MTARTECHNSENovember 09, 2023

Mtar Technologies Limited

10,329words

131turns

13analyst exchanges

4executives

Download PDF ↗MTARTECH stock page →

Management on call

Srinivas Reddy

MANAGING DIRECTOR – MTAR TECHNOLOGIES LIMITED

Gunneswara Rao

CHIEF FINANCIAL OFFICER

Srilekha Jasthi

SENIOR MANAGER,

Irfan Raeen

ORIENT CAPITAL

Key numbers — 40 extracted

, MT

ock exchange and company website. I hope everybody had an opportunity to go through the same. So, MTAR has delivered a top-line growth by clocking a revenue of INR166.8 crores with a 32.2% year-on-y

INR166.8 crore

unity to go through the same. So, MTAR has delivered a top-line growth by clocking a revenue of INR166.8 crores with a 32.2% year-on-year increase. We have recorded an EBITDA of INR26.1 crores during this q

32.2%

same. So, MTAR has delivered a top-line growth by clocking a revenue of INR166.8 crores with a 32.2% year-on-year increase. We have recorded an EBITDA of INR26.1 crores during this quarter. The most

INR26.1 crore

ng a revenue of INR166.8 crores with a 32.2% year-on-year increase. We have recorded an EBITDA of INR26.1 crores during this quarter. The most important aspect I would like to discuss today is about revision i

INR670

ut revision in our guidance. We have revised our annual guidance for FY24 to a revenue for around INR670 to INR700 crores as against previous guidance of around INR830 to INR860 crores with an EBITDA o

INR700 crore

in our guidance. We have revised our annual guidance for FY24 to a revenue for around INR670 to INR700 crores as against previous guidance of around INR830 to INR860 crores with an EBITDA of around 26% plus

INR830

e for FY24 to a revenue for around INR670 to INR700 crores as against previous guidance of around INR830 to INR860 crores with an EBITDA of around 26% plus or minus 100 basis points. This is due to the

INR860 crore

to a revenue for around INR670 to INR700 crores as against previous guidance of around INR830 to INR860 crores with an EBITDA of around 26% plus or minus 100 basis points. This is due to the deferment of s

26%

00 crores as against previous guidance of around INR830 to INR860 crores with an EBITDA of around 26% plus or minus 100 basis points. This is due to the deferment of shipment plans against the confir

100 basis point

st previous guidance of around INR830 to INR860 crores with an EBITDA of around 26% plus or minus 100 basis points. This is due to the deferment of shipment plans against the confirmed orders in the clean energy

rs,

ant inflow of orders in the second half of the year from new customers as well as existing customers, which will enable us to maintain our closing order book around INR1,400 crores to INR1,500 crores.

INR1,400 crore

ers as well as existing customers, which will enable us to maintain our closing order book around INR1,400 crores to INR1,500 crores. As far as this quarter is concerned, we have witnessed around INR80 crores o

Advertisement

Guidance — 20 items

Srinivas Reddy

opening

“The most important aspect I would like to discuss today is about revision in our guidance.”

Srinivas Reddy

opening

“We have revised our annual guidance for FY24 to a revenue for around INR670 to INR700 crores as against previous guidance of around INR830 to INR860 crores with an EBITDA of around 26% plus or minus 100 basis points.”

Srinivas Reddy

opening

“This is due to the deferment of shipment plans against the confirmed orders in the clean energy sector for the next fiscal year, which has impacted our growth in the short term.”

Srinivas Reddy

opening

“However, we anticipate a healthy long-term growth as we are expecting significant inflow of orders in the second half of the year from new customers as well as existing customers, which will enable us to maintain our closing order book around INR1,400 crores to INR1,500 crores.”

Gunneswara Rao

opening

“As per the revised projections, current inventories will be sufficient to a major extent to meet the production requirements of the next quarter.”

Gunneswara Rao

opening

“We will be working on reducing net working capital days by the end of this financial year.”

Deepak Krishnan

“So why the sharp deferral in terms of revenue guidance for us?”

Deepak Krishnan

“So do we still expect that sort of number to come through?”

Srinivas Reddy

“One is, there is a deferment of roughly about 1,200 units of hotboxes to the next fiscal year.”

Srinivas Reddy

“I don't see any other reason for this correction what we have made in our guidance.”

Risks & concerns — 3 flagged

So, it's like overhead is offsetting all the impact of favorable mix that can come into it?

— Deepak Krishnan

So, if we see last three, four quarters, the margin has been weak.

— Deepesh Agarwal

I don't see any other reason, why there should not be any kind of – they've not indicated any kind of slowdown in growth, but they're also looking at placing orders based on back-to-back orders they have, and they want to move forward in that direction.

— Srinivas Reddy

Advertisement

Q&A — 13 exchanges

I just wanted to check. Because we have seen healthy growth, low energy, 37% growth this quarter, 33% YTD. So why the sharp deferral in terms of revenue guidance for us? And in terms of ordering, we had indicated INR500 crores from clean energy. So do we still expect that sort of number to come through?

Srinivas Reddy

Yeah, I'm sorry. I was on mute, actually. So basically, if you remember, Bloom Energy has shifted certain shipment plans on two counts, which is definitely not alarming. I visited them for almost three days in the US to discuss the future growth plans and the current situation. One is, there is a deferment of roughly about 1,200 units of hotboxes to the next fiscal year. The primary reason being is they wanted to correct their inventories. The reason they have mentioned is obviously because of the reduction in the transit time from 12 weeks to six weeks post-COVID era. They had to correct thei

Yeah. Good morning, sir. So, my first question is if you can help us with the number of the Yuma, Santa Cruz and electrolyzers delivered this quarter and expectation for second half and next year?

Srinivas Reddy

See, what we have done is there was a phase in and phase out of Yuma this quarter to Santa Cruz Block 1, which I've said. So, we have done roughly close to about 400 units of Yuma and 200 and odd units of Santa Cruz Block 1, which has now been revised upwards to Block 2, as I mentioned, which is the final version of Santa Cruz. That's what we have done this quarter. And moving forward, we have an indication of doing – we have to again ramp up the Santa Cruz Block 2, which is going to be there as a final version for Bloom, as I explained earlier, because of the higher power output and which is

Good morning, Mr. Reddy.

Srinivas Reddy

Hi, Jonas. Just a couple of questions. Firstly, sir, when you say that about 1,000 to 1,200 hotboxes have moved from FY'24 delivery to FY'25 delivery, so would that mean that this year we will close the year with sort of flattish? So, I think last year we did close to 4,500- 4,600 numbers. This year will be flat, is it? Yeah, see, overall, it's not about these hotboxes. Obviously, because we're differing but the change in model from Yuma to Santa Cruz, they've explained very clearly on us. and secondly, obviously, that change transition will happen over the next one to quarter. That's what we'

Thank you for the opportunity, sir. First, I would like to understand, sir, some part of the growth for Bloom in the recent quarters has been driven by most of the deals being pursued through the tripartite agreement. I think now with the interest rates almost the first thing, we have seen the gas prices getting doubled, and now we are seeing the interest rates also getting doubled almost. What we get to understand is that, the viability of these projects is not that easy for Bloom to grow through this strategy. So have you heard anything on that? Even Bloom in its con call has also mentioned

Srinivas Reddy

I don't think there is. I've been there for almost three days with Bloom, and they have said that, they're going to release the orders. The main focus was on the new model, which makes a big difference for Bloom. I don't see any other reason, why there should not be any kind of – they've not indicated any kind of slowdown in growth, but they're also looking at placing orders based on back-to-back orders they have, and they want to move forward in that direction. And they have indicated to us that things will get back to normal and the growth phase, once we ramp up on the standard we'll walk to

Good morning, sir. Sir, my question is regarding the Santa Cruz boxes. Are we the sole supplier for Santa Cruz boxes and our product is totally disrupt-free and good quality?

Srinivas Reddy

We are not a sole supplier. As I said, we hold the majority of the portion of the requirement close to 70%, I guess. I'm not too sure, but it's close to 70%. And there's another company in Taiwan which I always mention to all of you that the rest of the thing is done by them. And with regards to quality, sir, is it defect-free and good? Can you repeat that question? I'm not able to hear you well. Sir, my question is with regards to quality of Santa Cruz boxes, is it totally defect-free? Yes, absolutely. That's what I've said. We have worked with Bloom and Bloom has done a phenomenal job as wel

Hi. Good morning, sir. Congratulations. Regarding this Santa Cruz boxes, I think then going forward, we produce only this Santa Cruz version 2 or we'll produce some more hot boxes also?

Srinivas Reddy

No, as I mentioned earlier, Mr. Bala Krishna, that the Santa Cruz Block 2 will be the final version and we'll be producing only Santa Cruz moving forward. That's why I said there is a transition from Yuma to Santa Cruz and there will not be any further Yuma moving forward. Okay. And in the electrolyzer, any further orders from any other customer or we are in discussion with any other customer for supply of electrolyzers? See, electrolyzers is a completely new product as it is. And Bloom is one of the premier companies that come out with a product which has been proven in the United States as w

Yes. Good afternoon and thank you for the opportunity. Sir, my first question is that only production schedule that we expect from Bloom in this quarter and in December. So, is that -- will we get a schedule for the entire next calendar year or it's going to be for one quarter or two quarters at a time? How does this typically work, sir?

Srinivas Reddy

So, they give a clear production schedule for the current quarter and for next quarter, they indicate to us probably in the month of December. The reason being, we already have inventories lined up for whatever volumes they want to give us. In the case of inventories not being lined up, they give us ahead of time so that we can source the material. In this case, we have enough inventories lined up. So, we're expecting the schedule for the next quarter probably in the month of December. So, we are on track with that. That's how it works. Right. So, secondly, apart from the hot boxes or the – yo

Hi, sir. My question is more around the Santa Cruz boxes. So, what is our capacity at this point? And what is the kind of volume, like number of boxes that we expect to ship in Q3 and Q4?

Srinivas Reddy

See, the capacity is the same as you know. As I said, the design is different, but the assets are fungible. So, that is something which we have done. And we have made some corrections in our manufacturing process to work on the Santa Cruz. That is how the ramp-up is happening. So, we are looking at, as I said, for this quarter, we are looking at around 500-odd units moving out. Then we will have an indication from Bloom on the higher number for the next quarter. That we know by December. Because we have all the inventories already lying with us. So, we are also looking at how we are going to r

Good morning, Mr. Srinivas.

Srinivas Reddy

Good morning, Bhavin. How are you? Very well, thank you. Sir, this question is on the import substitution opportunity that we spoke some time back, like ball screws, the water lubricated screws, and the roller screws. And what our understanding is, some of these are critical parts for the CNC machines, and this is a segment which is growing very rapidly in India. And is it that are we able to get through to some of the domestic manufacturers for this, because the opportunity could be pretty significant? See, the first thing is the water lubricated bearings are used primarily in the nuclear rea

Good morning, all. Thank you for the opportunity. So, my first question. So, is there any inventory write-off between 2Q FY ‘24?

Srinivas Reddy

No, we don't have any inventory write-off. GR, can you confirm that? I don't think there's any inventory. We have not any inventory write-off. Okay. Sir, also, sir, if you look at from the last quarter to this quarter, there has been a sudden change in plan by Bloom for supply. Earlier, we were to supply the Yuma hot boxes from that plant to now supplying the Santa Cruz, which are more efficient. Now, sir, in this technology space, efficiency would be chased by these players continuously going forward also. So, how do we plan to counter this kind of sudden change in plants that we don't take a

Thank you for the opportunity, sir. Sir, my first question is on the order books. Our space and defense segment accounts for almost 18% of our order books. So, how is the execution period for them vis-a-vis execution for the pending order book and for Clean Energy?

Srinivas Reddy

So, Clean Energy is much faster. As I said, only if I -- except for this technology change in -- from Yuma to Santa Cruz got deferred, but other than that, the order turnaround time is very less. That's within the calendar year in most of the cases. And then moving forward, we have to look at it. So, space and defense, they take a lot longer. So, probably, whatever order book we have, we'll try to -- it depends on the pre-issued material. So, everything is related to the pre-issued given by the department, but there we don't have the raw material content. So, the cycle is more or less like wit

Yeah. Hi, sir. Sir, a couple of questions. One, if you can give us, because now the order book from Bloom is a little bit more, short order instead of one-year order, which we got it, say, last year this time. If you can give us some sense of the total order pipeline of, say, from Bloom, and also overall from the energy segment, the Clean Energy segment, is it the same or, say, more than 30% same time last year? Because that's the rate of growth that, we have used to grow. If you can give us some sense and flavor of that, that will help, because now we don't know how to look at our order book

Srinivas Reddy

So, Bloom has not indicated that they'll give us on a quarterly basis, but they have said that. But they want to stabilize on the Santa Cruz, version 2 or Block 2 model. Once they do that, then they'll move forward to the annual contracts as well. So, that we'll know over a period of next one to quarter. So, it is not that they'll not release orders for the entire year. But as of today, we're looking at quarter-on-quarter orders being released, but probably they will look at giving orders for the entire year once the whole thing gets stabilized. So, that's already there. It's proven, and Block

So I'd like to thank everyone for attending this call. And once again, I would like to reiterate that we are right on our growth track. It's only a temporary correction because of the technology change from certain areas of Clean Energy, which has shifted certain revenues. But we are on track with our growth plan and we are doing a lot of work. I appreciate the entire team of engineers in MTAR, who are working on some phenomenal work in R&D for the future growth of this company. And I welcome any of the investors who are willing to come and visit us and see what kind of developments we have do

Management

Speaking time

Srinivas Reddy

Moderator

Yellapu Santosh

Bala Krishna

Lokesh Maru

Gunneswara Rao

Deepesh Agarwal

Jonas Bhutta

Ashish Shah

Bhavin Vithlani

Advertisement

Opening remarks

Irfan Raeen

Thank you, Yusuf and good morning, everyone. On behalf of MTAR Technologies Ltd, I extend a very warm welcome to all participants on Q2 and H1FY24 financial results discussion call. Today on our call, we have Mr. Srinivas Reddy, sir, Managing Director and Promoter, Mr. Gunneswara Rao, sir, Chief Financial Officer and Ms. Srilekha, Senior Manager Strategy and IR. I hope everyone had an opportunity to go through our investor deck and press release that we have uploaded on exchanges and on company's website. I would like to give a short disclaimer before we begin the call. This call may contain some of the forward-looking statements which are completely based upon our beliefs, opinions and expectations as of today. These statements are not guaranteed for our future performance and involve unforeseen risks and uncertainties. With this, I would like to hand over the call to Srinivas, sir, for his opening remarks. Over to you, sir. Thank you.

Srinivas Reddy

Thank you, Irfan and hello and good morning to everyone. Thank you for taking your time to join us today. Today on the call, I'm joined by Mr. Gunneswara Rao, Chief Financial Officer, Ms. Srilekha Jasthi, Senior Manager Strategy and Operations and Orient Capital, our Investor Relation Partners. We have uploaded our updated investor deck, press release and results highlights on the stock exchange and company website. I hope everybody had an opportunity to go through the same. So, MTAR has delivered a top-line growth by clocking a revenue of INR166.8 crores with a 32.2% year-on-year increase. We have recorded an EBITDA of INR26.1 crores during this quarter. The most important aspect I would like to discuss today is about revision in our guidance. We have revised our annual guidance for FY24 to a revenue for around INR670 to INR700 crores as against previous guidance of around INR830 to INR860 crores with an EBITDA of around 26% plus or minus 100 basis points. This is due to the deferment

Gunneswara Rao

Thank you, everyone. Thank you, Mr. Srinivas Reddy. Good morning to all of you to join in this earnings call. I will take you through the financial highlights, post which we will open the floor for questions and answers. Our revenue from operations at INR166.8 crores in Q2 FY24 as against to INR126.2 crores in Q2 FY23, which translates to a 32.2% increase on a year-on-year basis. And the company also reported EBITDA of INR36.1 Crores in Q2 FY24 as compared to INR34.9 crores in Q2 FY23. There is a 3.4% increase on a year-on-year basis. profit before tax is at INR25.7 crores in Q2 FY24 as against INR33 crores in Q2 FY23, which is a 22.1% decrease on a year-on-year basis. However, which is covered by the profit after tax. Profit after tax was INR20.5 crores in Q2 FY24 as against INR24.7 crores in Q2 FY23, which led to a 17.1% decrease on a year-on-year basis. Our net working capital stands at 287 days, where there was a reduction in receivable days and inventory days. However, there is a

Advertisement

← All transcripts MTARTECH stock page →

Mtar Technologies Limited

Market Movers