🧠 At a Glance
MTAR Technologies builds precision components for defence, nuclear, aerospace, and clean energy. It’s got elite clients, a ₹90 Cr/year 10-year contract, and exports rising — but ROE has cratered to 7.6%, operating margins are down to 18%, and P/E is an eye-watering 90x. A classic “orderbook rich, cashflow poor” tale?
🎬 1. Intro — “Defence Stock with Nuclear Hype, Solar Margin”
Every investor wants the next HAL or BEL — MTAR looked like it.
It had:
- 🇮🇳 Defence industrial license ✅
- 💣 ISRO, DRDO, Bloom Energy, Rafael clients ✅
- 📈 Order wins > ₹600 Cr in FY25 alone ✅
- 🏭 7 precision units in Hyderabad ✅
But dig deeper, and you’ll find:
- ROE < 8%
- Cash conversion cycle = 370 days
- Promoter stake = 31%
- PAT flat for 3 years
- P/E = 89.5x
This isn’t your average PSU re-rate play. This is “privately listed ISRO supplier with HAL-level hype and SME-level profits.”
🔧 2. WTF Do They Even Do? (Business Model)
MTAR makes high-precision, mission-critical components used in:
- 🚀 Aerospace: Cryogenic engines, ISRO launch components
- 💣 Defence: Fuel systems, electronic warfare components, naval subsystems
- ☢️ Nuclear: Reactor parts for NPCIL
- 🔋 Clean Energy: Supplies to Bloom Energy (SOFCs, hydrogen tech)
Recurring revenue = lumpy
Working capital = heavy
Exports = rising, but EBITDA declining
💸 3. Financials – Profit, Margins, Growth
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue (₹ Cr) | 573 | 580 | 676 |
| EBITDA Margin | 27% | 19% | 18% |
| Net Profit (₹ Cr) | 104 | 56 | 54 |
| EPS (₹) | 33.84 | 18.29 | 17.51 |
| ROE | 14% | 8% | 7.6% |
| ROCE | 22% | 11% | 10.7% |
🔻 Profits halved in 2 years
🔻 ROCE more than halved
🔻 EPS shrinking, while P/E rising
💰 4. Valuation – Is It Cheap, Meh, or Crack?
| Metric | Value |
|---|---|
| CMP | ₹1,568 |
| Market Cap | ₹4,822 Cr |
| P/E (TTM) | 89.5x |
| Book Value | ₹238 |
| P/B | 6.6x |
🎯 Fair Value Range
Assuming normalized PAT = ₹54 Cr, and fair P/E band of 30–40x for high-tech, export-heavy defence:
FV Range = ₹950 – ₹1,250
CMP = ₹1,568 = Valuation is clearly pricing FY28 hopes today.
🔥 5. What’s Cooking – Orders, Deals, Drama
- 💥 ₹200 Cr+ order from Bloom + Rafael (Dec 2024)
- 💼 ₹90 Cr/year 10-year contract with Weatherford (starting FY27)
- 🛰️ 15-year deal with Israeli Aerospace Industries
- 🔧 ₹19 Cr order for aerospace & clean energy in June 2025
- 🏭 New facility planned, fully operational by 2026
➡️ Great visibility. But visibility ≠ profitability.
💀 6. Balance Sheet – How Much Debt, How Many Dreams?
| FY25 Snapshot | ₹ Cr |
|---|---|
| Net Worth | ₹731 |
| Total Borrowings | ₹177 |
| CWIP | ₹53 |
| Inventory | ₹424 |
| Debtors | ₹209 |
| Total Assets | ₹1,128 |
📉 Working capital heavy
⚠️ 113 days debtor, 369 days inventory
🔋 Order wins ≠ free cash
💵 7. Cash Flow – Sab Number Game Hai
| FY25 Metric | ₹ Cr |
|---|---|
| CFO | ₹102 |
| Capex (CFI) | -₹104 |
| Financing (CFF) | -₹35 |
| Net Cash Flow | -₹37 |
🎯 Free cash flow = basically zero
🧯 Operating cash saved the year — but capex cycle will continue due to large orders
📊 8. Ratios – Sexy or Stressy?
| Ratio | FY25 |
|---|---|
| ROE | 7.65% |
| ROCE | 10.7% |
| OPM | 18% |
| Cash Conv. Cycle | 370 days |
| Debt/Equity | 0.24x |
🔴 Declining profitability
🔴 Capital getting locked in WC
🟡 Order wins may drive ROCE in FY26–27
📈 9. P&L Breakdown – Show Me the Money
| Metric | FY25 |
|---|---|
| Revenue | ₹676 Cr |
| Operating Profit | ₹121 Cr |
| Other Income | ₹6 Cr |
| Depreciation | ₹32 Cr |
| Interest | ₹22 Cr |
| Net Profit | ₹54 Cr |
Margins under pressure despite scale
→ Clean Energy & Exports contributing more, but may have lower margins
⚔️ 10. Peer Comparison – Defence vs. Reality
| Company | P/E | ROE | OPM | Market Cap |
|---|---|---|---|---|
| HAL | 39x | 26% | 31% | ₹3.3 L Cr |
| BEL | 56x | 29% | 28% | ₹3.0 L Cr |
| BDL | 126x | 14% | 14% | ₹69K Cr |
| Zen Tech | 61x | 26% | 38% | ₹17K Cr |
| MTAR | 89x | 7.6% | 18% | ₹4.8K Cr |
➡️ MTAR has the highest P/E, lowest ROE, and smallest scale
🧾 11. Misc – Shareholding, Promoters, Red Flags?
- Promoter Holding: down from 47% → 31% in 2 years 😬
- FII Holding: 6.7%
- DII Holding: 24.4%
- Public Holding: 37.1%
- No dividend
- Over 3 lakh retail shareholders
📉 Market optimism is retail-driven
📉 Promoters cashing out = yellow flag
⚖️ 12. EduInvesting Verdict™
MTAR is not a fraud. It’s not a loss-maker. It’s a legit, niche, high-tech exporter in sectors India loves: defence, nuclear, aerospace.
But its valuation is HAL-level without HAL’s margins.
Its order wins are sexy, but profitability isn’t.
Its cash flows are tight, and returns are falling.
🎯 Unless FY26–27 sees an ROCE breakout, this stock remains a premium story with average fundamentals.
💰 FV Range = ₹950 – ₹1,250
(Current = ₹1,568 → pricing FY28 dreams today)
✍️ Written by Prashant | 📅 July 11, 2025
Tags: MTAR Technologies, defence stocks, HAL vs MTAR, aerospace contracts India, high P/E stocks, nuclear supplier India, EduInvesting analysis, cashflow trap, retail favourite defence stock
