Shares of MTAR Technologies gained as much as 100 per cent on its stock market debut on Monday. The stock touched a high of Rs 1,155 apiece and a low of Rs 1,040 on the NSE, where Rs 1,638 crore worth of shares changed hands. It ended the session at Rs 1,078, with an 87 per cent gain over the issue price of Rs 575.
At the closing price, MTAR had a market capitalisation of Rs 3,317 crore. The strong listing follows a blockbuster initial public offering (IPO), where demand had exceeded supply by 200 times.
After Monday’s sharp run-up, analysts said IPO applicants could take money off the table.
“At the IPO price, the company was valued at a P/E (price-earnings) multiple of 49.1 times FY20 earnings, which was reasonable considering the growth prospects.
However, at the current market price, the stock is trading at P/E multiples of 95.3 times, which is expensive and captures near-term growth potential, thus, leaving very little upside from current levels. Hence, we would recommend to book profits at current levels,” said Jyoti Roy, deputy vice president – equity strategist, Angel Broking.
MTAR is an engineering solutions company that manufactures precision components. It primarily caters to the clean energy, nuclear and space and defence sectors. Indian Space Research Organisation (ISRO), Defence Research and Development Organisation (DRDO), Nuclear Power Corporation of India, Bharat Dynamics, and Hindustan Aeronautics are some of its clients.
The company’s Rs 596-crore IPO comprised a fresh fundraise of Rs 123 crore and secondary share sale worth Rs 473 crore. It plans to use the proceeds to repay debt and for working capital needs.
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