InCred Equities Initiates Coverage on MTAR Technologies with a Buy Call and 42% Upside Potential
After experiencing a 15 percent correction in the year-to-date performance of 2024, MTAR Technologies is now catching the attention of brokerage house InCred Equities. The brokerage has initiated coverage on the stock with a buy call and set a target price of ₹2,644, indicating a potential upside of 42 percent.
MTAR Technologies is a precision machining company that operates in niche sectors such as fuel cells for Bloom Energy, nuclear, defense, and space. InCred Equities believes that the rising power costs in the US, coupled with the increasing cost competitiveness of Bloom Energy, will provide significant tailwinds for MTAR. The brokerage values the stock at 45 times the FY26F EPS to reach the target price of ₹2,644 and has given it an ADD rating.
Forecasting a 41 percent growth in topline revenue over the period of FY24-26F, InCred Equities expects MTAR to see margin improvement of approximately 500 basis points due to operating leverage. Even if Bloom Energy, MTAR’s largest client, misses its consensus revenue estimates for CY26F by 5 percent, the negative impact on MTAR’s profits is projected to be only 10 percent, thanks to the company’s diversification into other revenue segments.
The stock price trend of MTAR has seen fluctuations over the past year, with a 4.5 percent decline and a 15 percent correction in 2024 year-to-date. Despite this, the stock has shown resilience, with a 16 percent increase from its year-low and currently trading at ₹1,862.65.
InCred Equities highlights MTAR’s unique machining capabilities, particularly its expertise in both conventional and non-conventional machining methods. The company’s specialization in manufacturing precision components with tight tolerances makes it a standout player in the industry.
The brokerage also emphasizes the potential growth drivers for MTAR, including its strong presence in the clean energy sector through its partnership with Bloom Energy. With Bloom Energy securing significant incremental orders and MTAR’s strategic relationship with the company, the future looks promising for MTAR.
Additionally, the European defense segment could act as a trigger for MTAR’s growth, especially with the company’s contracts with clients like Rafale and Israeli Aerospace Industries. The heightened defense spending in Europe amid ongoing conflicts further supports the growth prospects for MTAR in this segment.
In conclusion, InCred Equities sees MTAR Technologies as a promising investment opportunity with strong growth potential in the clean energy, defense, and nuclear sectors. Investors are advised to conduct thorough research and seek advice from certified experts before making any investment decisions.
