The IPO (initial public offering) of MTAR Technologies has witnessed good subscription on March 3, the first day of bidding, on the back of strong retail participation.
The issue has been subscribed 3.68 times so far on Wednesday, as investors put in bids for 2.67 crore equity shares against the offered size of 72.60 lakh equity shares, the subscription data available on exchanges showed.
Retail investors, who have led the charge, have put in bids 6.93 times against their reserved portion, while the portion set aside for non-institutional investors has been subscribed 1.02 times. However, qualified institutional buyers have not started putting bids in just yet.
MTAR Technologies targets to raise nearly Rs 600 crore through its maiden public issue which comprises a fresh issue of 21,48,149 equity shares and an offer for sale of 82,24,270 equity shares by promoters and investors.
The company raised Rs 179 crore from anchor investors on March 2, hence, the total issue size has been reduced to 89.50 lakh shares from over 1.03 crore shares earlier. The price band for the issue has been fixed at Rs 574-575 per share.
MTAR Technologies manufactures a wide range of complex product portfolios to meet the varied requirements of the Indian nuclear, defence, and space sector. MTAR Technologies is uniquely positioned as it is one of a kind company catering to marquee clients like ISRO, DRDO, NPCIL, Bloom Energy and Rafael.
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"At the higher end of the price band, the company is offering the shares at P/E multiple of 49.1xFY20 EPS. We believe that the company is uniquely positioned to benefit from the government's focus on the defence sector and make in India initiative," Jyoti Roy - DVP- Equity Strategist at Angel Broking told Moneycontrol.
"We are positive on the long-term prospects of the company and recommend a subscribe rating to the MTAR Technologies IPO for long term as well as for listing gains," he said.
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Prabhudas Lilladher also recommended subscribing to the issue as the brokerage sees reasonable listing gains given precision engineering manufacturing capabilities (close tolerances 5-10 microns) with timely delivery, reasonable costing, strong client base, and enormous opportunity in clean energy, nuclear, defence & space sectors.
MTAR’s engineering capability has enabled it to consistently offer quality complex precision components and assemblies, within stipulated timelines and at a reasonable cost, allowing the company to forge a robust relationship with customers.
Prabhudas Lilladher believes MTAR's past experience in supplying products, ability to meet customer-specific technical requirements, reputation of quality and safety features in their products, good financial strength and price competitiveness will help the company leverage its operating efficiencies in the coming years.
During FY18-20, MTAR's revenues, EBITDA and adjusted profit grew at a CAGR of 16 percent, 35 percent and 140 percent respectively. As of Q3 FY21, the order book stands at Rs 336.2 crore (1.6x FY20 revenues).