Is grey mkt thrilled about mtar tech ipo?

New Delhi: Precision engineering company MTAR Technologies is all set to hit the primary market with an initial public offering aggregating to Rs 596.41 crore. The grey market is looking

thrilled about the prospects of the issue, with the premium on its unlisted shares surging rapidly, as the bulls make a comeback on Dalal Street. The scrip is trading some Rs 430-450 above

the initial public offer (IPO) price band of Rs 574-575 in the unofficial market, which translates into a 70-75 per cent premium. The IPO would be available at a P/E of 47.3 times FY21 EPS

of Rs 12.20 on an annualised basis. MTAR is looking to sell 1.037 crore shares through a mix of fresh issue and offer for sale. The bidding process for the IPO will commence on Wednesday,

March 3, and conclude on March 5, Friday. The company manufactures critical and differentiated engineered products in the nuclear, space & defence and clean energy segments, and owns

seven manufacturing facilities in Hyderabad, including an export-oriented unit. Abhay Doshi, Founder of UnlistedArena.com, said the company operates on a decent margin. “Despite aggressive

pricing, the grey market premium continues to soar, as it has no listed peer and the market is pricing in growth,” he said. You Might Also Like: “Defence and space are the key sectors of

focus for the government, which aims to increase export in them,” said Doshi. “The government has increased the foreign direct investment (FDI) limit for the defence sector from 49 to 74 per

cent,” he said.The space and defence segment accounts for 48 per cent of market share of the company’s order book, followed by the nuclear sector at 28 per cent and clean energy segment at

24 per cent.MTAR’s order book stood at Rs 350 crore as of December 2020, which was 1.6 times of its FY20 revenue. It provides healthy revenue visibility in the near term. Its client list

includes ISRO, DRDO, Rafael, NPCIL and Bloom Energy. MTAR is a key supplier of mission critical assemblies and components to customers within the space & defence segment. Through a

long-standing relationship of over three decades with customers such as ISRO and the DRDO, it operates in a very niche market. You Might Also Like: Umesh Paliwal, Co-founder, UnlistedZone,

said the company has a strong business with satisfactory growth. “It is a key player with its own moat in the specialised technology with several entry barriers to new entrants,” he said.

The company’s order book grew at 31 per cent CAGR over FY18-20. “The company derives a larger chunk of revenue from the clean energy segment, which can be a theme in the coming year,"

added Paliwal. MTAR was a sole supplier from India to US-based Bloom Energy Inc in FY20. It has been associated with BE for the last nine years. Grey market dealers said MTAR Technologies is

riding the bullish sentiments of primary and secondary markets. “Solid listing of recent IPOs like Nureca and RailTel are helping sentiment on the counter, adding fuel to the fire,” he

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