Shares of MTAR Technologies Ltd plunged 16 per cent in Wednesday's trade, following its weak operating performance in the March quarter. Ahead of the company's conference call at 11 am today, Motilal Oswal noted that the defence firm's profit after tax declined 84 per cent YoY while its Ebitda plunged 63 per cent for the fourth quarter.
Ebitda margins contracted 1220 basis points YoY to 12.7 per cent (down 740 bps sequentially), led by a 320 bps contraction in gross margins to 45.3 per cent and an increase in other expenses/employee cost as percentage of sales by 710 bps/190 bps YoY to 14.8 per cent/17.7 per cent.
The stock fell 15.98 per cent to hit a low of Rs 1,732 on BSE.
For now, Motilal Oswal maintained its 'Buy' on the stock. The domestic brokerage recently initiated coverage on the stock, saying MTAR has over the years created a niche for itself in the industry, being the key supplier of mission precision engineered systems to large global MNCs, government departments and large Indian public and private sector companies.
"As the largest supplier of fuel cell components to BE (global leader), the company will benefit from the emerging demand for fuel cells in the coming years," it suggested.
Apart from fuel cells, its other business segments (such as nuclear, space, defense and products) offer a huge runway for growth, it suggested recently.
"We believe the company can capitalize on this opportunity with its strong manufacturing capabilities and customer relationship management. The company has registered a strong revenue CAGR of 25 per cent over FY18-24E (despite the pandemic), aided by healthy 33 per cent order book growth during the same period, it noted.
The brokerage sees MTAR clocking a revenue/Ebitda / adjusted PAT CAGR of 38 per cent/53 per cent/67 per cent over FY24-26, with RoE/RoCE of 23 per cent/21 per cent by FY26.