MTAR Technologies Limited IPO

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.

Since its inception, MTAR Technologies has significantly expanded its product portfolio including critical assemblies i.e. Liquid propulsion engines to GSLV Mark III, Base Shroud Assembly & Airframes for Agni Programs, Actuators for LCA, power units for fuel cells, Fuel machining head, Bridge & Column, Drive Mechanisms, Thimble Package, etc. A wide range of complex product portfolios meets the varied requirements of the Indian nuclear, Defense, and Space sector. ISRO, NPCIL, DRDO, Bloom Energy, Rafael, Elbit, etc. are some of the esteem clients.

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.

Product Portfolio:

Nuclear sector

• Fuel machining head: Used for loading and unloading of fuel bundles in nuclear reactors
• Bridge and column
• Grid plate
• Sealing plug, shielding plug, liner tubes and end fittings
• Drive Mechanisms

Customer Sector

• Ball screws and water-lubricated bearings
• Base shroud assembly and airframes
• Various missile parts
• Valves
• Cryogenic engines (turbopumps, booster pumps, gas generators and injector heads for such engines)
• Ball screws and water-lubricated bearings

Strength of the company:

• Wide range of product portfolio.
• 7 Modern technology manufacturing units.
• Diversified supplier base.
• Strong financial track record.
• Experienced and qualified management.

Risks Relating to Industry

• Company depend on a limited number of customers for a significant portion of their revenue. The loss of one or more of their significant customers or a significant reduction in demand for their products from such significant customers.
• The company depend significantly on orders from the NPCIL, ISRO and DRDO. A decline or re-prioritization of funding in the Indian budget towards the respective departments of the Government of India under which these customers operate or delays in the budget process could adversely affect their ability to grow or maintain our sales, earnings, and cash flow.
• The company primarily rely on purchase orders to govern the volume and other terms of the sales of their products. The company do not have long-term supply agreements with its customers.
• The company are subject to strict quality standards. Any failure to comply with such quality standards may lead to the cancellation of existing and future orders which may adversely affect their reputation, financial conditions, cash flows and results of operations.
• The company could make investments and acquisitions in the future that involve considerable integration costs. The company may be unable to sustain, manage or realize the expected benefits of such growth or may not be able to fund that growth.
• Company may face claims and incur additional rectification costs for delays and/or defects in respect of their precision components and equipment

IPO Details:

IPO Date Mar 3, 2021 to Mar 5, 2021Issue Type Book Built Issue IPO Issue Size Equity Shares of Rs.10 totaling up to Rs. 596.41 Crore Fresh Issue Equity Shares of Rs.10 totaling up to Rs. 123.52croreOffer for Sale Equity Shares of Rs.10 totaling up to Rs.472.89 crore Face Value Rs.10 per equity share IPO Price Per Equity Share: Rs. 574-575 Min Order Quantity 26 Listing At BSE, NSE

IPO Objective :

The company proposes to utilize the Net Proceeds from the Fresh Issue towards funding the following objects:

• Repayment/prepayment in full or in part, of borrowings availed by our Company
• Funding working capital requirements; and
• General Corporate Purposes

Financial Performance:

Particulars For the year/period ended (₹ in million)31-Dec-2031-Mar-2031-Mar-1931-Mar-18 Total Assets3,819.143,462.713,051.582,810.32Total Revenue1,779.912,181.421,859.101,605.45Profit After Tax280.69313.18391.9954.23

Tentative Time Table:

IPO Opening Date: 3^rd March 2021IPO Closing Date: 5^th March 2021Finalisation of Basis of Allotment: 10^th March 2021Initiation of refunds: 12th March 2021Transfer of shares to Demat account: 15th March 2021Listing Date: 16th March 2021

Outlook:

Hyderabad-based MTAR Technologies is a leading player in the precision-engineering industry develops and manufactures equipment for the defense, aerospace, clean energy, and nuclear energy sectors.

The company has long-standing relationships of over three to four decades with customers such as the Indian Space Research Organization (“ISRO”) and the Defense Research and Development Organization (“DRDO”), and have been able to supply specialized products to the Indian space programmes and the Indian missile programme, respectively.

The company’s aggregate Order Book as of November 30, 2020, was Rs.356 crores, comprising Order Book in the nuclear, space and defence, and clean energy sectors of Rs.93 crores, Rs.172 crores and Rs.86 crores respectively. These numbers signify the strength of the company. When it comes to Clean energy which is a boom these days, accounts for 64.34% of its revenues in FY2020 which also depicts its strong hold in the Clean energy sector.

The company is also focusing on its expansion plans and for the same, it is establishing an additional manufacturing facility at Adibatlaand in Hyderabad which is expected to become operational in Fiscal 2022.MTAR Technologies owns a large range of equipment, resulting in increased fixed costs.

When it comes to the financial performance of MTAR Technologies over the last three years highlights significant growth. The total revenue of the company showed a 3-year CAGR growth of 16.57%. Further, between 2018 and 2020, the profit after tax grew at a staggering CAGR of 14.39%. Also, the company’s total assets grew at a CAGR of 11%. The company’s Earnings Per Share is 11.11 and the Price to Earnings ratio stands at 51.75. As a niche player, the company is expected to gain fancy after the listing as it will be the first company to list in this segment.