Subscribe to MTAR Technologies: Prabhudas Lilladher

Prabhudas Lilladher IPO report on MTAR Technologies

MTAR’s engineering capability evolved over decades, has enabled it to consistently offer quality complex precision components and assemblies, within stipulated timelines and at a reasonable cost; allowing to forge a robust relationship with customers. We believe 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 company leverage its operating efficiencies in the coming years. Over FY18-20, MTAR’s revenues/ EBITDA/ Adj. PAT grew at a CAGR of 16%/35%/140% respectively. As on 3QFY20, order book stands healthy at Rs3362mn (1.6x FY20 revenues) At upper end of the price band, this issue is trading at a P/E of 56.5x and an EV/EBITDA of 30.6x as on FY20 earnings.

Valuation and Outlook

We recommend SUBSCRIBE rating on MTAR Technologies (MTAR) IPO issue as we see reasonable listing gains given 1) precision engineering manufacturing capabilities (close tolerances 5-10 microns) with timely delivery, 2) reasonable costing, 3) strong client base and 4) enormous opportunity in clean energy, nuclear, defence & space sectors.