MTAR Technologies Limited : IPO ALERT

MTAR Technologies Limited is coming out with a fresh public issue to raise ₹ 596.41 crores from the market.

Here are some more details regarding the issue:

The issue opens – Mar 3 (Wednesday)

The issue closes – Mar 5 (Friday)

Issue size – ₹ 596.41 crores

Price band – ₹ 574 – 575 per equity share

Bid lot – 26 shares and in multiples thereof

What’s more – Through UPI, you can now apply online and block payment.

Verdict

From a long-term perspective, investors can consider applying for the IPO.

MTAR is a leading precision engineering solution company having a niche play. It has been serving nuclear sector for over 35 years also a key supplier of mission critical assemblies and components to customers within the space and defence sectors for their programs of national importance. The order book as of Dec 31, 2020, stood at Rs 80.19 crore in the clean energy sector, the nuclear sector was Rs 93.19 crore and defence sector was Rs 160.61 crore.

The company has shown steady growth in the past couple of years. Restated profit for the year has grown at a CAGR of 140.31%, from ₹ 5.42 Cr. in FY 2018 to ₹ 31.31 Cr. in FY 2020 and was ₹ 28.06 Cr. for the nine months ended December 31, 2020. Operating margins have increased from 20.5% in FY 2018 to 28.5% in FY 2020. ROCE increased from 9.2% in FY 2018 to 19.2% in FY 2020. The company has been paying dividend in last 3 years.

The issue is priced at a P/BV of 6.26 based on its NAV of Rs. 91.78 per share as of December 31, 2020. At upper price band of ₹ 575, the issue is fully priced based on its P/E of around 52x at FY20 while on the basis of 9 months ended Dec ,2020 P/E comes around 44x. 

MTAR has reasonable financial performance with strong margins for the last two fiscals and 9 months ending 31st Dec. 2020. The company however has client concentration risk. 

Hence, considering all the above factors, investors may subscribe to a long-term perspective in the IPO.

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