Defence Stock With ₹5,976 Crore Order Book Across Nuclear, Aerospace and Data Centres to Add to Your Watchlist
MTAR Technologies have been growing their business in recent years, expanding into new sectors such as nuclear power, aerospace, defence and fuel cells. More recently they have also entered into the data centre infrastructure market. However, is this diversified growth helping to create a sustainable business, or are they still heavily dependent on one core industry?
With a market capitalization of Rs. 18,424.23 crore, the shares of MTAR Technologies Ltd were trading at Rs. 5,953.30 per share, down 0.74 percent from its previous closing price of Rs. 5,997.55 apiece. The stock trades at a P/E of 137.38x on a consolidated basis.
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A Diversified Portfolio, but Revenue Remains Concentrated
The company is expanding its presence in segments such as nuclear power, aerospace, defence, fuel cells and recently data centres. The company has also seen good improvement in its financial performance with revenue rising 200% YoY to Rs.406.8 crore in Q2 FY27. Net profit increased significantly from Rs.4.2 crore to Rs.59.8 crore. Revenue for H1 FY27 was Rs.767.5 crore, a rise of 162.7% compared to Rs.292.2 crore in the same period last year.
However, looking at the performance of each segment:
Business Segment
H1 FY27 Revenue
Revenue Share
Clean Energy – Fuel Cells, Hydel & Others
Rs.554.7 Cr
72%
Aerospace & Defence
Rs.80.2 Cr
10%
Civil Nuclear Power
Rs.8.7 Cr
1%
Products & Others
Rs.123.8 Cr
16%
Clean Energy (Fuel cells, Hydel & others) contributed almost three-fourths of the revenues. This segment contributed 77% of the revenues in FY23, meaning that it has only lost around 5 percentage points of its dominance in the last few years of diversification.
This is reflected in the order book as well. Out of the total order book of Rs.5,976.5 crore, Clean Energy - Fuel Cells, Hydel & Others contributed around Rs.4,075.5 crore or 68.2%.
This shows that while MTAR has managed to diversify its products, it has not had much of an impact on their overall portfolio.
Data Centres Could Become the Next Growth Engine
Another newer opportunity MTAR has is its manufacturing business in Data Centre Infrastructure. The company has received orders for first articles of sheet metal parts and assemblies worth Rs.45 crore from SLB. They have also leased a dedicated manufacturing facility and are building the infrastructure.
Management expects these orders to be fulfilled over the next 6 months, with potential for larger volumes once qualified. This is a good opportunity to expand MTAR's manufacturing capabilities into a growing sector. However, the Rs.45 crore is just initial orders.
Success of this diversification will depend on whether they can secure regular production orders from the customers once they have been qualified.
Aerospace Expansion Is Beginning to Gain Scale
The aerospace and defence segment is a promising area. In H1 FY27, revenue from this segment was Rs.80.2 crore, but overall revenue for FY26 was Rs.103.8 crore. Though this shows that the business is gaining steam, it still only makes up around 10% of total revenue.
MTAR has established partnerships with global aerospace players such as GKN, Thales and Israel Aerospace Industries (IAI). The company has several programmes which are moving into high volume production after being qualified as first article. The company has also seen orders related to the AMCA programme. The company also expects opportunities from actuator assemblies for LCA Tejas Mark IA.
This is a big deal since aerospace manufacturing requires a lot of qualification and precision engineering. However, the financial gains will come from the ability to move from early development and qualification into high volume commercial production. Until then the aerospace segment will only contribute a relatively small amount compared to clean energy.
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Nuclear Orders Are Growing, but Execution Takes Time
The order visibility in MTAR’s nuclear segment has improved considerably. However, the revenue generation is limited. Recently, the company won its biggest single order for nuclear business amounting to Rs.504 crore for the Kaiga 5 and 6 projects and also received over Rs.130 crore orders in FY27 for nuclear reactor refurbishment.
However, the revenue generated from nuclear civil business was limited to Rs.8.7 crore in H1 FY27, which is about 1% of total revenues. This is due to long execution timelines in nuclear projects. Hence, the nuclear diversification should be seen from the revenue generation perspective.
Is Diversification Actually Improving Profitability?
At the consolidated level, the profitability of MTAR has improved significantly. The H1 FY27 EBITDA has increased by 305.9% to Rs.184.2 crore and EBITDA margins have increased to 24% from 15.5%. Management has also guided that revenues will grow by 80% in FY27 with EBITDA margins at 24% (+/- 1%).
However, this improvement in profitability may not necessarily be due to diversification. This could be due to higher volumes and leveraging operations. The profitability at a segment level is not available. The gross profit margin has decreased to 46.2% from 52.8%. It is therefore important to see the impact of the changing product mix on the profitability of the company.
Conclusion
Benefits are starting to be seen from the group's diversification strategy. New products, global customer base and increased aerospace revenues are being seen. Orders have also increased in the nuclear space and there are opportunities around data centre manufacturing.
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However, the group still has a long way to go. It has a large reliance on one clean energy category with 72% of revenues and 68.2% of order book.
Whilst diversification is providing benefits, there is still a lack of balance in the revenue stream. The next stage will depend on whether aerospace programmes get into volume production, nuclear orders can be converted into sales and data centres can move beyond early customer qualification.