MTAR Technologies IPO Review (Apply or Not?)


Overview of the Company:

  • MTAR was incorporated on 11th November 1999 at Hyderabad.
  • Initially the company was instituted on 23rd July 1970 as a partnership firm namely "M/s Machine Tools Aids and Reconditioning"
  • The Company has 7 Manufacturing Units including 1 Export Oriented Unit (EOU).
  • The Company has some Major Clients namely ISRO, NPCIL, DRDO, Bloom energy, Rafael, Elbit Systems.
  • MTAR Technologies of serving Nuclear Sector Customers for over 35 Years and has served NPCIL for over 16 Years

About The Company

  • 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 (5-10 microns) and in critical assemblies through its precision machining, assembly, specialized fabrication, testing, and quality control processes.
  • The Company Serves its customer in Nuclear, Space, Defence and Clean Energy Sector.
  • 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, Defence, and Space sector. ISRO, NPCIL, DRDO, Bloom Energy, Rafael, Elbit, etc. are some of the esteem clients.
  • The Key Customers from whom it earns around 50% of the Revenue is Bloom Energy.

What are Precision Engineering Products which company manufactures?

Precision Engineering Products are that products where the tolerance level of error is very less and if due to some reasons there is error in design of the products or equipment then there are huge chances of Disasters. Along with Monetary Losses there can be losses of human life if there are some errors in such equipments.

The Critical position of this company.

  • In 26th April 1986, Chernobyl Disaster where a Neuclear Reactor blast happened because there was a flaw in the design of nuclear design.
  • Further there were losses in many space programs for example: Apollo-13 in 1970 which was the 3rd mission of USA which was meant to land on the Moon. The craft was launched by Kennedy Space Center on 11th April 1970 but the lunar landing was aborted after an oxygen tank in the service module failed.
  • Recently, Falcon 9 was a partially reusable two-stage-to-orbit medium-lift launch vehicle designed and manufactured by SpaceX in the United States.The two-stage launcher will blast off from NASA's historic Pad 39A here at Kennedy Space Center in Florida The explosion occurred during the preparation for the static fire test of the rocket's engines, and no one was injured but there was a loss of around $200 Million USD.
  • So we can estimate the amount of Loss which can happen if there are some errors in the products which MTAR Technologies Manufactures.

SWOT Analysis

 STRENGTH (S) 

  • Wide product portfolio
  • Good track record in technologically driven industry
  • Diversified supplier base
  • Stable financial growth
  • Better margin (14%)
  • Well Qualified and Experienced Management

WEAKNESS (W)

  • Concentration of Revenue (50% from Bloom energy, 27% from NPCIL)
  • High dependency on government 

 OPPORTUNITIES (O)

  • Product diversification in India and Export
  • Capitalize current trends and diversify revenues
  • Defence sector In India is opening up and many private players are entering along with this space sector also allows private players
  • In defence sector mainly the products were used to be imported from international markets. Recently around 101 components import has been Banned and Only Indian Companies can BID for these Components to promote Atmanirbhar Bharat program.

THREATS (T)

  • More competition with opening up of Defence sector and to compete in such competitive market, MTAR will have to create their own USP.
  • Deviation from quality in high precision industry
  • Volatility in Raw material Supplies and prices


Financial Data Analysis:


Particulars

For the year/period ended (₹ in million)

 

 

31.12.2020

31.03.2020

31.03.2019

31.03.2018

Total Assets

3,819.14

3,462.71

3,051.58

2,810.32

Total Revenue

1,779.91

2,181.42

1,859.10

1,605.45

Profit After Tax

280.69

313.18

391.99

54.23


 

FY 2021

FY 2020

P/E Ratio

41.11

51.76

EPS

10.50

11.00

Price to Book Value

6.26

6.84

  •  The Company has a Operating Margin of around 37% and Net Profit Margin of around 15.77%
  • The Company has a reasonable / manageable Debt Position of ₹ 67.261 crores

IPO Basic Details

IPO Opening Date

Mar 3, 2021

IPO Closing Date

Mar 5, 2021

Issue Type

Book Built Issue IPO

Face Value

₹10 per equity share

IPO Price

₹574 to ₹575 per equity share

Market Lot

26 Shares

Min Order Quantity

26 Shares

Listing At

BSE, NSE

Issue Size

10,372,419 Eq Shares of ₹10
(aggregating up to ₹596.41 Cr)

Fresh Issue

2,148,149 Eq Shares of ₹10
(aggregating up to ₹123.52 Cr)

Offer for Sale

8,224,270 Eq Shares of ₹10
(aggregating up to ₹472.90 Cr)

MTAR Technologies IPO Tentative Timetable

The MTAR Technologies IPO open date is Mar 3, 2021, and the close date is Mar 5, 2021. The issue may list on Mar 16, 2021.

IPO Open Date

Mar 3, 2021

IPO Close Date

Mar 5, 2021

Basis of Allotment Date

Mar 10, 2021

Initiation of Refunds

Mar 12, 2021

Credit of Shares to Demat Account

Mar 15, 2021

IPO Listing Date

Mar 16, 2021


MTAR Technologies IPO Lot Size

The MTAR Technologies IPO market lot size is 26 shares. A retail-individual investor can apply for up to 13 lots (338 shares or ₹194,350).

Application

Lots

Shares

Amount (Cut-off)

Minimum

1

26

₹14,950

Maximum

13

338

₹194,350


CONCLUSION

This IPO is Very Good for both Listing Gain as well as for Long Term Investment Perspective.
The Company is in a very Unique Industry and the Growth aspects in future for this Industry is very Good and hence according to individual goals one can apply for this IPO.

The Grey Market Premium of this IPO Currently is Around Rs. 250 to 300/- per share so one can expect a listing gain of around 30-35%

This are my personal views, all the equity investments are subject to market risk. Please read all offer documents before investing. This blog is only for information and education purposes. Please consult your investment adviser before investing.


Thank You for Reading this Article 



To Read My Article on Basics of Initial Public Offer (IPO). Do Visit the Following Link: 


To Read My Article on RAILTEL IPO Review. Do Visit the Following Link:


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