MTAR Technologies hits 10-month low; tanks 52% from 52-week high level

A combined 1.55 million equity shares representing 5 per cent of the total equity of the company had changed hands on the NSE and BSE.

Shares of MTAR Technologies hit a 10-month low of Rs 1,223.35 on slipping 9 per cent on the BSE in Wednesday’s trade. The aerospace & defense company's stock quoted its lowest level since August 2021. The stock has fallen 13 per cent in the past two trading days on margin concerns.
 
In the past three months, it has underperformed the market by falling 30 per cent, as compared to an 8 per cent decline in the S&P BSE Sensex. It has corrected 52 per cent from its 52-week high level of Rs 2,555.65 touched on January 3, 2022. It had hit a 52-week low of Rs 1,000 on June 20, 2021.

At 02:03 pm; the stock was trading 7.5 per cent lower at Rs 1,247 as against a 0.06 per cent rise in the Sensex. The counter has seen huge trading volumes with a combined 1.55 million equity shares representing 5 per cent of the total equity of the company having changed hands on the NSE and BSE.

MTAR has seven strategically based manufacturing units including an export-oriented unit each based in Hyderabad, Telangana. MTAR caters to civil nuclear power, space & defence and clean energy sectors.

For the January-March quarter (Q4FY22), MTAR reported a 9.9 per cent year on year (YoY) growth in its consolidated profit after tax at Rs 19.8 crore, on the back of higher revenue. The company’s revenue during the quarter grew 42.5 per cent YoY to Rs 98.6 crore. Earnings before interest, taxes, depreciation, and amortization (Ebitda) margins, however, contracted to 28.1 per cent from 43.5 per cent in Q4FY21.

MTAR said its net working capital days have risen to 299 days due to an increase in average inventory as it had procured raw materials in advance amid the Covid-19 pandemic and geopolitical concerns.

“The company’s growth was led by 56 per cent growth in clean energy segment, driven by robust volumes of SOFC volumes, while ex-clean energy vertical reported a growth of 43 per cent, largely driven by growth in space and defence (+73 per cent YoY) and new product launches, even as nuclear energy segment declined by 9 per cent YoY,” analysts at JM Financial said in a Q4 result update.

Gross margins contracted by 410 bps QoQ and sustained at 61 per cent level largely on the back of raw material inflation and supply chain issues. Base quarter is not comparable given low base due to some adjustment and mix benefit.

Also, a sharp increase in employee addition (caused 10 per cent increase in employee costs) and variable pay structure (increase of 24 per cent) led to 34 per cent increase in total employee costs, the brokerage said. It also cut EBITDA/EPS estimates for FY23/24 by 5 per cent/11 per cent and 10 per cent/16 per cent, respectively, considering inflationary environment and increase in fixed costs due to new projects undertaken by the company.

Inordinate delays in order placement and technology shift from solid oxide fuel cell (SOFC) based fuel cells are key risks, it added.