30-Oct-2026 17:21:51
MTAR TECHNOLOGIES Q2 CONCALL: RETAINS FY27 REVENUE GROWTH GUIDANCE OF 80% & EBITDA MARGIN OF 24%; EXPECTS TO EXCEED GUIDANCE, ₹500 CR CAPEX PLAN & STRONGER H2
• FY27 Revenue Guidance: Management retained its guidance of 80% revenue growth for FY27 and expressed confidence in exceeding the target. • FY27 EBITDA Margin Guidance: Management maintained its EBITDA margin guidance of 24%, while expecting actual margins to be higher. • H2 FY27 Outlook: Management expects H2 revenue and profitability to be stronger than H1, supported by a robust order book and higher execution across business segments. • Guidance Upgrade: Management clarified that it does not intend to formally revise guidance every quarter, despite expecting performance above the original targets. • Order Inflows: Company recorded order inflows of ₹4,102 Cr during H1 FY27, supported by demand across clean energy, nuclear, aerospace and other businesses. • Order Book Outlook: Management expects a strong closing order book at FY27-end, although the timing of additional fuel-cell orders remains uncertain. • Order Execution: Management indicated that the majority of its order book is executable within approximately 12–18 months, while nuclear orders have longer execution timelines. CLEAN ENERGY & FUEL CELLS • Fuel Cell Capacity Expansion: Phase 2 expansion is expected to become operational by the end of November 2026, increasing capacity by approximately 30%. • Fuel Cell Phase 3: Management plans a multi-fold capacity expansion through a dedicated manufacturing facility. • Phase 3 Timeline: Management's opening remarks indicated completion by June 2028, although a subsequent Q&A response referred to June 2027. The timeline requires clarification. • Fuel Cell Demand: Management highlighted substantial customer demand and continued order inflows, with capacity expansion being prioritized to meet projected requirements. • Fuel Cell Automation: Company has strengthened its workforce, completed substantial employee training and introduced automation initiatives to support higher production volumes. • Fuel Cell Manufacturing: Management indicated that most components used in hotbox assemblies are sourced domestically, with selected specialized components still imported. • Customer Diversification: Company continues to evaluate opportunities in fuel cells but has not announced a confirmed new customer programme beyond its existing relationships. DATA CENTER INFRASTRUCTURE • Data Center Revenue Opportunity: Management sees potential revenue of approximately ₹350–450 Cr from the data center infrastructure business over the next two years, subject to successful qualification and scaling. • First Article Orders: Company is executing initial data center infrastructure orders worth approximately ₹45 Cr. • Customer Demand: Management indicated that the customer's potential requirement could be approximately eight times the initial first-article order value. • Data Center Facility: Management expects the initial manufacturing facility to become operational during Q3 FY27, with further expansion planned. • Full Facility Readiness: Management's opening remarks indicated full-fledged operations by March 2027, while the Q&A referred to phased capacity additions extending into the following year. • Data Center Growth Strategy: Company plans to scale the business after successful completion and qualification of the initial products. CIVIL NUCLEAR BUSINESS • Nuclear Order Book: Civil nuclear closing order book stood at approximately ₹812 Cr, supported by Kaiga, Gorakhpur and refurbishment programmes. • Nuclear Revenue Outlook: Management expects some additional execution during H2 FY27, with the majority of revenue from existing nuclear orders expected during FY28–FY30. • Nuclear Execution Timeline: Existing major nuclear programmes are expected to be executed over approximately 3–3.5 years. • Refurbishment Orders: Company received approximately ₹134 Cr of refurbishment orders during Q2, with execution expected over two years. • Mahi Banswara Opportunity: Management estimates a potential order opportunity of approximately ₹700–1,000 Cr from four proposed nuclear reactors. • Fast Breeder Reactor Programme: Company has submitted budgetary quotations for upcoming projects, with tendering expected over the coming years. • Nuclear Capex: Management does not currently expect substantial additional nuclear-specific capex, apart from selected bottleneck investments, but may reconsider depending on future orders. AEROSPACE, DEFENCE & SPACE • FY27 MNC Aerospace Revenue Target: Management expects revenue exceeding ₹150 Cr from the multinational aerospace business during FY27. • Aerospace Growth Outlook: Management expects continued growth as qualified products move into higher-volume production and additional customer programmes scale up. • Aerospace Customers: Company is currently working with four multinational aerospace customers across volume production and first-article qualification programmes. • New Aerospace Orders: Management expects to complete first-article qualifications for a key customer during FY27, with volume deliveries commencing in FY28. • Aerospace Expansion: Company is evaluating additional manufacturing facilities to support higher volumes and new customer opportunities. • AMCA Programme: Company is developing main landing gear support structures and fuselage door assemblies for the Advanced Medium Combat Aircraft programme. • AMCA Revenue Timeline: Management clarified that meaningful volume production from AMCA projects will materialize over a longer period. • LCA Tejas Programme: Company expects volume production orders for actuator assemblies. • Space Business: Company continues supplying propulsion systems and electro-pneumatic modules for PSLV and GSLV launch vehicles. • Actuator Opportunity: Management highlighted an approximately ₹150 Cr potential opportunity for electromechanical actuators, with order timing yet to be finalized. OIL & GAS AND PRODUCTS • Oil & Gas Facility: Dedicated manufacturing facility is expected to become operational by the end of November 2026. • Oil & Gas Growth Outlook: Management expects meaningful production volume growth from FY28 onwards. • Weatherford Programme: First-article qualification has been completed, while qualifications for other customers remain underway. • FY27 Products Revenue Target: Management expects the products and others business to generate approximately ₹500 Cr of revenue during FY27. • Products Business Correction: Management clarified that Q2 products and others revenue was approximately ₹125 Cr rather than ₹65 Cr, due to a ₹60 Cr classification error in the presentation. • Products Order Book Correction: Approximately ₹60 Cr of order inflows will also be reclassified from clean energy to products and others. • Products Growth Outlook: Management expects continued sequential growth, supported by box-build assemblies, ball screws, roller screws and water-lubricated bearings. • Ball Screw Exports: Company commenced exports of ball screws during Q2 FY27. • Products Execution Cycle: Management indicated that most orders in the products division are short-cycle, with execution generally within one year. CAPEX, WORKING CAPITAL & DEBT • Total Capex Plan: Management outlined a ₹500 Cr expansion programme, including approximately ₹350 Cr for fuel cells and ₹150 Cr for aerospace, oil and gas and other businesses. • FY27 Capex: Approximately ₹100 Cr was incurred in FY26, with the remaining ₹400 Cr expected to be incurred during FY27, subject to project execution. • Capex Funding: Management plans to fund approximately 75% through debt and 25% through internal accruals. • Future Capex Outlook: Management expects annual maintenance and growth capex of approximately ₹50–100 Cr over the next 1–2 years, excluding any major new projects. • Asset Turnover Target: Management aims to generate revenue equivalent to at least three times its asset base as expansion investments mature. • Working Capital Days: Net working capital improved to 50 days in September 2026 from 172 days in March 2026. • FY27 Working Capital Guidance: Management expects working capital days to reach approximately 100 by FY27-end due to higher production and inventory requirements. • Long-Term Working Capital Target: Management aims to maintain working capital at approximately 150 days over the next 2–3 years as the business scales. • Working Capital Improvements: Company secured higher customer advances, negotiated better payment terms and expects annual GST refunds of approximately ₹70–80 Cr. • Operating Cash Flow: H1 FY27 operating cash flow increased to ₹350 Cr from ₹39.8 Cr in H1 FY26. • Debt Position: Total debt stood at approximately ₹465 Cr, comprising ₹189 Cr of long-term debt and ₹276 Cr of short-term debt. • Investments: Company reported investments of approximately ₹358 Cr, implying debt net of these investments of around ₹107 Cr. • ROCE Guidance: Management expects ROCE to improve to approximately 23% by FY27-end, compared with 17.2% in FY26. Q2 FY27 FINANCIAL PERFORMANCE • Revenue: Revenue from operations increased 200% YoY and 12.8% QoQ to ₹406.8 Cr. • EBITDA: Reported EBITDA increased 483.3% YoY and 16.6% QoQ to ₹99.2 Cr. • EBITDA Margin: Margin improved to 24.4%, compared with 12.5% YoY and 23.6% QoQ. • Gross Margin: Gross margin improved to 46.8% from 45.5% QoQ, supported by a better product mix. • Net Profit: PAT increased to ₹59.8 Cr from ₹4.2 Cr YoY and ₹50.2 Cr QoQ. • PAT Margin: Margin improved to 14.7%, compared with 3.1% YoY and 13.9% QoQ. • Earnings Per Share: EPS stood at ₹19.45 for Q2 and ₹35.78 for H1 FY27. KEY MANAGEMENT Q&A • Why Was FY27 Guidance Not Upgraded? Management stated that it prefers to retain its original annual guidance rather than revise targets every quarter, despite expecting stronger performance. • Will Fuel Cell Capacity Meet Future Demand? Management indicated that the planned multi-fold expansion is designed around customer forecasts and expected requirements. • Will Nuclear Revenue Accelerate in H2? Some revenue is expected in H2 FY27, but the majority of existing nuclear orders will be executed from FY28 onwards. • Will Working Capital Remain at 50 Days? Management expects working capital requirements to increase as revenue scales, with FY27-end targeted at 100 days. • Can Data Center Revenue Reach ₹350–450 Cr? Management indicated that this is a potential opportunity based on customer requirements, subject to successful qualification and execution. • Are There Supply Chain Disruptions? Management reported no material shipment disruption from geopolitical developments, although some consumable costs have increased. • What Is Driving Products Revenue? Growth is being driven by box-build assemblies, ball screws, roller screws, bearings and other newly developed products.
MTAR TECHNOLOGIES LIMITED