The Rs 596-crore public issue of MTAR Technologies, a key supplier of mission-critical components to space and defence sectors, had been subscribed 10.26 times by noon on March 4, the second day of bidding.
The offer received bids for 7.45 crore equity shares against the initial public offerings (IPO) size of 72.60 lakh equity shares, the subscription data available on exchanges showed. The IPO size has been reduced to 72.60 lakh shares from over 1.03 crore shares after the closing of the anchor book through which the company raised Rs 179 crore.
The portion reserved for retail investors has been subscribed 16.54 times and that of non-institutional investors 8.04 times, while the qualified institutional buyers have put in 96 percent bids against their reserved portion.
The MTAR Technologies IPO opened for subscription on March 3 with a price band at Rs 574-575 per share and will close on March 5. The issue comprises a fresh issue of Rs 123 crore and an offer for sale of Rs 473 crore by promoters and investors.
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The company will utilise net fresh issue proceeds and pre-IPO placement money for debt repayment, working capital requirements and general corporate purposes.
Incorporated in November 1999, MTAR Technologies is a leading precision engineering solutions company engaged in the manufacture of mission- critical precision components with close tolerances, and in critical assemblies. The company primarily serves customers in the nuclear, space and defence and clean energy sectors.
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"On the valuation front, at the upper price band, the company is valued at 56.5x P/E based on FY20 numbers considering the diluted equity shares which is aggressively priced. While comparing on apple to apple basis, the company has no listed peers," BP Equities said.
"However, the company’s wide product portfolio catering to customers in diverse segments and surplus order book of Rs 336 crore (December 2020) will enable to leverage its overall operating efficiency in upcoming years. Considering all these factors, we give a subscribe rating on this IPO issue for the long term," the brokerage added.
As on December 2020, the company’s major product portfolio included three kinds of products in the clean energy sector, 14 kinds in the nuclear sector and six in space and defence sectors.
The company is involved in the manufacture of power units, specifically hot boxes, and in the development and manufacture of hydrogen boxes and electrolysers, to serve Bloom Energy.
The company's income has increased at a CAGR of 16.56 percent during the last three fiscals, from Rs 160.55 crore in FY18 to Rs 218.14 crore in FY20. The EBITDA has grown at a CAGR of 37.80 percent from FY18-FY20.
"At the upper price band of Rs 575, the stock is valued at 47.26x FY21E EPS of Rs 12.17 (based annualize latest earnings and on diluted basis). We recommend subscribing to the issue from a long-term perspective," Asit C Mehta said.