Due to the ongoing West Asia crisis, the overall sentiment across Indian equity markets has been relatively negative. Since the beginning of this calendar year 2026, the Nifty 50 has declined by over 9.4%, along with most of the sectoral indices.
Having said that, there is one sector that has been rising during this period, amidst all the geopolitical turmoil – the defence sector. In fact, Nifty India Defence Index jumped 16.09% since the beginning of 2026, in contrast to the overall market sentiment.
While the defence sector gaining traction in times like these is nothing unusual, foreign institutional investors (FIIs) are raising stake only in a particular defence company. In fact, FIIs raised their stake in this company throughout the year (FY26). And that too at a significant pace.
The Stock? It is MTAR Technologies Limited.
During Q4FY25, FIIs holding in this company stood at only 6.74%, while at the end of Q4FY26, the same went up to 17.3%. That’s an increase of over 10.5% points.
MTAR Technologies’ Shareholding Pattern
Let’s explore the factors that possibly made FIIs raise their stake in this defence tech stock throughout FY26.
MTAR Technologies Ltd: Excelling with critical engineering
MTAR Technologies Ltd. is engaged in developing advanced technology products for different high-tech industries using its critical and differentiated engineering approach.
For the aerospace sector, the company offers precision-engineered assemblies, while for the defence sector, there are gearboxes, actuation systems, aerostructures, ball screws, and other related products required in different defence systems.
Apart from aerospace and defence, the clean energy sector has been a top priority of the company. MTAR manufactures a wide range of complex components and assemblies, like fuel machining head, bridge & column, and drive mechanism for the civil nuclear power segment.
For the other segment under clean energy that includes fuel cells, hydel, and other similar products, the company offers power units, mainly hot boxes, and also supplies prototype hydrogen boxes and electrolyzers.
There is another segment where MTAR has a strong foothold, and that is the Space segment. MTAR manufactures liquid propulsion engines, electro-pneumatic modules, satellite valves, and other similar products.
A solid order book with record inflows
During FY26, MTAR received record order inflows worth ₹2,453.3 crore. Out of the total, orders worth ₹481.6 crore were received during the final quarter of FY26.
As of 31 March 2026, the company’s order book stood at ₹2,581.9 crore, out of which 51.2% orders were for the civil nuclear power segment, 26.3% were for other clean energy products, 14% were for the defence and aerospace segment, and the remaining 8.5% for other products.
The company received two more orders during April and May. During April, it received an order worth ₹35.56 crore from a new international client.
On 14May 2026, MTAR received a significant order from an existing international client. This is a blanket purchase order worth ₹2,278.96 crore.
A solid order book often offers clear revenue visibility for the business, and this could be a probable reason for FIIs to increase their stake in this company.
Expansion across business verticals
MTAR has been increasing its production capacity robustly, which might be another reason FIIs are loading up on this stock at such a pace.
For the aerospace and defence segment, it is increasing production of engine components and storage boxes. The company is also developing new products, such as the load-bearing structure-Z adapter, which is for Thales Alenia Space. MTAR has completed the design and development of the product.
During the fiscal year, the company received a prestigious order for the Main Landing Gear Support Structure Tex Box assembly for the AMCA Program.
MTAR is also exploring opportunities within the structural assemblies of the fighter jet program.
Furthermore, management said that they are expecting significant orders for LCA Tejas Mark IA for its actuator assemblies.
Apart from these, for the clean energy business, MTAR is setting up a new facility to boost the production capacity to meet the rising demand for the existing clients and the new clients onboarded during the fiscal year.
Furthermore, MTAR is venturing into the Oil & Gas sector. Currently, the company is setting up a greenfield facility for catering to the oil & gas clients, such as Weatherford and others.
This facility is anticipated to be operational by the end of September 2026.
A 76% Surge in the Profits
For MTAR, FY26 has been a year of solid performance.
During the fiscal year, sales increased by 29.6% YoY from ₹676 crore in FY25 to ₹876.2 crore.
However, the company successfully converted this 29.6% growth in sales to a 76% YoY growth in profits. From ₹53.4 crore in FY25, profit rose to ₹94 crore in FY26.
This significant growth in profit might be another reason for the FIIs continuously pouring funds into this company. Especially, when the input prices of raw materials and freight charges have surged due to ongoing geopolitical tensions, as per management.
Having said that, management also commented that due to the ongoing expansions, the company’s headcount has increased, which is putting pressure on the profit margins.
MTAR has a return on capital employed (ROCE) of 15.2%, slightly lower than the industry median of 16.6%.
Management Guidance for FY27
For FY27, MTAR’s management is anticipating a revenue growth of around 80%, while the earnings before interest, tax, depreciation, and amortization (EBITDA) margin is expected to be around 24%.
Already trading at a Premium?
The stock is trading at a price earnings (PE) of 213.8x, which is way higher than the industry median of 64.6x. Even the price-to-book value ratio (PBV) is at 25.4x, higher than the industry median of 7.9x, indicating that the stock is relatively overpriced.
1-Year Share Price Chart of MTAR Technologies Ltd.
Final Thoughts
Thus, FIIs’ increasing stake in this defence tech company throughout FY26 is not just a mere coincidence or geopolitical scenario fuelling the sector. FIIs are perhaps buying this stock due to the ongoing expansions, rising demand, and growing order book, solid financial performance, and positive management guidance for FY27.
For now, it will be wise to add the stock to your watchlist to keep a check on its future performance.
We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Maumita Mitra is a seasoned writer specializing in demystifying the world of investment for a broad audience. She has a keen eye for detail and a knack for explaining complex financial concepts in the simplest manner possible.
Disclosure: The writer and her dependents do not hold the stocks discussed in this article.
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