Bucking the broader market trend, MTAR Technologies stock ended with massive gains of 88.26 percent on the National Stock Exchange (NSE) on March 15, its listing day.
The stock ended the session at Rs 1,082.50, posting a gain of Rs 507.50 over the issue price of Rs 575. After opening at Rs 1,050, it touched an intraday high of Rs 1,154.90 and a low of Rs 1,040.
On the BSE, shares settled the session at Rs 1,082.25, an 88.22 percent premium over IPO price after hitting a day's high of Rs 1,154 and low of Rs 1,035.70. The opening price was Rs 1,063.90.
In terms of volumes, MTAR traded with 16.30 lakh shares on the BSE and over 1.49 crore shares on the NSE.
"There was very strong demand for the shares given that the company is uniquely positioned catering to marquee clients like ISRO, DRDO, NPCIL, Bloom Energy and Rafael," said Jyoti Roy - DVP - Equity Strategist at Angel Broking who recommended profit booking at current levels citing expensive valuations.
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The precision engineering solutions company had garnered Rs 596.4 crore through public issue which comprised a fresh issue of Rs 123.5 crore and an offer for sale of Rs 473 crore by selling shareholders. The company will utilise net proceeds from fresh issue and pre-IPO placement for debt repayment and working capital requirements.
The firm has seven state-of-the-art manufacturing facilities in Hyderabad, Telangana that undertake precision machining, assembly, specialised fabrication, brazing and heat treatment, testing and quality control, and other specialized processes. The company serves customers in the nuclear, space and defence, and clean energy sectors.
"MTAR has a good track record of growth in its financial performances over the years. The order book of the company has grown at a CAGR of 31 percent between FY18 – FY20; total order book as of December 2020 stood at Rs 336.2 crore whereas the orderbook to revenue stood at around 2x as of December 2020 which indicates a better execution capabilities of the company," said KR Choksey.
During the nine months period ended December 2020, the company reported profit of Rs 28.1 crore (up 25 percent YoY), with net profit margin of 15.8 percent (up 108bps YoY). During 9MFY21, the company has raised debt of Rs 65.5 as compared to Rs 16 crore in 9MFY20 which has resulted in increase in debt/equity ratio to 0.3x to 0.1x for the same period.
"We expect the topline and bottomline of MTAR to improve further as the overall industry growth is supported by the Make in India initiative and sector specific initiatives to boost manufacturing," KR Choksey said, adding the major challenge faced by the company is managing the working capital and the company has long cash conversion cycle of 298 days in FY20.