MTAR Technologies Limited IPO | 10 Things You Must Know

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MTAR Technologies Limited IPO | 10 Things You Must Know

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The 9th IPO so far in the calendar year 2021 is here! MTAR Technologies Ltd. will launch its Rs 560-crore initial public offering on March 3, 2021 as the defence equipment maker plans to repay borrowings.

Let's talk about 10 things you must know before subscribing.

Also Read : How to Apply for IPO online (step by step guide)

1) About:

Incorporated in 1999, MTAR Technologies is a leading national player in the precision engineering industry. The company is primarily engaged in the manufacturing of mission-critical precision components with close tolerance and in critical assemblies through its precision machining, assembly, specialized fabrication, testing, and quality control processes.

The company co-develops critical sub-systems like Liquid propulsion Rocket Engines, Cryogenic Engines and other parts for space programs like Chandrayan-II, Mangalyaan and Agni missile programmes.

Currently, the firm has 7 state-of-the-art manufacturing facilities in Hyderabad, Telangana that undertake precision machining, assembly, specialized fabrication, brazing and heat treatment, testing and quality control, and other specialized processes.

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2) IPO Details:

MTAR plans to raise Rs 597 crore from the primary market. This includes a fresh issue of shares worth Rs 124 crore ( 21.48 lakh shares) and an offer for sale of Rs 473 crore (82.24 crore shares) worth of shares. The company has already undertaken a pre-IPO placement of 1,851,851 shares, aggregating to Rs 100 crore with Axis MF and SBI MF.


IPO Date: Mar 03, 2021 - Mar 05, 2021
Face Value: ₹10 per equity share
IPO Price: ₹574 to ₹575 per equity share
Market Lot: 26 Shares
Listing At: BSE, NSE
Finalisation of Basis of Allotment: Mar 10, 2021
Initiation of Refunds: Mar 12, 2021
Credit of Shares to Demat Acct: Mar 15, 2021
IPO Shares Listing Date: Mar 16, 2021

3) Business & Order Book

The company manufactures high precision components, sub-systems, assemblies having components with close tolerances (5-10 micron) to serve projects in the clean energy, nuclear sector, space and defence. MTAR has seven manufacturing units, including an export oriented unit that supplies power units to Bloom Energy, and high-end components to an Israeli defence technology company.

The company has three key customers in the fuel cell, nuclear, and space and defence segments.

  • In the fuel cell segment, Bloom Energy is its largest customer that accounted for 49% of the company’s revenue in the nine months ended December 2020.
  • Its key customer in the nuclear segment, Nuclear Power Corporation of India Ltd., accounts for 27% of the overall revenue.
  • In the space and defence segment, clients such as the Indian Space Research Organisation and Defence Research and Development Organisation account for 21% of the top line.

Order Book: MTAR has an order book of Rs 334 crore across three segments, including Rs 160.60 crore for space and defence segment. It has an Rs 80.2-crore order book for the clean energy segment from Bloom Energy and Rs 93.2 crore from Nuclear Power Corp.

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Read more: Opening an Account with RBI for Investing?

4) Financials:

MTAR has seen a compounded average revenue growth of 16% in the last three financial years. Its revenue for the fiscal ended March 2020 stood at Rs 213.8 crore, and at Rs 177.3 crore for the nine month ended December 2020.

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The company’s Ebitda margin hovered between 29% and 30% in the last three financial years. It stood at 30% for the nine months ended December 2020.MTAR’s profit for 2019-20 stood at Rs 45.5 crore, and at Rs 39.6 crore for April-December 2020 period.

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5) Valuations:

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 but there are no direct listed entities in India that are engaged in a similar line of business and whose business is comparable with that of this business.

6) Grey Market premium:

(As on Mar 02, 2021) The grey market premium of MTAR Technologies Limited shares is at 400 Rs. or 70% up from the IPO price.

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7) Peer comparison:

MTAR competes with more than 200 vendors in the nuclear, space and defence segments. It has formidable competition from Mahindra Defence, Larsen & Toubro’s defence and heavy engineering segment, and Godrej & Boyce, among others.

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8) Objective:

The net proceed from the IPO will be used towards following purposes:

  • To partly or fully repay company's borrowings.
  • To finance company's working capital requirements.
  • To meet general corporate purposes.

9) Pros:

  • Wide range of product portfolio.
  • 7 Modern technology manufacturing units.
  • Diversified supplier base.
  • Strong financial track record.
  • Experienced and qualified management.
  • MTAR has been a key partner to Indian Space Research Organization (ISRO), Defense Research and Development Organization, Nuclear Power Corporation of India Limited (NPCIL) and the US-based Bloom Energy, besides catering to several large Indian entities such as Bharat Dynamics and Hindustan Aeronautics in aerospace and defence. The company is also working with Israel- based Rafael Advanced Defense Systems and Elbit Systems on the exports front.

10) Cons:

  • The company depends on Bloom Energy and a limited number of other clients for a significant portion of its revenue. It depends on NPCIL, ISRO and DRDO for more than 50% of its revenue.
  • The company does not have long-term supply agreements with its customers.
  • The company is in a highly competitive market where pricing pressure can adversely impact its Ebitda margin.
  • The company does not have the intellectual property rights for fuel cells technology.

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Data source: Bloombergquint, Hindustantimes, financialexpress, chittorgarh

Akshay Seth
Research Analyst (SEBI Regd.)
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