Rushikesh BhiseMTAR Technologies IPO Details:
- IPO Date: March 3rd to March 5th, 2021
- Total Shares for subscription: ~1.04 Cr
- IPO Size: ~Rs. 596.4 Cr
- Lot Size: 26 shares
- Price Band: Rs. 574-575/ share
- Market Capitalization: 1,656 Cr
- Recommendation: Subscribe
Purpose of MTAR Technologies Limited IPO
- To partly or fully repay the company’s borrowings.
- To fulfill working capital requirements.
- To meet general corporate purposes.
About the MTAR Technologies Company
MTAR Technologies, an Rs. 250 Cr company, 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.
The company is also involved in critical assemblies, to serve projects of high national importance, through precision machining, assembly, testing, quality control, and specialized fabrication competencies. Some of those have been indigenously developed and manufactured.
Products & Manufacturing Facilities
Over time, MTAR Technologies has 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 company has a strong network in the domestic as well as the overseas market. In India, it has 8,600 dealers across 16 states and 1 union territory whereas, in the overseas market, it exports its products to more than 60 countries through international distribution partners. The company exported its products in Latin America, CIS, Middle East, Africa, Asia, and South East Asia in FY20.
More than 50% of the revenue comes from customers outside India. The overall order book as of December’20 stood at Rs. 336 Crores.
Management of MTAR Technologies:
Parvat Srinivas Reddy is the Managing Director and promoter of the company. He has over 29 years of work experience and before his appointment as the Managing Director of the Company; he served as the managing director of Ravileela Granites Limited and has acted as a consultant to the Company.
Devesh Dhar Dwivedi is the Chief Operating Officer of the company. He has over 13 years of experience in the defence, manufacturing, information technology and engineering, procurement, and construction sectors, among others. He has previously served as the chief financial officer of High Radius Technologies Private Limited, an assistant vice president with Bharat Forge Limited.
Financials of MTAR Technologies:
The revenue of the company has grown at a CAGR of 16% from FY18 to FY20. On the other hand, the order book has grown at a CAGR of 31% in the same period from Rs. 201 crore in FY18 to Rs. 345 crore in FY21.
The company has managed to improve its net cash flow (from operations) at and ROCE offlate.
Strengths:
- Wide range of product portfolio
- Modern manufacturing units
- Diversified supplier base
- Experienced and qualified management
Risks:
- Inability to source purchase orders
- Risks from slow-moving orders and volatile cash flows
MoneyWorks4me Opinion
The engineering is largely driven by order books and limited by production capacity. MTAR Technologies operates in the precision engineering industry which offers a high margin to compensate large investments into receivables and inventory.
Firstly, the company is catering to lucrative sectors like Defence is trending due to the Atmanirbhar initiative by the government of India. Also, the company believes that it shall be one of the preferred suppliers for any defence offset transaction that any current international customers may be part of.
Secondly, the company is a supplier to clear energy companies that have a large growth potential over the next decade. This will provides a long-term growth trajectory for the company.
Considering the size of the company we see headroom for the company to grow. The future potential is huge but largely dependent on the execution abilities of the management.
Valuation
Valuation of Mtar Tech is quite high, Rs. 1,656 Cr for Rs. 50-60 Cr in operating cash flows, i.e. 28-32x. We can’t think of investing long-term investment at such a price.
Considering few positive factors, we recommend SUBSCRIBE as an IPO investment, as it will be quite a small allotment. We wouldn’t buy post listing as we find prices are not so favorable based on current data.
Over the next few quarters, the stock might do well as we see order book converting into sales growth. But thereafter one has to take decision-based on order inflow and execution. Hence, you can hold for the long term.
Note: We do not recommend buy just because the IPO market is hot. We do not earn any commission or fee for promoting IPOs so expect an honest review from us on the business model and valuation.
| IPO Activity | Date |
| IPO Open Date | 3rd Mar 2021 |
| IPO Close Date | 5th Mar 2021 |
| Basis of Allotment Finalisation Date | 10th Mar 2021 |
| Refunds Initiation | 12th Mar 2021 |
| A credit of Shares to Demat Account | 15th Mar 2021 |
| IPO Listing Date | 16th Mar 2021 |
| Date | QIB | NII | Retail | Total |
| Mar 3, 2021, 05:00 | 0.00x | 1.02x | 6.93x | 3.68x |
| Mar 4, 2021, 05:00 | 0.96x | 8.04x | 16.55x | 10.27x |
| Mar 5, 2021, 05:00 | 164.99x | 650.79x | 28.40x | 200.79x |
| Application | Lots | Shares | Amount (Cut-off) |
|---|---|---|---|
| Minimum | 1 | 26 | ₹ 14,950 |
| Maximum | 13 | 338 | ₹ 194,350 |
When will the MTAR Technologies IPO open?
MTAR Technologies IPO will open for subscription on Wednesday, March 3, and will close on Friday, March 5.
What is the price band of MTAR Technologies IPO?
The price band for MTAR Technologies IPO is Rs 574-575.
What is the lot size for MTAR Technologies IPO?
Retail investors can subscribe to the IPO minimum lot size is 26 shares, up to a maximum of 13 lots i.e. Rs. 1, 94,350.
What is the issue size of MTAR Technologies IPO?
The total issue size is ~1.04 cr shares raising ~Rs. 596.4 Cr.
What is the quota reserved for retail investors in MTAR Technologies IPO?
The quota for retail investors in MTAR Technologies IPO is fixed at 35% of the net offer.
When will the basis of allotment be out?
Allotment will be finalized on March 10 and refunds will be credited by March 12. Shares allotment will be credited in Demat accounts by March 15.
What is the listing date of MTAR Technologies IPO?
The tentative listing of MTAR Technologies IPO is March 16.
Where could we check the MTAR Technologies IPO allotment?
One can check the subscription status on Kfin Technologies.
Who are the leading book managers to the issue?
Book running lead managers to the IPO are IIFL Holdings Limited & JM Financial Consultants Private Limited.
What does MTAR Technologies do?
MTAR Technologies 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.
Who are the peers of MTAR Technologies?
All capital goods are peer to this company. But especially engineering companies like EIL, L&T can be considered as peers to MTAR technologies.
What if I do not get the allotment?
If not allotted then subscribe to PRO.
Know more: Indian IPO Historic Data 2021
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