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MTAR Technologies is a Hyderabad-based precision engineering company engaged in manufacturing critical components and assemblies for clean energy, nuclear, space, and defence sectors. It is a manufacturer of critical subsystems like fueling machine head, Grid plate, and other assemblies for Nuclear, Fuel cell hotboxes and electrolysers for fuel cells and various parts for the defence and aerospace industries. Established in 1970, the company has built strong long-term partnerships with marquee clients such as ISRO, DRDO, NPCIL, HAL, and Bloom Energy (US).

Investment Rationale

Significant Growth in the Nuclear Sector:

MTAR's nuclear segment is expected to contribute 19% to total revenues by FY28E, up from 3% today, driven by the Rs 10bn Kaiga 5 & 6 order and five reactor refurbishment projects in FY26. The company supplies 15 critical reactor components and is the sole domestic qualified supplier for Fuel Transfer Systems (FTS) and Bridge & Carriage Assemblies (FMBC) for NPCIL's PHWRs. This structural moat positions MTAR favorably as India plans to expand nuclear capacity from 8 GW to 100 GW by 2047. Currently, 8 reactors are under construction (adding 8 GW by 2030), and 20 more have government approval (~19 GW). MTAR represents ~25% of total equipment costs for these projects.

Clean Energy Dominance to continue:

The clean energy segment is expected to remain MTAR's largest revenue contributor, growing at a 17% CAGR, with Bloom Energy projected to grow at 25-30% CAGR over CY20-30, continuing as MTAR's largest client. The global fuel cell market is expected to expand at a 26.3% CAGR from 2025-2030, presenting a robust long-term opportunity. MTAR's partnership with Bloom is expected to deepen as wallet share rises, with the addition of new products such as sheet metal assemblies, bellows, and electrolysers. Additionally, MTAR is onboarding new clients, including Fluence Energy for battery storage systems, further diversifying its clean energy portfolio.

Growing Role in India's Space Sector:

MTAR is poised to play an increasingly important role as ISRO plans to launch 150 satellites by 2033, with near-term projects including Mangalyaan-2, Shukrayaan, and Chandrayaan-4. India's space economy is projected to grow from $8.4bn to $44bn by 2033. MTAR has a zero-failure execution record and longstanding relationships with ISRO, supplying critical components such as hardware for semi-cryogenic engines and actuation systems. With its expertise and track record, MTAR is wellpositioned to capitalize on rising satellite launches and defence localization, with order inflows expected to grow 25-30% annually.

Valuation summary

We initiate coverage on MTAR Technologies with a HOLD rating and assign a 55x PE multiple on Sep-2027E EPS, implying a target price of Rs.2,711 (12% upside). Our positive view is driven by (1) robust growth visibility in the nuclear segment, with revenue share expected to rise to ~19% by FY28E (from 3% currently) supported by the Rs10 bn Kaiga 5 & 6 order and upcoming reactor refurbishments, (2) continued strength in the clean energy business, with MTAR's deepening partnership with Bloom Energy and diversification into new clients such as Fluence Energy, and (3) MTAR's strategic role in India's expanding space ecosystem, where its proven execution capabilities and long-standing relationship with ISRO position it well to capitalize on various opportunities. We estimate Revenue/EBITDA/PAT CAGRs of 34%/ 48%/68% over FY25-28E, driven by strong order growth in the clean energy and nuclear segments, expansion of wallet share with existing clients, and onboarding of new customers.

Risks to our thesis:-

* High client concentration (Bloom Energy at ~60%)

* Delays in nuclear projects or regulatory approvals.

* Currency and raw material price volatility (~40% revenue from exports, high volatility in alloys and special grade metals)

* Capacity underutilization during expansion.

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