MTAR Technologies IPO opens today: Issue Details highlighted by Sharekhan
MTAR Technologies IPO subscribed 1.33 times. The public issue subscribed 2.58 times in the retail category, and 0.19 times in the NII category by Mar 3, 2021 12.20 pm. MTAR Technologies is a fresh issue of equity shares aggregating upto Rs 123.52 cr and an offer for sale by selling shareholders of an aggregate of up to 82,24,270 shares held by them. MTAR Technologies will not receive any proceeds from the Offer for Sale.
MTAR Technologies IPO subscribed 1.33 times. The public issue subscribed 2.58 times in the retail category, and 0.19 times in the NII category by Mar 3, 2021 12.20 pm.
MTAR Technologies (MTAR) is bringing an Initial Public Offer (IPO), which comprises a fresh issue of equity shares aggregating upto Rs 123.52 cr and an offer for sale by selling shareholders of an aggregate of up to 82,24,270 shares held by them. MTAR Technologies will not receive any proceeds from the Offer for Sale. Net proceeds of the Fresh Issue, i.e. gross proceeds of the Fresh Issue less the Offer Expenses apportioned to the Company (“Net Proceeds”) are proposed to be utilised for 1) Repayment / prepayment in full or in part, of borrowings availed by the Company2) Funding working capital requirements 3) General corporate purposes. The Issue opens for subscription today and closes on Friday, 5 th Mar’2021.
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About the company:
MTAR Technologies (MTAR) a leading precision engineering solutions company that manufactures missioncritical precision components with close tolerances (5-10 microns). In critical assemblies, the company serves projects of high national importance, through precision machining, assembly, testing, quality control and specialised fabrication competencies, some of which have been indigenously developed and manufactured.
MTAR primarily serves customers in the clean energy, nuclear and space and defence sectors. Since inception, it has strived to grow continually, contributing to the country’s civilian nuclear power programme, space programme, Indian defence and aerospace requirements, as well as to the global clean energy sector and the global defence and aerospace sector..
India’s engineering sector is divided into two segments: heavy and light engineering, based on the nature of the product and the technology used for processing. Heavy engineering includes manufacturing and assembly of industrial machinery and plant equipment for various end-use sectors. Equipment are designed and manufactured to suit end-use applications for process industries such as fertilisers, textiles, chemicals, refineries, petrochemicals, and oil & gas, as well as for the thermal and nuclear power sector.
On the other hand, light engineering includes manufacturing everything from basic to sophisticated equipment. Light engineering products (components, parts and small equipment) find application in the automobiles, industrial machinery, power, oil & gas, fertilisers, steel, refineries, petrochemicals, cement, and railways sectors; and also serve as inputs for the heavy engineering and capital goods sectors.
Valuation of MTAR Technologies:
MTAR Technologies, at an upper price band, is valued at a P/E of 56.5x FY2020 EPS. MTAR’s revenues/operating profit/PAT has grown at a CAGR of 15.7%/34.9%/140.3%, respectively over FY2018-FY2020. High net earnings CAGR were also aided by a rise in other income, lower depreciation and a lower effective tax rate. 9M FY21 revenues/operating profit/PAT has grown by 16.5%/22.1%/25.0% yoy.
MTAR Technologies generated Rs 112.7 cr net operating cash flows during FY2018-FY2020 (average Rs 37.6 cr per annum) while during 9M FY21, net operating cash flows were Rs -6.4 cr (versus Rs. 34.7 cr in 9M FY20) due to an increase in trade receivables and decrease in trade payables. The company’s borrowings stood at Rs 65.5 cr as on Q3FY2021 with a D/E ratio of 0.32x. The RoE/RoCE as on FY20 was at 13.9%/19.8%, respectively. Order book for the company stands at Rs 336.91 cr (1.6x FY20 revenues).
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