Synopsis: MTAR Technologies Limited’s profits may be falling, but institutional investors are still showing strong interest in the stock. This has raised curiosity among many investors. Read the article below to understand why institutions are buying MTAR despite the profit decline and what it could signal for the company’s future.
MTAR Technologies Ltd, with a market capitalization of Rs. 7,689.90 crore, closed at Rs. 2,500 on Wednesday, down by 1.1 percent from its previous day’s close price of Rs. 2,527.70 per equity share.
As of Q2 FY26, the shareholding pattern shows that FIIs increased their stake from 7.57 percent to 9.21 percent, while DIIs also raised their holding from 23.51 percent to 24.81 percent, indicating growing institutional confidence in the company. But the company’s finances are declining.
Financial Outlook
The company reported revenue of Rs. 135.59 crore in Q2 FY26, which represents a 28.7 percent decline year-on-year from Rs. 190.18 crore in Q2 FY25 and a 13.4 percent decline quarter-on-quarter from Rs. 156.58 crore in Q1 FY26. EBITDA for Q2 FY26 stood at Rs. 17 crore, reflecting a 53.5 percent decrease year-on-year compared to Rs. 36.57 crore and a 40.3 percent decrease quarter-on-quarter from Rs. 28.45 crore.
Profit after tax came in at Rs. 4.59 crore in Q2 FY26, resulting in a 75.6 percent drop year-on-year from Rs. 18.78 crore and a 59.1 percent drop quarter-on-quarter from Rs. 11.23 crore in Q1 FY26. Overall, the results indicate broad-based weakness across revenue, operating performance, and profitability on both yearly and sequential comparisons.
Over the past five years, the company has delivered a revenue CAGR of 26 percent, a profit CAGR of 11 percent. A return on equity (ROE) of about 7.51 percent, a return on capital employed (ROCE) of about 10.5 percent and debt to equity ratio of 0.25 demonstrate the company’s financial position. At the moment, the company’s P/E ratio is 167x higher as compared to its industry P/E 63x.
Strong order book
One of the key reasons institutions are buying MTAR now is the company’s robust order book and visible pipeline. As of September 2025, MTAR had an order book totalling Rs. 1,296.6 crore; new orders worth Rs. 497.7 crore were added during the quarter.
Moreover, a fresh order worth Rs. 751.75 crore was added by November 2025, and management expects the total order book to rise to as much as Rs. 2,800 crore by the end of FY26. This gives a degree of revenue visibility and suggests that the drop in profits may be a temporary blip rather than a structural problem.
Diversification across multiple strategic sectors
Unlike many companies that rely heavily on one industry or one client, MTAR is diversified across several strategic verticals; defence, aerospace, nuclear power, and clean energy. That breadth helps mitigate sector‑specific risks.
With global and domestic geopolitical tensions, rising emphasis on energy transition, and governments pushing domestic capabilities in defence and nuclear sectors, institutions may be betting that demand across these sectors will remain structurally strong ; and that MTAR is well‑placed to capture a wide range of opportunities.
Clean‑energy capacity expansion signal future growth
MTAR is also leaning into clean energy and “future‑tech” related engineering; for instance, manufacturing components for nuclear and hydrogen‑based energy systems, and hot boxes and related equipment for clean energy applications.
The company plans to expand production capacity for “hot boxes” (used in clean‑energy applications) from 8,000 units per year to 12,000 by end FY26 and eventually to 20,000 per year by end FY27. For which company has planned a capex of Rs. 35 crore to 40 crore for FY26 and Rs. 60 crore for FY27. Such capacity expansion, especially in emerging sectors like clean and alternate energy, may offer a new growth engine that institutional investors find appealing, even if near‑term profitability is weak.
Debt Reduction
The company has been actively reducing its long-term debt as part of its financial strengthening efforts, bringing it down from Rs. 81 crore in FY25 to Rs. 59 crore in H1 FY26, reflecting better cash management and a focus on improving its balance sheet.
Future Outlook
Management expects FY26 revenue to rise 30–35 percent (higher than the earlier 25 percent forecast) and anticipates maintaining an EBITDA margin of about 21 percent, signalling stronger growth momentum and stable profitability outlook.
About the Company
MTAR Technologies Limited, founded in 1969 and based in Hyderabad, manufactures high-precision equipment and components for space, defence, nuclear, aerospace, and industrial applications. Its offerings include liquid and cryogenic propulsion engines, mechanical and electro-pneumatic subsystems, oilfield tools, critical nuclear assemblies, and ball and roller screws used across missiles, reactors, medical devices, and CNC machines, serving customers in India and globally.
Conclusion
Institutional investors are still buying MTAR even though profits have fallen because they see strong long-term potential. The company operates in high-entry, strategic sectors like defence, space, nuclear, and clean energy, has a rising order book, and is expanding capacity. So, despite weak short-term results, big investors believe MTAR can become an important player in India’s strategic manufacturing push.
Written by Akshay Sanghavi
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