MTAR Technologies Ltd (MTARTECH) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, good day and welcome to the MTAR Technologies Limited Q2 and H1 FY27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Vidhi Vasa from MUFG in time. Thank you and over to you, ma'am.
Vidhi Vasa (MUFG in time): Thank you. Good morning, everyone.
Vidhi Vasa (MUFG in time): On behalf of MTAR Technologies, I extend a very warm welcome to all the participants for Q2 and H1 FY '27 earnings discussion call. Today, on the call, we have Mr. Srinivas Reddy, Managing Director and Promoter, Mr. Gunesh Rao, Chief Financial Officer, and Ms. Srilatha Jasthi, Head Strategy and IR. I hope everybody had an opportunity to go through our investor deck and press release that we have uploaded on the exchange and on the company's website. I would like to give a short disclaimer before we begin the call. This call may contain some of the forward-looking statements, which are completely based upon our beliefs, opinion and expectations as of today. These statements are not a guarantee of our future performance and involve unforeseen risks and uncertainties. Now, I hand over the call to Srinivas sir. Over to you, sir.
Srinivas Reddy (MTAR Technologies Ltd): Hello, and good morning to everyone. Thank you for taking the time to join us today. Today on the call, I am joined by Mr. Gunesh Rao, Chief Financial Officer, Ms. Srilatha Jasthi, Head Strategy & Investor Relations, and Orient Capital, our Investor Relations partners. We have uploaded our updated investor deck, press release, and results highlights on the stock exchanges and the company website. I hope everybody had an opportunity to go through the same. I'm pleased to share that we have delivered another strong quarter, continuing our track record of consistently surpassing the performance of previous quarters. During Q2 FY '27, we registered a revenue of INR 106.8 crores with an EBITDA margin of 24.4% and a year-on-year EBITDA growth of 483.3%, reflecting our record quarterly performance and sustained growth momentum. We expect this momentum to continue into the second half of the fiscal year, with H2 of FY '27 anticipated to be stronger than H1, supported by our robust order book and continued focus on execution. However, our growth journey is not merely about delivering a robust set of financial numbers. It's equally about strengthening our presence across key business segments, building differentiated capabilities, and strategically positioning ourselves in high-growth sectors ahead of broader market adoption. Over the decades, we have established a strong reputation for our niche product portfolio, and our ability to identify emerging opportunities, develop specialized capabilities, and establish an early presence in sectors with significant long-term growth potential. This forward-looking approach continues to remain an integral part of our business model and long-term growth strategy. Against this backdrop, I would like to share our outlook on the emerging opportunities across our key business segments, including Clean Energy, comprising of civil nuclear and fuel cells, Aerospace & Defense, along with the progress we are making in our new business verticals, like data center, center infrastructure solutions, Oil & Gas, which we believe will contribute to our next phase of growth as well. Starting with Civil Nuclear, as you are all aware, we are building specialized capability capabilities for the sector since the inception of our company. Over the decades, we have patiently invested in strengthening our manufacturing capabilities, and we now see significant opportunities emerging as Government of India targets to achieve 100 GW of nuclear power capacity by 2047. We have a closing order book of INR 805 crores, supported by order inflows from Kaiga and Gorakhpur and also from the refurbishment programs. As you are aware, we have played a significant role in Prototype Fast Breeder Reactor program, having supplied the majority of the assemblies for the reactor core. Leveraging this technology expertise, we have also submitted our budgetary quotations for the upcoming Fast Breeder Reactor program, with tenders expected to be floated over the coming years. In addition, the company is actively submitting quotations to private sector players intend intending to bid for the four proposed seven 700 MW nuclear reactors at Mahi Banswara, further strengthening our pipeline of opportunity in the Civil Nuclear program. With respect to execution of our existing orders, we expect a meaningful ramp-up during H2 FY '27, followed by a significant revenue growth from FY '28 onwards. Given our long long-standing experience, established capabilities and strong positioning in this sector, we believe civil nuclear will be an important growth driver for the company in the coming years. Moving on to Clean Energy, fuel cells, the sector continues to witness accelerated growth, supported by strong industrial tailwinds and increasing demand for reliable and sustainable power
Srinivas Reddy (MTAR Technologies Ltd): Our Phase 2 capacity expansion is nearing completion with the facility expected to be operational by end of November. Phase 3, which will enhance our manufacturing capacity multifold, will be housed in a new dedicated facility with the overall expansion expected to be completed by June 2028. As discussed during our previous earnings call, the facility being developed for fuel cells is designed to accommodate multiple products under one roof, enabling us to achieve greater scale, improved operational efficiency, and better utilization of resources. In parallel, we have significantly strengthened our workforce by onboarding skilled personnel to support the anticipated growth. We have substantially completed our training activities and made considerable progress in implementing various automation processes in the manufacturing area. And these initiatives are aimed at improving productivity and supporting a seamless ramp-up in production as capacities will be in place in the near future. The company also continues to witness a steady growth in hydropower and wind energy segments as well, and we continue to pursue select products in this segment. Moving on to aerospace and defense, we continue to witness phenomenal growth in our MNC aerospace business while actively participating in several prestigious programs across domestic defense and space as well. Our MNC aerospace business continues to witness the robust demand with products that have already been qualified seeing a significant ramp-up in volumes. We expect to complete the qualification process of the first articles for one of our key customers during the current financial year with volume deliveries under long-term agreements commencing from next fiscal year. To support the anticipated increase in volumes across various customers, we have established multiple units within our existing dedicated aerospace facilities. In parallel, we are actively working on inquiries for new products from existing customers and intend to pursue opportunities with new customers following the completion of the first article qualifications which are being done for the existing customer. Over the past few years, we have established customer specific manufacturing capabilities at an accelerated pace, including our dedicated aerospace facility and NADCAP approved special process facility. We have come a long way from generating revenues from a small number 3 years ago to an expecting to achieve about 150 crores plus revenue purely from our MNC Aerospace business during the current fiscal year and which is expected to grow further year-on-year basis. We believe our sustained investments in building specialized capabilities, including our NADCAP approved special process facilities and dedicated aerospace manufacturing infrastructure coupled with an expanding portfolio of qualified products and long-term customer relationships have laid a strong foundation for scaling our MNC Aerospace business in the coming years. Moving on to the domestic defense, we are strengthening our focus on high-value structural assembly programs for fighter aircrafts. We are currently undertaking structural assembly projects, including the main landing gear support structure assembly and fuselage door assembly for the Advanced Medium Combat Aircraft program. We're also expected to receive volume production orders for actuated assemblies for the LCA Tejas program in the coming period. In addition, we anticipate significant order opportunities for various other assemblies and electromechanical actuators which are expected to further strengthen our presence in the domestic defense sector. In the space segment, we continue to witness steady growth supported by our long -standing association with ISRO. We continue to supply critical propulsion systems and electropneumatic modules for PSLV and GSLV launch vehicles. To conclude, we are well positioned for the next phase of growth in aerospace and defense, supported by our increasing participation prestigious domestic and global programs which provide us with multidecade growth visibility. To cater to the anticipated increase in demand and support our long-term growth ambitions, we're also evaluating the establishment of new greenfield manufacturing facilities with further developments expected over the coming quarters. Moving on to our diversification to data center infrastructure solutions, which forms part of our clean energy vertical, we are currently working on the execution of the first article orders valued at approximately 45 crores to support
Srinivas Reddy (MTAR Technologies Ltd): initiative. We're also establishing a manufacturing facility and are in the process of establishing the necessary infrastructure and capabilities. And this facility should be operational in a full-fledged manner by end of March 2027. We are significant we have a significant potential for scalability following the successful completion and qualification of these first articles with the business having the potential to scale up to 350 to 400 450 crores over the next few years. With the rapid expansion of data center infrastructure globally, we believe this emergent business vertical presents a substantial growth opportunity, enabling us to further diversify our product portfolio and strengthen our presence in high-growth sectors. Moving on to oil and gas, our dedicated manufacturing facility is expected to become operational by end November, while the development and first articles qualification has already been completed with Weatherford, and further first articles with other customers are currently in progress. With the necessary infrastructure and capabilities being established, we anticipate a mean- meaningful ramp-up in production volume from FY28 onwards, positioning this vertical as another gro- growth driver for the company. I'm also glad to share that we have commenced exports of ball screws as well, marking a significant milestone for the company. This achievement demonstrates our capabilities in developing import-substitute products not only to meet domestic requirements but also to cater to global programs, further strengthening our confidence in expanding our presence in international markets. In addition, our net working capital days continue to remain among the lowest in the industry, reflecting our prudent working capital management and disciplined approach to capital allocation. Our operating cash flows continue to with- witness significant growth, further strengthening our financial position and supporting our ongoing expansion initiatives. Our CFO will provide a detailed overview of our working capital position, cash flow performance, and overall financial management. We have witnessed a record order inflows of 4,102 crores during H1 FY27, reflecting robust demand across our business segments. With strong industry tailwinds and a growing pipeline of opportunities across the sectors in which we operate, we expect to sustain this momentum in the coming quarters and anticipate a strong closing order book by the end of FY27. With this, I would like to reaffirm that we have a robust roadmap for the next 5 years, supported by significant growth opportunities across our business segments and continued investments in building specialized capabilities. While our long-term growth outlook remains strong, execution continues to be our key priority in the near term as we remain focused on translating these opportunities into sustainable growth. I would like to take this opportunity to thank all our shareholders for their continued trust and confidence in the company. We remain committed to delivering sustainable growth and creating long-term value for all our stakeholders. With this, I would like to hand over to our CFO, who will provide a detailed overview of the company's financial performance.
Gunesh Rao (MTAR Technologies Ltd): Yeah, good morning everyone. Thank you for joining us today. I am pleased to share that we have delivered highest ever quarterly revenue of 406.8 crore in Q2 FY27. This is a strong growth over the same quarter last year and over the previous quarter driven by good execution across our product portfolio. Let me take you through the financial performance when it comes to year on year. Revenue from operation was 406.8 crore against 135.6 crore, a growth of 200%. EBITDA was 99.2 crore against 17 crore, a growth of 483.3%. Profit before tax was 80- 80.3 crore against 5.7 crore, a growth of 1314 1314.6%. Profit after tax was 59.8 crore against 4.2 crore, a growth of 1309.5 crore 5%. When it comes to quarter on quarter, revenue from operation grew at 12.8% from 360.7 crore to 406.8 crore. EBITDA grew at six- at 16.6% from 80- 85.1 crore to 99.2 crore. Profit before tax grew 19.1% from 67.4 crore to 80
Gunesh Rao (MTAR Technologies Ltd): Crores. Profit after tax grew 19.1% from 50.2 crore to 59.8 crore. When it comes to margins, our gross margin is improved to 46.8% from 45.5% in the previous quarter mainly because of a better product revenue mix, and EBITDA margin was 24.4% compared to 12.5% in Q2 FY26 and 23.6% in Q1 FY27. This improvement came from a higher revenue, a better mix, and operating leverage. PAT margin was at 14.7% compared to 3.1% in Q2 FY26 and 13.9 in Q1 FY27. Earning per share was at 19.45 for the quarter and 35.78 for the first half of the year. When comes when it comes to the balance sheet and cash flow, our working capital days came down to 50 as of September 2026 from 172 days in March 2026. This was helped by better margins, tighter working capital management. By end of FY27, we expect it to maintain working capital at around 100 days. This is due to higher revenue forecast for the H2 of FY27 and also FY20- 28. ROCE is expected to improve to around 23% by end of FY27 from 17.2 in FY26. And our cash flow from operation was at 350 crore, a positive number in H1 FY27 compared to compared with 39.8 crore in H1 FY26. This was driven by stronger profitability, better working capital management, and it gives us a solid base for our capacity expansion and future growth. Our debt our total debt is around 465 crore, of which 190 189 crore is a long term debt and 276 crore is a short term debt. Having said that, our investments stands at 358 crore. It literally means we have around 107 crores debt in the after adjusting the investments. When it comes to our our outlook, so we continue to expand capacity in new high-growth verticals. Our immediate priority is to complete this expansion on time so that we can execute smoothly. We remain confident of achieving our annual guidance. With this, I would like to open the floor for question and answers. Thank you very much.
Moderator: Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Abhijeet Singh with Systematix Group. Please go ahead.
Abhijeet Singh (Systematix Group): Yeah, thank you for the opportunity, sir. And good to see some great results. First question is on the fuel cell business. Sir, after the phase two, what would be our hot box capacity there? And given that our customer, Bloom Energy, has reported you know, strong results, upgraded guidance also, how do we see order inflows looking you know, going forward in the next two to three years in the medium term from this particular pocket? That's my first question.
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