs 203 million (m), supported by strong topline and operational performance.

The company said it has a closing order book of Rs 10.8 bn as of June 2023 and expects orders of around Rs 12 bn during the year.

It received fresh orders of Rs 500 m in the first quarter.

In its investor presentation, it gave a strong guidance for the full year among other updates for its orders.

The company expects revenue to grow between 45%-50% for FY24, with strong revenue growth expected over the coming three quarters.

The key highlight? The company said it's working on establishing some units in Europe and the US, which might add a lot to its topline. It plans to invest in these units for energy storage systems.

MTAR is also working on developing its own defense products further fueling Modi's Make in India initiative.

The recent license approval opens up a lot of opportunities for MTAR as it'll now aim to supply directly to end users and bid for major defense projects in India.

How MTAR Technologies share price has performed recently

In the past five days, MTAR Technologies is up 20%. In the month gone by, the stock gained 26%.

While in the past one year, MTAR shares are up around 62%.

MTAR Technologies touched a 52-week high of Rs 2,817 yesterday and it has a 52-week low of Rs 1,472 on 28 March 2023.

Since listing in March 2021, the stock has rallied 166%.

At the current price, the company trades at a price to earnings (PE) multiple of 77x and a price to book value multiple of 13x.

Look at the table below to compare MTAR with its peers -

Comparative Analysis

Company	MTAR	DMR Hydro	Engineers Ind	Rites	Thejo Eng
ROE (%)	18.2	13.3	18.5	22.4	19.5
ROCE (%)	22.5	17.1	24	30.5	25.6
Latest EPS (Rs)	35	2.1	7.5	21.3	30.2
TTM PE (x)	77.9	33.8	21.1	23.9	56.2
TTM Price to book (x)	13.1	4.5	4.3	4.5	8.8
Dividend yield (%)	0	0.2	1.9	4	0.1
Industry PE	18.8
Industry PB	4.4

Data Source: Ace Equity

About MTAR Technologies

MTAR Technologies is in the business of manufacturing various machine equipment, assemblies, sub-assemblies, and spare parts for energy, nuclear, space, aerospace, defence and other engineering industries.

The company has 7 manufacturing units including an export oriented unit (EOU). These plants are located in proximity to major defence organizations.

To know more, check out MTAR's financial factsheet and its latest quarterly results.

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