mtar ipo Archives

MTAR Technologies IPO subscribed 200.8 times on final day of bidding

The Rs 596.41-crore initial public offering (IPO) of MTAR Technologies was subscribed 200.79 times on the second day of bidding. The issue received bids for 145.79 crore equity shares against an offer size of 72.60 lakh shares. The portion reserved for retail investors was subscribed 28.4 times. The portion set aside for non-institutional investors (NIIs) was subscribed 650.7 times and that for qualified institutional buyers (QIBs) 165 times.

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Kotak Mahindra Bank divests 10% stake in ECA Trading Services to its subsidiary

Kotak Mahindra Bank has divested 10% stake in ECA Trading Services to its wholly-owned subsidiary, Kotak Securities, for Rs 1.98 crore. A total of 1.09 crore equity shares were sold to the subsidiary at Rs 10 per share. The divestment was done to comply with the prudential limit set by the Reserve Bank of India (RBI) on investment in a non-financial services entity.

On Thursday, Kotak Mahindra Bank signed a Memorandum of Understanding (MoU) with the Indian Army. The private sector lender will now handle the salary accounts of Indian Army personnel.

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PNB Housing Finance, Yes Bank enters into co-lending partnership

PNB Housing Finance and Yes Bank have entered into a strategic co-lending agreement to offer customised retail loans for homebuyers at competitive interest rates. The Delhi-based housing finance company will serve customers through the entire loan lifecycle including sourcing, documentation, and collection with an information-sharing arrangement with Yes Bank. Both companies will jointly do due diligence and co-originate the loan at an agreed ratio.

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Tejas Network secures order from Mexico-based GigNet

GigNet, a Mexico-based digital infrastructure company, has selected Tejas Networks Limited’s optical networking and broadband access products for their high-capacity fiber-optic network expansion in the Cancun region of Mexico. Tejas Networks will supply its full range of last-mile access products to support the rapid growth of GigNet’s Smart Communities business segment for planned developments across the region.

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Lenders agree to JSW Steel’s terms for buying Bhushan Power: Report

As per a report from BloombergQuint, the lenders to Bhushan Power & Steel Ltd (BPSL) have agreed to the terms set by JSW Steel for purchasing the assets of insolvent BPSL. A majority of the financial creditors on Friday voted in favour of accepting JSW Steel’s Rs 19,350-crore offer for the sale. The report further states that the deal will be closed by the end of March.

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Dilip Buildcon receives LoA for two HAM projects in Karnataka

Dilip Buildcon Limited has received the Letter of Acceptance (LoA) for two Hybrid Annuity Mode (HAM) projects worth Rs 2,439 crore in Karnataka. The scope of the first project involves four laning of the Bangalore to Malur section of Bangalore-Chennai Expressway. The second project is for four-laning the Malur to Bangarpet section of Bangalore-Chennai Expressway. Both projects are to be completed within 24 months.

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Sun Pharma’s subsidiary to acquire Australia-based WRS Bioproducts

Sun Pharmaceutical Industries announced that one of its wholly-owned subsidiaries will acquire 4.28 lakh equity shares (or 12.5% stake) of Australia-based WRS Bioproducts. The consideration to be paid for acquiring the stake will be AUD 2 million (~Rs 11.21 crore). WRS Bioproducts is engaged in developing novel technologies to produce and commercialise supplements and nutraceutical ingredients from diverse algae species in Australia. Sun Pharma expects to complete the acquisition by March 15, 2021.

PVR opens new six-screen property in Mysuru

Multiplex operator PVR Limited announced the launch of a new six-screen property in Mysuru, Karnataka. The latest PVR Cinemas in Mysuru spreads across an area of 32,240 sq feet and can accommodate a total of 1,078 audiences. PVR said the new property features advanced cinematic technological solutions that offer a holistic movie-going experience. With this opening, PVR now operates 844 screens at 177 properties in 71 cities across India and Sri Lanka.

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Shilpa Medicare gets USFDA approval for Apremilast Tablets

Shilpa Medicare has received tentative approval from the US Food and Drug Administration (USFDA) for Apremilast Tablets- 10 mg, 20 mg, and 30 mg. The tablets are indicated for the treatment of psoriatic arthritis. According to IQVIA MAT 2020 data, the US market for Apremilast Tablets is approximately $2.4 billion (~Rs 17,541 crore).

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Coal India declares second interim dividend of Rs 5 per share

The Board of Directors of Coal India Limited (CIL) has approved the payment of a second interim dividend for the financial year 2020-21 of Rs 5 per share. The record date for the same has been fixed as March 16. The date of payment of the interim dividend is March 24. CIL has also revised its capital expenditure (capex) plans to Rs 13,000 crore from Rs 10,000 crore after the government asked the company to push expenditure to spur demand in the post-lockdown period.

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Covid-19 did initially decrease the pace of IPOs in 2020 but 2021 is proving to be completely opposite. Many companies are taking the public route this year and hopefully would have earned a lot in an oversubscribed IPO as well. Do tell us if you are one of those lucky investors who are enjoying profits and are investing in Railtel’s IPO. For now, let’s discuss a very unique company that has launched its IPO today and the market is already discussing it in length, which is MTAR Technologies.

About MTAR Technologies

MTAR Technologies are a leading national player in the precision engineering industry. The company is engaged in the manufacture of mission-critical precision components. Most of the projects in which MTAR Technologies deals are of very high importance to the nation in terms of security. They hold a rich history to contribute to the Indian Civilian Nuclear Power program, Indian Space program, Indian Defence and Global Defence.

Since the inception of the company in 1970, it has grown massively to aid government agencies and add them to its client list. Currently, MTAR Technologies cater to the needs of esteemed clients like ISRO, NPCIL, DRDO, Bloom Energy, HAL, VSSC, Rafael, Elbit and others.

Currently, MTAR Technologies hosts 7 modern state-of-the-art manufacturing facilities. Their key products include the manufacturing or assembling of Liquid propulsion engines to space programmes and defence programmes including GSLV Mark III, Base Shroud Assembly & Airframes for Agni programs, Actuators for LCA, power units for fuel cells and others. In all, they offer 14 kinds of products in the nuclear sector, six kinds of products in the space and defence sectors and three kinds of products in the clean energy sector.

About the IPO

The IPO of MTAR Technologies will open on 3rd March 2021 and will close on 5th March 2021. The total issue size of the IPO is Rs 596.41 crore. The fresh issue aggregates up to Rs 123.52 crore whereas the Offer for sale aggregates up to Rs 472.90 crore. The price band of the IPO is Rs 574 – Rs 575 per equity share. You have to apply for a minimum of 26 Shares which is one lot.

The upper limit to the number of lots you can apply for is 13, which means, 338 shares. The minimum an investor has to pay for this IPO of MTAR Technologies is Rs 14,900. Similarly, the maximum one can invest in is Rs 1,94,350. Currently, the promoters of the company have 62.24% of the total holdings. After the IPO, this will decrease to 50.25%. Just above the 50% mark so that they remain the highest stakeholder. The allotment date and listing date for the IPO are 10th Match 2021 and 16th March 2021 respectively.

MTAR Technologies plans to use the net proceeds from the IPO in three ways. Firstly, the amount will be used to partly or fully repay the company’s borrowings. Secondly, to finance their working capital requirements. Lastly, the remaining sum will be used to meet general corporate purposes.

Financial Overview

.	30 December 2020	31 March 2020	31 March 2019	31 March 2018
Total Assets	381.91	346.27	305.15	281.03
Total Revenue	177.99	218.14	185.91	160.54
Profit after Tax	28.06	31.31	39.19	5.42

(Values in Rs Crore)

The table suggests that the company has consistently increased its revenue and total assets each year. In FY20, MTAR Technologies failed to generate profits as they did in FY19. One of the main reasons behind this is the lockdown initiated due to Covid-19 cases last year. Till December 2020, that is the third quarter of FY21, the company has done well to generate revenue and profits. If they can end FY21 on a high, they will beat their numbers from last year.

MTAR Technologies has a lower return on equity of 13.61% as compared to GMM Pfaudler’s 23%, which can be considered as one of its indirect competitors. Both companies are into precision manufacturing of components but for different industries. But when it comes to Net Profit Margin(NPM) and Operating Profit Margin(OPM), MTAR Technologies beats GMM Pfaudler. The former has an NPM and OPM of 15.77% and 20.3% as compared to the latter’s 12% and 19.48% respectively.

The primary reason for the company to take the public route is to repay its borrowings. But it has a very low debt-to-equity ratio of 0.18. After the IPO, this ratio will fall further. Lesser the debt on the company, the lesser the risk for the investors.

Risk Factors

As said before, MTAR Technologies features in the precision engineering industry which is used by a very limited number of customers. These are specially engineered products that are required by only some specific entities. Thus, the customer range is small.
The company’s brand image and financials highly depend on the orders from the NPCIL, ISRO and DRDO. A decline in orders from these known government institutions or a change in policy from the government can highly impact MTAR Technologies business.
They don’t have long-term contracts with their customers. Thus, if they choose to buy from an alternate seller, the company will face a reduction in total revenue.
As the company is engaged in highly secretive work for some sectors, they have to undergo strict quality standards. If they fail to make accurate and precise products, the company will lose its customers.

IPO Details in a Nutshell

IPO Date	March 3, 2021 – March 5, 2021
Issue Type	Book Built Issue IPO
Face Value	Rs 10 per equity share
IPO Price	Rs 574 to Rs 575 per equity share
Lot Size	26 Shares
Offer for Sale (goes to promoters)	Aggregating up to Rs 472.90 crore
Fresh Issue (goes to the company)	Aggregating up to Rs 123.52 crore
Issue Size	Aggregating up to Rs 596.41 crore
Listing At	BSE, NSE
IPO Listing Date	March 16, 2021

Conclusion

MTAR Technologies revenue from the clean energy sector increased from 49% in 2018 to almost 65% in 2020. This shows that as the demand for clean energy will increase in the future, MTAR Technologies will benefit more. The rest of the revenue share comes from the defence manufacturing and nuclear sector.

As we all are aware that our national government is keen to bring manufacturing of defence within India rather than importing products. Thus, initiatives like this will surely benefit MTAR Technologies in the future. Also, with governments around the world once again pushing for dominance in space, companies like MTAR will

Yes, it has some cons but in my view, this company is expected to have a robust future. So we will be applying for the IPO. My gut feeling says that this IPO will be oversubscribed, but my guess is as good as yours! Do your own analysis about the company and let us know in the comments section if you find any other interesting information. MTAR Technologies filed its draft papers last December. You can find it here. Will you be applying for this IPO? Tell us in the comments section below!