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Kolkata: The defence sector has frequently made headlines this year. Nifty India Defence Index has surged by 18.5% over the last year. The valuations of many defence stocks reached their peaks in the June-July period this year. In this busy space, MTAR Technologies is a stock that has become conspicuous with both FIIs (foreign institutional investors) and DIIs (domestic institutional investors) expressing their continuing faith in it.
Business of MTAR Technologies
MTAR Technologies is one of the manufacturers of components and equipment for defence, aerospace, nuclear and clean energy sectors. In short, sectors that are going to have a rising curve for many years ahead. Data show that in the Q2Fy26 period, FIIs increased their exposure in MTAR Technologies by 164 basis points and DIIs upped their holding by 130 basis points. In the process the total exposure of FIIs now stand at 9.21% and that of DIIs at 24.81%. It appears that both categories of investors are buying this stock in dips.
Why the optimism
To look for pointers, one has to have a look at the sectors this company is active in. For the defence sector MTAR Technologies manufactures missile components for Agni ballistic missiles and Prithvi missiles, which are the mainstays of the Indian defence forces. It also makes gearboxes, actuation systems and aerostructures for the defence sector. MTAR Technologies also contributes to the Navy since it develops Air Independent Propulsion (AIP) systems that are deployed in submarines. It is also developing air-breathing engine technology for future defence uses.
For the aerospace segment, MTAR manufactures liquid propulsion engines, cryogenic engine sub-systems, electro-pneumatic modules, satellite valves, space launch vehicles, etc underscoring its utility in different sectors. For the nuclear power and clean energy sector, it manufactures fuel machining head, bridge, and column, and drive mechanisms for nuclear reactors. Lastly, it makes power units, especially hot boxes, prototype hydrogen boxes, electrolyzers and other parts for the clean energy sector.
Order book size
MTAR’s order book stood at Rs 1,297 crore till end of September. Orders worth Rs 498 crore has been added so far in Q3FY26. The company expects the order book to swell to Rs 2,800 crore by the end of the current financial year. Analysts indicate that institutional investors are attaching a lot of importance to the expanding order book, especially to a lot of orders that are pouring in from the renewable energy sector. MTAR is investing Rs 35-40 crore as capex for expansion plans.
Financials
In the Q2FY26 period sales revenue of the company dropped from Rs 190.2 crore to Rs 135.6 crore (in the same period a year ago), marking a decline of 28.7%. The company’s profits crashed from Rs 18.8 crore to Rs 4.6 crore between the same periods.
The stock is trading at a price/earnings (PE) ratio of 167.3x, which is far higher than the industry median of 63.3x, which is a premium valuation. On Dec 5, at close of session, the MTAR Technologies stock ws trading at Rs 2,401, down Rs 117.20 or 4.65%.
(Disclaimer: This article is only meant to provide information. TV9 does not recommend buying or selling shares or subscriptions of any IPO, Mutual Funds, precious metals, commodity, REITs, INVITs, any form of alternative investment instruments and crypto assets.)
