MTAR Technologies Rs 596-crore IPO opens March 3, grey market premium soars 75%; should you subscribe?

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March 01, 2021 12:28 PM

Hyderabad-based MTAR Technologies Rs 596-crore initial public offering (IPO) will open for subscription on Wednesday, March 3, 2021

MTAR Tech IPO, MTAR grey market premiumMTAR Technologies' revenue grew at a CAGR of 17 per cent while PAT grew by 140 per cent CAGR in the past three years. (Image: mtar.in)

Hyderabad-based MTAR Technologies Rs 596-crore initial public offering (IPO) will open for subscription on Wednesday, March 3, 2021. Amid share market volatility, MTAR Technologies shares in the grey market were commanding a premium of 75 per cent. MTAR Technologies shares were trading at Rs 1,005, up Rs 430 over the IPO price in the grey market on Monday. 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 defence sectors, and initiatives like Make in India and Atmanirbhar Bharat, companies like MTAR Technologies can see increased opportunities.

Likhita Chepa, Senior Research Analyst at CapitalVia Global Research Limited has recommended to ‘subscribe’ this issue with medium to long term perspective although it has the potential to generate decent listing gains. Chepa also said that MTAR has 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 defence. The company is also working with Israel- based Rafael Advanced Defense Systems and Elbit Systems on the exports front.

MTAR Technologies’ revenue grew at a CAGR of 17 per cent while PAT grew by 140 per cent 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,” Chepa told Financial Express Online. It has an aggregate order book of Rs 336.2 crore as on December 31, 2020.

Those at 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 & defence 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.

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