MTAR Tech Falls 12% After FY24 Revenue, Margin Guidance Cut; Details

Shares of MTAR Technologies cracked 11.7 per cent to Rs 2,248 apiece on the BSE in Thursday’s intraday trade after the company revised its financial year 2024 revenue and EBITDA margin guidance lower.

“We revise our annual guidance for FY24 to a revenue of around Rs 670 crore – Rs 700 crore as against previous guidance of around Rs 830 crore – Rs 860 crore with an Ebitda of around 26 per cent (+/- 100 bps) as against previous guidance of around 28 per cent ( +/- 100 bps) due to deferment of shipment plans against the confirmed orders from Clean Energy to the next fiscal year,” said Parvat Srinivas Reddy, managing director & promoter, MTAR Technologies.

In the recently concluded quarter, the defence equipment manufacturer reported a 32.2 per cent year-on-year (Y-o-Y) increase in revenue from operations at Rs 166.8 crore from Rs 126.2 crore in the previous year quarter.

However, an increase in costs and inventories resulted in gross profit margin declining to 45.6 per cent to 54.1 per cent Y-o-Y. Sequentially, too, the margin shrank from 49.9 per cent reported in Q1FY24.

Further, an increase in expenses led to bare 3-per cent Y-o-Y increase in Ebitda (earnings before interest, tax, depreciation, and amortisation) to Rs 36.1 crore from Rs 34.9 crore. Compared to Q1FY24, Ebitda rose 4.3 per cent. Ebitda margin, too, contracted to 21.6 per cent in the quarter under study from 27.2 per cent last year and 22.7 per cent in the previous quarter.

The company’s net profit fell 17.1 per cent Y-o-Y to Rs 20.5 crore from Rs 24.7 crore in the September quarter of last year, and was flat Q-o-Q.

Meanwhile, the company received Rs 79.6 crore of orders in various sectors including Clean Energy – Civil Nuclear Power, Fuel cells and Hydel, Space, Defence, Products and others in Q2FY24.

Reddy said the long-term growth of the company remains intact as the sectors MTAR is catering to are witnessing significant growth. In addition, we expect there will be an acceleration of orders inflow from H2FY24, he added.

MTAR Tech is a leading precision engineering company engaged in the manufacture of mission critical precision components with close tolerances (5-10 microns) for sectors such as clean energy, nuclear, space and defence.

All five analysts that track MTAR Technologies continue to have a “buy” recommendation on the stock.

Despite today’s drop, shares of MTAR Tech are up 43 per cent so far in 2023.