• by Stocktry Expert
• 02nd Mar 2021

MTAR Technologies Rs 596-Crore IPO will Open for Subscription on Wednesday, March 3, 2021. Should you Subscribe?

On Wednesday, March 3, 2021, Hyderabad-based MTAR Technologies Rs 596-crore initial public offering (IPO) will open for subscription. Amid share market volatility, in the grey market, MTAR Technologies' shares were commanding a premium of 75 percent. On Monday, MTAR Technologies shares were trading at Rs 1,005, up to Rs 430 over the IPO price in the grey market. A precision engineering solutions company has fixed the price band of the issue at Rs 574-575 apiece. Analysts expect that with the government’s focus on space and defense sectors, companies like MTAR Technologies can see increased opportunities.

Subscribe for medium and long perspective:

• Likhita Chepa, a Senior Research Analyst at CapitalVia Global Research Limited, has recommended to ‘subscribe’ this issue from a medium to long-term perspective, although it has the potential to generate decent listing gains. Chepa also said that MTAR had been a key partner to Indian Space Research Organization (ISRO), Defense Research and Development Organization, Nuclear Power Corporation of India Limited (NPCIL), and the US-based Bloom Energy, besides catering to several large Indian entities such as Bharat Dynamics and Hindustan Aeronautics in aerospace and defense.
  
  MTAR Technologies’ revenue grew at a CAGR of 17 percent while PAT grew by 140 percent CAGR in the past three years. “Its portfolio also looks well diversified as it is not majorly dependent on one category or sector for its operations and revenue,” said Chepa.

• Geojit Financial Services Ltd have also given a ‘subscribe’ rating to the issue as MTAR Technologies is a strong player in the booming precision engineering industry. At the upper price band of Rs 575, MTAR is available at a P/E of 47.3x (annualized basis on FY21E EPS of Rs 12.2), which is aggressively priced. “With no listed peers and positive sentiment in space & defense sectors due to Make in India and Atma Nirbhar Bharat with limited competition for the products they manufacture, we assign a Subscribe rating, with a long term perspective,” they said.

  Considering TTM adjusted EPS of 12 on a post-issue basis, Marwadi Shares and Finance Ltd said that MTAR Technologies is going to list at a P/E of 47.9X with the market cap of Rs 1,769 crores. There are no listed entities in India that are engaged in a similar line of business and whose business is comparable with that of this business.

• Marwadi Share & Finance Limited has also given a ‘subscribe’ rating to the IPO.