MTAR Technologies Raises FY26 Revenue Guidance to 30-35% Amid Strong Order Book Despite Weak Q2

MTAR Technologies, a precision engineering firm, announced its financial results for the second quarter of fiscal year 2026, revealing a considerable decline in performance. Consolidated revenue decreased by 28.7% year-on-year to Rs 135 crore, while EBITDA margins fell by 682 basis points to 12.5%. This downturn was attributed to extended tariff discussions with customers, leading to order execution delays and increased inventory.

Net profits saw a sharp decline of 77.4% on a year-on-year basis, settling at Rs 4.2 crore, largely mirroring the revenue drop.

Despite the weak quarterly performance, the company's order book stands strong at Rs 1,296 crore, up from Rs 930 crore in the previous quarter. Clean energy projects constitute 67.1% of this order book, followed by aerospace at 25.2%. MTAR Technologies projects its order book to reach approximately Rs 2,800 crore by the end of the fiscal year, driven by inflows from clean energy, nuclear, and space segments.

Earnings Outlook: The company is optimistic about the second half of FY26, expecting sales to nearly double compared to the first half. It has revised its annual revenue growth guidance upward to 30-35% for FY26, an increase from the initial 25% projection. The annual EBITDA margin is expected to be around 21%.

Segmental Growth: The clean energy segment, particularly fuel cells, is projected to generate Rs 340 crore in revenue in H2 FY26. The nuclear division has secured orders worth Rs 500 crore for Kaiga 5 & 6 projects and Rs 800 crore for new and refurbishment projects. Aerospace and defence segments are expected to contribute Rs 100 crore, with other verticals adding over Rs 100 crore.

Financial Strategy: MTAR Technologies plans to invest Rs 150 crore in capital expenditure over the next two years. It aims to reduce working capital days to 220 by the end of FY26 and is raising Rs 150-200 crore in debt to fund growth, targeting total debt levels below Rs 250 crore.

Valuation: The stock is currently trading at approximately 39 times its fiscal 2028 estimated earnings. While medium-to-long-term growth prospects are promising due to the robust order book and improving balance sheet, near-term performance hinges on effective order execution.

Impact: This news is significant for investors in MTAR Technologies and the broader precision engineering and clean energy sectors. The strong order book and revised revenue guidance, despite a weak quarter, indicate potential for substantial growth. Investors will monitor execution efficiency and how the company manages its expansion plans and debt. The outlook reflects positive trends in India's manufacturing and green technology sectors. Rating: 7/10.

Difficult terms: EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortisation): A measure of a company's operating performance before accounting for interest expenses, taxes, depreciation, and amortisation. YoY (Year-on-Year): A comparison of financial data from the current period to the same period in the previous year. Basis points: A unit of measure used in finance representing one one-hundredth of one percent (0.01%). 100 basis points equal 1%. Capex (Capital Expenditure): Funds used by a company to acquire, upgrade, and maintain physical assets like property, buildings, technology, or equipment. ASP (Assembly, System and Products): Refers to the integrated process of putting together components into a final product or system.