This multibagger space-related, defence stock has rallied 140% in 3 years, should you buy after Chandrayaan-3 success?
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Designed by: Manoj Kumar
After the successful landing of Chandrayaan-3 on the south pole of the Moon, India has become the fourth country in the world to achieve this feat after Russia, US and China and the first nation to successfully soft-land on the lunar south pole. India's reputation has gone up in the global space, and it has opened avenues for revenue in future, and is expected to boost India's contribution to the global space market from 3% to 10% in the next decade.
Chandrayaan-3 success
impact
From raising just around $28 million in investments in 2020, the Indian space tech sector grew investments over four times in 2022 as it closed the year with $112 million of funding. As of August 2023, startups in the sector have raised $62 million, data from research firm Tracxn shows. The average deal size in space tech investments climbed from $2.8 million in 2020 to $15 million in 2023, it added. In terms of entrepreneurial action, the total number of space tech startups has grown around 25%, from 67 companies in 2020 to 84 in 2023.
Indian space tech sector growth
Previously dominated by government players, the space sector saw its first lift-off in 2020 with its privatisation, and the success of Chandrayaan-3 has emerged as the next big thrust for private space tech companies. According to experts, after Chandrayaan-3's success, around 13 listed Indian companies would be the major beneficiaries of this emerging business in space. Those companies include MTAR Technologies, Larsen & Toubro (L&T), Bharat Heavy Electricals Ltd (BHEL), Centum Electronics, Hindustan Aeronautics Ltd (HAL), Linde India, Paras Defence, etc.
Golden era for space tech-related companies
Shares of MTAR Technologies, which made core parts of the rocket engines and core pumps of cryogenic engines required for take-off of Chandrayaan-3, have delivered multibagger returns to investors. In the last 3 years, since July 2021, the stock has rallied around 140%. So far this year, MTAR Technologies share price has jumped 47.67% to Rs 2,403 on NSE. Analysts believe that the stock is poised to rally further.
Multibagger stocks: MTAR Technologies
Shares of MTAR Technologies surged more than 4.5% today at around Rs 2,400 apiece after the company received the ‘Defence Industrial License’ for production of various mechanical and electronic subsystems in the defence sector. The licence will enable the company to partner with foreign MNCs and cater to both domestic and export markets by taking up projects under ‘Buy (Indian)’, ‘Buy & Make (Indian)’ & ‘Make’ categories of acquisition, thereby increasing the share of defence in its revenues.
MTAR Technologies share price today
CLSA said India’s Chandrayaan 3's soft landing on moon, the first globally on the South Pole and fourth country overall, and that at a third of the global average cost, should strengthen the ‘Make in India’ theme. It would open up global rocket, launch and satellite markets for Indian players, the foreign brokerage said. MTAR Technologies stock a buy rating from both Nuvama Institutional Equities and JM Financial Services.
Time to buy MTAR Technologies?
According to analysts at JM Financial Services, MTAR Technologies (MTAR) offers a niche business model backed by decades of proven engineering capabilities and long-standing relationships with clients like DRDO, NPCIL, and ISRO. Clean Energy is an emerging space and MTAR has established itself as a reliable partner for supplies of power units, electrolysers, and other components to US-based Bloom Energy. It also offers highly engineered and critical products in the Nuclear, Space, and Defence segments.
MTAR Tech well-positioned?
As per JM Financial report, key drivers for MTAR Technologies in near-term will be: Continued scale-up in supplies to Bloom and addition of new clients; Anticipated large order win of Rs 5 billion in the Nuclear Energy segment; Supplies of critical components to upcoming programmes of ISRO, and a Ramp up in supplies of in-house developed products aimed at import substitution.
Tailwinds for MTAR Technologies
JM Financial forecasts 38%, 39% CAGR in MTAR Technologies' sales/EPS over FY23-26E, led by growth in segments of clean energy and nuclear as well as ramp-up in newer products. "We maintain a 'Buy' with a revised target price of Rs 2,770, based on 35x Sep’25E EPS," the brokerage said, implying an upside of around 15%. Delays in order placement and technology obsolescence may be a key risk.
MTAR Technologies share price target
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