3 days Ago
Defence and clean energy stock MTAR Technologies, which has fallen 34 per cent in the past one year due to client concentration risks, climbed 3 per cent in Thursday's trade after MOFSL said the battered stock can deliver 35 per cent return over the next 12 months. MTAR generated nearly 70 per cent of its total FY24 revenue from one client Bloom Energy (BE), which is the global leader in manufacturing standard oxide fuel cells (SOFC). MOFSL said the client concentration risk has been a key concern for MTAR Tech, as seen in FY24 when BE went into product transition to Santacruz (65kw energy generation) from Yuma (50kw).
This led to a slowdown in BE’s order flows to MTAR Tech, thereby impacting the company’s revenue and profitability. It noted that MTAR's revenue from clean energy fuel cells declined 21 per cent YoY in FY24 against a 2.2 times growth in FY23.
MOFSL said the BE transition was completed two quarters ago and it is seeing normalised order flows from BE. In 2QFY25, the clean energy fuel cell segment posted 9 per cent YoY growth against a decline in the last four quarters. It noted that under a recent agreement, BE will supply 15,000 hotboxes to AEP.
For MTAR Tech, it can translate into Rs 1,000-1,100 crore in revenue over the next couple of years. MTAR Tech has also looking to diversify client base. One such addition in clean energy is Fluence Energy.
"Currently, the contribution from Fluence is nil as Fluence has not yet won any orders in India, but when it does, the orders from Fluence will start flowing in to ," MOFSL said. The brokerage believes the BE-related headwind is over now, and going ahead, strong order flows and agreements by BE should boost the business scenario for MTAR Tech. The diversification across segments by the company is expected to result in healthy revenue growth going ahead, it said.
It expects MTAR Tech to deliver a revenue growth of 28 per cent, Ebitda growth of 42 per cent and adjusted PAT growth of 58 per cent, compounded annually, over FY24-27 on the back of strong order inflows. MOFSL retained its 'Buy' rating on the stock with a target price of Rs 2,100. On Thursday, the stock was trading 3.
31 per cent higher at Rs 1,609.15..
