MTARTECH - MTAR Technologies Limited Share Price

Management maintains a positive outlook for MTAR Technologies, projecting a revenue growth of 25% for FY '26 and an EBITDA margin of approximately 21%, with a fluctuation of +/- 100 basis points. In Q1 FY '26, the company reported revenue of INR 156.6 crores, up 22.1% year-on-year, with EBITDA increasing by 70.9% to INR 28.4 crores.

Key forward-looking points include:

1. Clean Energy Segment: Management expects robust growth of 15% to 20% in FY '26, driven by new product development for Bloom Energy. This sector generated approximately INR 105 crores in revenue during the quarter.

2. Aerospace and Defence: The company delivered orders worth INR 25 crores, with anticipated revenue growth of approximately 80% in FY '26, bolstered by increased participation in international tenders and collaborations with government organizations like ISRO and DRDO.

3. Nuclear Division: A significant order visibility of INR 1,000 crores is expected within the next 3 to 6 months, particularly from refurbishment projects across several states, including Kaiga, Madhya Pradesh, and Rajasthan. MTAR anticipates delivering orders worth INR 60 crores in FY '26 from this segment.

4. Working Capital Management: The management aims to reduce working capital days from 267 to 200 by the end of FY '26 as cash flows stabilize.

5. Capex Guidance: MTAR plans to invest INR 100 crores for FY '26, primarily for oil and gas sector facilities and other sustenance costs, with financing supported mainly through debt.

6. Market Dynamics: Despite tariff-related uncertainties in the U.S. market, the management remains confident in sustaining export momentum, leveraging cost competitiveness and indigenization strategies.

These targets and strategic initiatives reflect management's commitment to operational excellence and long-term shareholder value.

Here are the major questions and answers from the Q&A section of the earnings transcript:

1. Question: "What's the net working capital days you're expecting by the end of this year? And what's the capex guidance for FY '26?" Answer: "We aim to reduce net working capital days from the current 267 to 200 by the end of FY '26. For capex, we're spending approximately INR 70 crores for the oil and gas sector and around INR 100 crores for other needs this financial year. Future capex will be minimal at about INR 25-30 crores annually, depending on new customer requirements."

2. Question: "Any plans for Bloom to come to India or will they remain focused only on the U.S. market?" Answer: "Bloom is currently focused on the U.S. market. However, due to increased wallet share and demand, they may consider a strategy to cater to Asian and Indian markets by directly shipping products from India."

3. Question: "Is the increased traction in aerospace and defense a function of the ongoing conflict, or is it structural?" Answer: "The traction is not solely due to conflict; it stems from long-term contracts and proven project quality. Our growing order book is driven by consistent performance and customer satisfaction, positioning us well for future growth."

4. Question: "When should we expect large orders from Bloom Energy?" Answer: "We expect orders to come in line with Bloom's forecast, likely in the second half of this year. They've authorized us for sourcing raw materials, so the inflow will be significant, roughly 25% higher than current volumes."

5. Question: "Where is the order stock for the nuclear division?" Answer: "The orders are in an advanced stage. We're expecting approximately INR 1,000 crores in orders over the next 3-6 months, with tenders for Kaiga-5 and -6 and refurbishment projects in progress."

6. Question: "How do you see the gross margin improvement, given changes in the revenue mix?" Answer: "The margin improvement comes from work on long-term projects in civil nuclear power and efficient inventory management. We have seen increased production in other areas that contribute positively to gross margin."

7. Question: "How will the INR 100 crores capex be funded? Will it involve more debt?" Answer: "Yes, we plan to fund about 70% through debt and 30% from internal accruals. We're managing existing debt levels and will repay it within 2-3 years."

8. Question: "Is a dedicated facility being established for both nuclear and oil & gas?" Answer: "We are establishing a dedicated facility for the oil and gas sector in SEZ. For nuclear, we have smaller-scale enhancements to support increased order volume, addressing bottlenecks for timely project execution."

9. Question: "Can you provide clarity on the semi-cryo engine project?" Answer: "We are on track to resolve some design issues related to the semi-cryo engine. Deliveries are expected within this fiscal year, and we anticipate ISRO starting to use these engines by FY '27."

10. Question: "What is the status of the battery storage and electrolyzer projects?" Answer: "For the battery storage, Proto 2 delivery is underway; precise timing on mass production agreements will follow its completion. As for electrolyzers, development is ongoing, awaiting suitable infrastructure to ramp up orders."

These questions reflect key aspects of the company's strategy, market positioning, and operational expectations moving forward.