MTAR Technologies IPO is the 9th in 2021. The offer will open for bidding on March 3, 2021. Ahead of the IPO offer, let’s evaluate the various key parameters to understand if it is an offer worth subscribing to.
- MTAR Technologies is a key player in the precision engineering segment, maker of mission-critical equipment for the defence, nuclear, and aerospace sectors
- The company plans to raise Rs 597 crores from the market, which includes Rs 124 crores of fresh issues and Rs 473 crores in an offer for sales equity shares
- The IPO shares will launch in the price band of Rs 574-575 per shares against the face value of Rs 10. According to LKP Research, the price of the shares is 20x premium than its FY20 earnings of Rs 28.3
- The company has already raised Rs 100 crores from the sales of 1,851,851 shares to Axis Mutual Fund and SBI Mutual Fund ahead of the IPO offer. These pre-IPO shares will come with a lock-in period of one year
- Post-issue, the implied market capital of the company is expected to rise to between Rs 1,766-1,769 crore
- The company RHP suggests that the firm plans to use the proceeds from the fresh issues to repay debts, funding working capital requirements, and general corporate expenses
- At least 50 percent of the issue size is reserved for Qualified Institutional Buyers (QIBs). The issuer reserved not less than 15 percent for non-institutional buyers and the remaining 35 percent to retail investors
- Bidding for the anchor investors will begin on March 2, 2021
- Investors will have to subscribe to a minimum of 26 shares, amounting to Rs 14,950
- After finalisation of allotment on March 10, the shares will debut in the NSE and BSE on March 16, 2021
Understanding The Company Business
Before investing in any IPO, it is very important to make an informed decision about its business, competitors, and future growth. Several stock market experts have asked investors to subscribe for MTAR Technologies IPO based on its performance, healthy order book, superior profitability, and competitive edge over its peers.
MTAR Technologies’ well-diverse product portfolio comprises three products in the clean energy segment, fourteen products in the nuclear sector, and six products in space and defence sectors.
The company exhibits strong financials
According to a report by LKP Research, the company had grown at a CAGR of 16.5 percent in the last three years, when its EBITDA stood at 28.5 percent in FY20. In FY20, the company managed to earn Rs 213.7 crores in revenue and a PTA of Rs 310.30 crores. Between April to December 2020, the company revenue stood at Rs 177.28 crores and PTA at Rs 28 crores.
MTAR Technologies isn’t a typical defence or capital goods company, but it has a healthy order book with a profit net margin of 14 percent in the last fiscal, despite reducing the defence budget of the government.
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