Hold MTAR Technologies Ltd For Target Rs. 7,995 by ARETE Securities Ltd
MTAR's 4QFY26 revenue growth of 76% YoY was primarily driven by the Clean Energy segment (+89% YoY), while Aerospace & Defence (+26% YoY), Products & Others (+30% YoY) and Civil Nuclear (+169% YoY) also supported overall growth. FY26 revenue grew 67% YoY to Rs 3,060 mn (est Rs 3,330mn), while PAT surged over 220% to Rs 442mn (est Rs 485mn), supported by operating leverage and better scale utilization. EBITDA improved by 81% YoY to Rs 617mn (est Rs 799 mn), and EBITDA margins also improved by 157bps to ~20%. The management upgraded FY27 revenue growth guidance to 80% from the earlier 50% with 24% EBITDA Margins, alongside confidence in significantly expanding the order book over the next year to Rs 50,000mn (vs current Rs 25800mn). Current order book is dominated by clean energy (~77%), followed by Aerospace & Defence (~14%) and Products & Others (~9%). Working capital days declined to 172 from 229 in 4QFY25, aided by improved payment terms with customers
Management Call Highlights
• FY27 revenue growth guidance of ~80% with EBITDA margin target of 24%; clean energy expected to contribute ~70% of revenue.
• FY27 closing order book expected at ~Rs 50bn, mainly driven by clean energy orders.
• Entering into an LTA with SLB for data center components. Total opportunity estimated at ~Rs 4-5bn; received first article orders worth Rs 350mn. Value addition around 70%, though management indicated the process is not highly specialized.
• Current order book stands at Rs 25,820mn versus guidance of Rs 28,000mn, with an execution period of around 3 years. Reactor refurbishment orders worth Rs 2,500mn were deferred.
• Management did not quantify Bloom hotbox orders due to NDA restrictions, but indicated demand could be significantly higher than the earlier FY26 guidance of 4,000 hotboxes.
• In Aerospace & Defence, received orders worth Rs 360cr+. First articles have been completed and volume production is expected to begin soon. First articles for Israel Aerospace Industries are expected to be completed by September. LCA actuator assembly opportunity estimated at Rs 1300-1500mn. Also received a Rs 40mn order for AMCA structural assemblies, with the company being one of eight qualified vendors.
• In Products & Others, FY27 revenue is expected to exceed Rs 200cr, supported by supply of ballscrews to MNC customers.
• Planned capex of Rs 2,500-3,000mn over FY27-FY28, mainly for hotbox capacity expansion.
• In Oil & Gas, first article orders have been completed. Total opportunity estimated at $35-40mn. The new plant is expected to become operational by September 2026, with volume production starting around six months later. Peak sales v
• Other income during the quarter was supported by forex gains; management expects rupee depreciation benefits to continue in FY27.
• FY30 revenue target remains Rs 50,000mn. Additional capex of Rs 5000-7000mn, including possible greenfield expansion, may be required to support this scale-up.
• Already qualified for calandria components used in nuclear reactors and plans to participate in upcoming tenders. Management expects nuclear-related scaling to begin from 2QFY26.
Valuation and Outlook
We remain constructive given the visibility from the doubled order book, management's margin trajectory, and the multi-year AI data centre runway. However, given the run-up and embedded execution assumptions, we view risk-reward as more balanced at current levels - investors should look to accumulate on pullbacks rather than chase.
Rolling forward to June-28E EPS of Rs 84.17, we value the stock at 95x P/E to arrive at a revised target price of Rs 7,995 (CMP-Rs 7,595). The multiple sits roughly in line with where MTAR currently trades (~221x FY26 P/E, ~95x FY27E) and is justified, in our view, by (i) earnings nearly doubling over two years, (ii) target of the Rs 50,000mn FY30 revenue target, and (iii) scarcity premium for direct, listed India-exposure to the SOFC / AI data centre power theme. On EV/EBITDA, the stock would trade at ~37x our FY28E vs 130x for FY26, suggesting the de-rating on growth is meaningful even at the higher target. Comparable Kaori Heat (the other key Bloom precision supplier) trades at ~117x P/E and ~81x EV/EBITDA, while Bloom Energy itself is at ~275x EV/EBITDA. We recommend HOLD at 5% upside.
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