I don’t think that is very subjective. Recently same thing has happened in Usha Martin but stock kept going up. Disc: not invested
Well, Usha martin is a company where QoQ profit has been growing consistently for the last 5 quarters.
And MTAR Tech is one where management gave a higher guidance and then lowered it in previous qtr result citing orders getting pushed to next year.
MTAR tech getting orders in H2 will certainly help boost shareholder confidence.
Disc: Also not invested in any of those.
1 Like
Azad IPO will rub off on MTAR in the short term.
Although, I hope promoters do something about building investor confidence.Such heavy selling does shake investor confidence in the company.
How these two are compared, what is common amongst them ?
both are from same region (Hyderabad) …
both have common customers like ISRO and DRDO, I guess.
so in sept and now in Dec, total 0.8% of promoter stake is sold. we were 39.14% including pledge. now 38.4%.
can anyone confirm Leelavathi Parvatha Reddy is wife of P Srinivas Reddy or not? her middle name is matching with MD. @ankit_george
We kept telling its inactive promoters but needs to confirm above.
Again sold 44 crore worth of shares: Stock Share Price | Get Quote | BSE
1 month before declaration of result, the promoters are not allowed to trade. Could be the reason of mass selling. Also, results might be muted.
1 Like
Again Leelavathi Parvatha reddy!! This time significant stake 0.65 totaling sale of 1.35% now including all promoters. SCan anyone confirm if Mr Parvat reddy MD CEO is Parvtha reddy here?
Azad business is entirely different from the MTAR.
Azad supplies components for Turbines and Aerospace OEM’s. Turbine components business contribute 90% of their revenue with high customer concentration as there are only few turbine makers globally.
One more round today, 0.45% totaling sale to almost 2%.
I am going to critically look at MTAR’s most recent earnings, guidance, and overall industry dynamics in the new year. I will share my thoughts together here once complete. Aiming for Jan 15, at the latest.
My key reason to remain invested would be my belief in MTAR’s ability to keep scaling up its fuel cell business, and the its ability to start mass manufacturing electrolyzers. The revenue diversification, away from clean energy (ex-nuclear) would be a bonus.
I am no expert on Telugu naming conventions but, looking at the IPO prospectus here, I saw that P. Srinivas Reddy (company MD) got the majority of his shares (at that time) as a gift from a P. Leelavathi. Below is a brief profile:
If that is the same person as Leelavathi Paravatha Reddy, I am the least bit bothered by the sale, but I can’t confirm.
3 Likes
I think she is mother of Mr. Srinivas Reddy.
Yes, H2 momentum is just at beginning stage, going forward lot of industries should use H2 instead of hydrocarbons.
As I am in steel domain, we have initiated the project of Green H2 based steel plant in Oman. This require huge quantity of H2 derived from electrolysis process route. Europe has mandate to procure only green steel in the coming 4-5 years. This momentum will start in India as well all over the world to decrease the carbon gases. They will surely get few more bunch of customers in electrolyzers segment in addition to the bloom. In my opinion electrolyzers could beat the SOFC box business of MTAR with the bloom in coming 2-3 years.
Defence related import substitute products contribution will keep on increasing.
All these factors will enable MTAR to maintain the growth rate.
5 Likes
Promoters selling in the December month, offloaded 4-5%.
| Row Labels | 13/12/2023 | 15/12/2023 | 19/12/2023 | 22/12/2023 | 26/12/2023 | 28/12/2023 | Grand Total |
|---|---|---|---|---|---|---|---|
| A MANOGNA | 49924 | 49924 | |||||
| K VAMSHIDHAR REDDY | 59472 | 26000 | 85472 | ||||
| Leelavathi Parvatha Reddy | 23500 | 26500 | 200000 | 250000 | |||
| MITTA MADHAVI | 38338 | 38338 | |||||
| Northeast Broking Services Limited | 22500 | 22500 | |||||
| P Kalpana Reddy | 25000 | 25000 | 1000 | 51000 | |||
| Saranya Loka Reddy | 25000 | 10000 | 35000 | ||||
| Grand Total | 50000 | 23500 | 84000 | 201000 | 147734 | 26000 | 532234 |
1 Like
can anyone please share the some thoughts on the leadership commentary of Mtar , where they could not walk the talk and not able to keep pace with both the top and bottom line, as per their predictions ?
Since company is into a niche sector and finding something under a billion mcap is rare , however how much heed one should attach to what the management has said and were not delivered ?
I would find stock interesting only after fall in coming Quarter. My reasoning. Sell Mining equipment to Gold miners. MTAR tech does that. Because there is intense competition in Alternate sources of energy. I am not sure if their defence technology but they do have some technology.
This Quater would also be very bad.
2 Likes
In FY23, they delivered, what they told.
In Q2 guidance has been changed, i hope they will stick to revised guidance without any further downgrading.
1 Like
Disclaimer - I hole 2% of my portfolio. My strategy would be to hold for 1 Qtr to see their new guidance. Promoter group selling is bothering me as well . Below is my notes generated with the help of manual + AI. MTAR Technologies Ltd Q2 and H1FY24 Financial Results Discussion Call
• The call was hosted by Mr. Srinivas Reddy, Managing Director and Promoter, Mr. Gunneswara Rao, Chief Financial Officer, and Ms. Srilekha Jasthi, Senior Manager Strategy and IR.
• MTAR Technologies Ltd reported a top-line growth of INR166.8 crores, a 32.2% year-on-year increase.
• The company recorded an EBITDA of INR26.1 crores during the quarter.
• The company revised its annual guidance for FY24 to a revenue of around INR670 to INR700 crores, compared to previous guidance of INR830 to INR860 crores.
• The company anticipates a healthy long-term growth due to significant inflow of orders in the second half of the year from new and existing customers.
• The company’s net working capital stands at 287 days, with a reduction in receivable and inventory days. However, a sharp reduction in payable days has led to an increase in working capital days due to liabilities paid for inventory purchases during the last quarters.
• The company is working on reducing net working capital days by the end of the financial year.
• The company is working to generate revenue of around INR670 crores-INR700 crores by the end of this financial year, with EBITDA of 26% plus or minus 1%.
MTAR Technologies Limited’s Phase-Out from Yuma to Santa Cruz
• The transition from Yuma to Santa Cruz is a temporary correction, generating almost 30% of higher power output with marginal cost increase.
• MTAR is preparing to ramp up the Santa Cruz model to generate more units every quarter.
• The company is revising Yuma orders back to Santa Cruz and plans to continue releasing orders.
• MTAR is working on a strong back-to-back order book position to place more orders quarter-on-quarter.
Sharp Reduction in Payable Days
• The sharp reduction in payable days from 108 to 49 is due to a deferred shipment plan and the company’s commitment to sourcing all raw materials and bought-outs ahead of the plan.
• Most of the inventories currently held are more or less paid, and there is no need to buy further inventories.
• The inventory reduction is expected to be on the maximum side over the next two quarters.
• The company is following value stream mapping for each major process, with a focus on reducing quality clearance days and timely payments to suppliers.
MTAR Technologies Limited Q1 Q1 Discussion
• Deepak Krishnan asked about the margin reduction, stating that the guidance has been cut to 26%.
• Srinivas Reddy confirmed that the reduction is due to a ramp up in domestic sales over the next second half of the year.
• The company is looking to be a bit conservative on estimates due to the reduction in the guidance plan and see where cost reductions can be achieved.
• Deepesh Agarwal from UTI Asset Management Company asked about the number of Yuma, Santa Cruz, and electrolyzers delivered this quarter and expectations for the second half and next year.
• Srinivas Reddy explained that there was a phase in and phase out of Yuma this quarter to Santa Cruz Block 1, with approximately 400 units delivered this quarter.
• He also mentioned that there is an indication of ramping up to Santa Cruz Block 2, which is the final version for Bloom due to higher power output.
• He also mentioned that there is a ramp-up in terms of Santa Cruz Block 2.
• He also mentioned that there is a change of model, which is important for Bloom and supply to Bloom.
MTAR Technologies Limited Updates
• Final negotiations with Fluence are underway, with a target of 1,000 units for next year, ranging from INR120 to INR130 crores.
• The company plans to build facilities capable of producing up to 3,000 units per year for export and domestic requirements.
• The company is also investing for the future, with a goal of moving to a higher margin level in the long run.
• The company is working on improving its margin profile over the next year and moving forward.
• MTAR is on a growth track, with a temporary correction due to a change in model and inventory correction.
• The company is also adding a lot of new customers, indicating a positive growth trajectory.
Birla Mutual Fund’s Q&A with Jonas Bhutta
• Jonas Bhutta from Birla Mutual Fund asked about the shift in hotboxes from FY’24 to FY’25 delivery.
• Srinivas Reddy clarified that the change in model from Yuma to Santa Cruz will occur over the next quarter.
• Revenues from 574 are moving up to close to 700, but growth track remains intact.
• Sales mix is expected to be in favor of non-Clean energy business, implying a 26% margin number by year-end.
• Domestic business sales are expected to increase in the second half of the year, with the first half bringing in around INR50-plus crores.
• The company needs close to INR800 crores of new orders in the next five, six months.
• Two reactors, Kaiga 5 and 6, have been opened for tenders.
• Three competitors have bid for the project, with MTAR’s actual number being around INR600 to INR700 crores.
MTAR Technologies Limited’s Future Outlook
• Projects Kaiga 5 and 6 are expected to be finalized by the end of December.
• The PMO office is focusing on implementation within four to five years.
• The rest of the orders will be placed directly with MTAR.
• Expected to see more orders from space and the defence sector.
• Clean energy is receiving sufficient orders.
• Bloom will release orders quarterly.
• The closing order book is expected to close by the end of the year.
Bloom’s Growth Challenges
• Growth has been driven by deals pursued through the tripartite agreement.
• The viability of these projects is challenging due to interest rate doubled gas prices and interest rates.
• Some 60 gigawatts of projects are running slow.
• Bloom is focusing on releasing orders based on back-to-back orders.
• The company is confident that the order book position will increase based on back-to-back orders.
• More acceptance is being received for their electrolyzers with multiple platforms.
Srinivas Reddy’s Electrolyzers and Non-Defence Related Business Developments
• Electrolyzers have been proven and two consignments are expected to be dispatched this quarter and three next.
• The company anticipates back-to-back orders from Bloom to MTAR by March.
• Volume numbers for the next two years are '24, '25, and '26, focusing on electrolyzers only.
• The company is optimistic about booking enough orders, but cannot quantify the numbers.
• New clients like GE, Andritz, Voith have been added for the past five to six quarters.
• The company has qualified for the first batch of works, but there has been little traction from these clients or the defence side.
• The company is on track with the growth of revenues in the new fabrication shed due to these clients.
• The company is also working on internal work for the future, which does not reflect in the company’s numbers.
• The SSLV technology transfer is still in a pre-qualification stage.
MTAR Technologies Limited’s Progress and Future Plans
• MTAR Technologies Limited has made significant progress in its SSLV program, with the company focusing on internal know-how and technology.
• The company is not dependent on technology transfer or working in-house, with agreements with ISRO for testing facilities and other areas.
• The company is not the sole supplier for Santa Cruz boxes, but holds a majority of the requirement, close to 70%.
• The quality of Santa Cruz boxes is defect-free and good, with work with Bloom, a company in Taiwan, contributing to their success.
• The company will transition from Yuma to Santa Cruz and will not produce any further hot boxes.
• MTAR is in discussions with Bloom for supply of electrolyzers, a new product that has been proven in the US.
• The company has received the defence license after 18 months to two years, which is a significant milestone for MTAR.
• MTAR is working on various products and is working towards obtaining the clearance with the clean sheet.
• There is a collaboration between EV bus manufacturers and players to produce buses that can run on hydrogen and fuel cells.
• MTAR is evaluating various opportunities from all sectors and is working towards them.
• Bala Krishna may visit MTAR in March or April.
MTAR Technologies Limited’s Q1 2023 Meeting Summary
• Srinivas Reddy, CEO of MTAR Technologies, encourages investors to visit the plant to understand the company’s engineering and future growth prospects.
• Production schedules are usually given in December due to sufficient inventories.
• The company is working on increasing its volume share in supply elements such as ASPs and diluents.
• The company is currently supplying products like hot boxes, enclosures, and sheet metal assemblies.
• The revenue guidance with the hot box deferment plan has affected other areas, leading to revised guidance numbers.
• The company is qualified for future growth and is working on additional products for customers.
• The increase in raw material cost in the second quarter is attributed to the domestic market, which is expected to triple the revenue generated in the first two quarters.
• The company is also expecting a nuclear order from Kaiga 5 and 6/GHAVP by the end of this year.
Discussion on Nuclear Revenue Conversion and Santa Cruz Box Capacity
• Srinivas Reddy: The company has orders for nuclear from NPCL, which will start dispatching next year. However, lead time for raw materials is expected by March.
• Lokesh Maru: The company’s capacity and volume for Santa Cruz boxes are the same, with a 30% higher capacity. The company is expecting around 500 units to be shipped out this quarter.
• Bloom will provide an indication on the higher number for the next quarter by December.
• Internal expectation is to reach 4,500 boxes first and then outgrow that number by next fiscal.
• Srinivas Reddy: The company is on track with the growth pattern for the next year, with more products added.
• Lokesh Maru: The company is also considering when it will shift its focus from nuclear to other products.
MTAR Technologies Limited Q&A Summary
• The company is transitioning from 50 kilowatt to 65 kilowatt, with the possibility of a phase of pain in terms of growth or delivery.
• The journey beyond Santa Cruz Block 2 is expected to remain unchanged for the next four to five years.
• The company is taking steps to reduce costs wherever possible.
• The gross margin has been affected by the delivery of some nuclear projects, which has impacted the overhead portion.
• The company is working on establishing all the requirements for INR800 crores turnover, which has impacted around 2% to the
EBITDA margin.
• The company is also taking steps to reduce raw material cost, with domestic turnover being lower in the first two quarters compared to the next two quarters.
• The company is working on importing critical parts for CNC machines, such as ball screws, water lubricated screws, and roller screws.
• The company is working on releasing the first three electromechanical actuators in quantities of 10 or 15 numbers each to the defense sector next quarter.
• The company is waiting for final certification from different organizations to approve the use of its roller screws.
• The company’s revenues from these import substitution opportunities are expected to be around 300 to 400 screws over the next three to four years.
• The company does not need additional investment towards the machinery or existing assets for these additional revenues.
• The company has already assets in place, so no additional capex is needed for this.
MTAR Technologies Limited’s Technology Efficiency Changes
• The company is implementing a sudden change in plants to supply more efficient Santa Cruz.
• The change is primarily due to substantial additional power output.
• The assets are fungible, requiring minimal changes.
• The company needs to ramp up to this level, which is not every three to four years.
• Certain design changes will not affect the ramp-up plan, such as improvements or cost reductions.
• The company is confident that the efficiency improvement will continue for some time going forward.
• The execution period for the space and defense segment is faster than for the pending order book and Clean Energy.
• The order turnaround time is usually within the calendar year.
• The space and defense segment takes longer, so the cycle is expected to be within a year or 1.5 years.
• The guidance revision has been downgraded to almost INR160 crores.
Growth and Execution Shift in FY '25
• Srinivas Reddy confirmed that most of the execution will be shifted to FY '25, especially moving from Yuma to Santa Cruz.
• The execution part will be for the next year, depending on the kind of orders Bloom is looking at with the new model.
• The change in model and inventory correction will not affect future growth plans.
• Amish Kanani from JM Financial Service asked about the total order pipeline from Bloom and the energy segment, specifically the Clean Energy segment.
• Bloom has not indicated a quarterly schedule from Bloom, but they are stabilizing on the Santa Cruz version 2 or Block 2 model.
• MTAR Technologies Limited is looking at quarter-on-quarter orders being released, but they may release orders for the entire year once the model is stabilized.
• The overall growth track is intact, with more companies added in Clean Energy.
MTAR Technologies Limited Growth Discussion
• Srinivas Reddy, CEO of MTAR Technologies Limited, confirmed the company’s overall growth percentage.
• Amish Kanani raised concerns about the execution schedule for different verticals, potentially affecting the growth for FY '25.
• Reddy stated that the company is on track for a reasonable growth rate of 30% to 40% next year.
• He also mentioned the product ramping-up, which is in line with expectations, but still needs to get certain certifications done.
• Reddy thanked the attendees for attending the call and reiterated that the company is on track with its growth plan.
• He invited investors to visit the company and see the developments in the company’s future, including the SSLV project.
• The call concluded with Orient Capital being contacted for any queries.
1 Like
MTAR Technologies – is trading at a market capitalization of INR 6,600 CRORE at a P/E ratio of 64 times (approx). This is after a recent correction in the stock – however the stock still looks expensive for an entry point.
After reading the latest Q2FY24 earnings call transcript, here’s my summary:
Cons
- Revenue guidance was reduced from INR 860 Cr to INR 700 Cr for FY24, due to deferral of shipments to Bloom Energy. This just goes on to highlight how dependent the company is on ONE customer. Any adverse impact in the business of Bloom, will directly impact the topline / bottomline of MTAR
- EBITDA guidance has been reduced from 29% to 28% to 26% (+/- 1%) now for FY24
- Borrowings have increased by INR 108 crore, no commentary from the management in the Q2 call on ^
- Cash flow from Operations were negative, due to significant decrease in payables.
Pros
- Expecting domestic sales to be 3x in H2FY24. In H1, domestic sales was INR 50 Cr, expected to be INR 150 Cr in H2 with higher margins
- Expecting Order book to close at INR 1,500 Cr for FY24 end
- Received order from NPCIL (defence business), revenues of which should flow from FY26 onwards
- In the pre-qualification stage for SSLV technology – would be interesting to see if any revenue drivers can emerge from this
- Added more companies in the Clean Energy space, but didn’t reveal any names. It is imperative for the company to de-leverage from Bloom Energy to built a robust business model
- Could capitalize on import substitution opportunity for ball screws, roller screws, actuators. No additional Capex would be required for this.
Disclosure - Tracking, not invested. Waiting to see defence / space revenue drivers to kick in.
3 Likes
As expected from promoter selling, the results are disappointing.
Revenue 118 Cr vs 168 Cr QoQ
Profit 10Cr vs 20Cr Qoq (Down 50%!)
Eager for the management commentary and guidance.
Disclaimer: Not invested.
https://www.bseindia.com/xml-data/corpfiling/AttachLive/112c7bc7-5e76-48e8-833f-c545e90eaca4.pdf
4 Likes
Guidance is mentioned in Press Release. 45-50% growth as some talks with customers are in final stages.
However, the things to watch out for are
- Is the target based on confirmed orders or expected orders?
- Chance of further deferment of exports to customer (Bloom Energy)
- Reason for promoter selling. Whatever may be the answer, this is going to be a bad remark for Corporate governance of the Co
Disc: Just my thought. No reco to buy or sell
1 Like