MTARTECHNSEQ3 FY24February 14, 2024

Mtar Technologies Limited

10,073words

145turns

13analyst exchanges

4executives

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Management on call

Srinivas Reddy

MANAGING DIRECTOR – MTAR TECHNOLOGIES LIMITED

Gunneswara Rao

CHIEF FINANCIAL OFFICER

Srilekha Jasthi

SENIOR MANAGER,

Parth Patel

ORIENT CAPITAL

Key numbers — 40 extracted

INR118 crore

ctor, which had a significant impact in this quarter. Because of which, we clocked the revenue of INR118 crores, 26.1% decrease year on year. The impact is more than expected as supply chains of Bloom Energy

26.1%

a significant impact in this quarter. Because of which, we clocked the revenue of INR118 crores, 26.1% decrease year on year. The impact is more than expected as supply chains of Bloom Energy in clean

INR610 crore

this quarter as well. In FY24, based on the current scenario, we might record revenues of around INR610 crores around that number, which is marginally higher than the revenues of FY23, which was around INR

INR573 crore

ores around that number, which is marginally higher than the revenues of FY23, which was around INR573 crores. The company has also witnessed a reduction in EBITDA in the quarter because of lower operating

24%

technical and FIM-related issues. And we might end up with an overall EBITDA of 24% for this financial year. While the unprecedented events caused a significant impact to our top

45%

ant impact to our top line and bottom line growth in FY24, the growth in FY25 remains intact with 45% -50% increase in revenues year on year basis. And we will be maintaining an EBITDA of about 26% f

50%

mpact to our top line and bottom line growth in FY24, the growth in FY25 remains intact with 45% -50% increase in revenues year on year basis. And we will be maintaining an EBITDA of about 26% for th

26%

h 45% -50% increase in revenues year on year basis. And we will be maintaining an EBITDA of about 26% for the next financial year as well. In Clean Energy, we have received orders to tune of INR264 c

INR264 crore

bout 26% for the next financial year as well. In Clean Energy, we have received orders to tune of INR264 crores in Q3, mainly for the Santa Cruz hot boxes. And we are still holding an order for Yuma for abo

INR184 crore

n Q3, mainly for the Santa Cruz hot boxes. And we are still holding an order for Yuma for about INR184 crores-INR185 crores, which Bloom will decide to amend it to Santa Cruz. That decision will be taken by

INR185 crore

or the Santa Cruz hot boxes. And we are still holding an order for Yuma for about INR184 crores-INR185 crores, which Bloom will decide to amend it to Santa Cruz. That decision will be taken by the end of th

100 megawatt

ook, which they're trying to work on enhanced power capacity to about, as I mentioned, from 75 to 100 megawatts. So that's what they're looking at moving forward. So in civil nuclear power segment, we have

Guidance — 20 items

Srinivas Reddy

opening

“The company has also witnessed a reduction in EBITDA in the quarter because of lower operating leverage in export segment and schedule slippage of some projects in space segment, especially in the Semicryo engine (03:32) project, which we are working on due to technical and FIM-related issues.”

Srinivas Reddy

opening

“While the unprecedented events caused a significant impact to our top line and bottom line growth in FY24, the growth in FY25 remains intact with 45% -50% increase in revenues year on year basis.”

Srinivas Reddy

opening

“And we will be maintaining an EBITDA of about 26% for the next financial year as well.”

Srinivas Reddy

opening

“That decision will be taken by the end of this year.”

Srinivas Reddy

opening

“Semicryo engine project, as I mentioned earlier, is supposed to be executed in this fiscal year.”

Srinivas Reddy

opening

“It's postponed to the first half of next year because of various design changes and also the FIM issues.”

Srinivas Reddy

opening

“Gunneswara Rao, will be providing a detailed financial outlook later on, I would like to briefly discuss about our cash flows.”

Gunneswara Rao

opening

“Wherever possible, we will try and reduce working capital days, improve the payable days, and try to achieve the working capital target, reduction in the working capital days.”

Srinivas Reddy

“The next quarter we are doing 664 and it's getting back to complete normalcy by end of Q4.”

Srinivas Reddy

“But the growth outlook for next year, we have taken a very conservative estimate of around 3,500 units of Santa Cruz units for the entire financial year.”

Risks & concerns — 1 flagged

And even there's a lot of pressure from the government or the corporation to speed up the activities.

— Srinivas Reddy

Q&A — 13 exchanges

Thank you for the opportunity, sir. I have two questions. First, what is the comfort that the supply chain issues with regard to the transition of the hotboxes should get materialized or get over by the end of this quarter one? And second thing of the INR185 crores of hot boxes to be to be executed. What are the timelines? Thank you.

Srinivas Reddy

Good morning, Santosh. Basically, the Santa Cruz Block 2 has been a complete change of product line from Yuma to Santa Cruz. We as a company are geared up to address volumes. We have the capacities, the facilities to do it. We have the know-how to do it. But the related supply chains also have to gear up. So we have done 500 odd hot boxes this quarter. The next quarter we are doing 664 and it's getting back to complete normalcy by end of Q4. So this is a transition phase of two quarters, which I mentioned, which might get affected. But the growth outlook for next year, we have taken a very con

Hi, good morning sir. Revenues on nuclear power [inaudible 17:57] how much orders you are expecting from Kaiga 5 and 6?

Srinivas Reddy

We're expecting on a conservative basis, at least about INR500 crores because the price bid they said it's getting opened either in February or March. It got delayed because of the evaluation process with the NPCL took some time. And once it's done, then we get the subsequent orders from the companies which are big for it, where we are qualified to do the major portion of those mechanical SMEs for them. And that must be close to about INR500 crores now. And so just a follow up on this, what could be the execution timeline, sir? This is the execution of this INR500 crores order? The entire proj

Thank you, sir, for the opportunity. My question is, the revenue impact that we have seen this quarter, is it that we have lost some business to a competitor? Or is it an inventory correction, sort of a thing? Or there is an underlying demand impact? If you can categorize into one of these buckets?

Srinivas Reddy

See, basically, it is not losing business to the competitor at all. It is one was, I've said earlier, it's one was the inventory correction they've done. But more, the reason is, more the reason is a change of product line, from Yuma to Santa Cruz. All of you should understand that I've said it will take two quarters. But all the other supply chains also have to gear up. So the primary reason is that. And once it is done, in fact, some of the bought outs, were even airlifted by, which Bloom has borne the cost for airlifting those parts, to adhere to the delivery schedule. So the issue here is

Hi, sir. I think you can hear me fine. I just want to understand from a product perspective or from our contribution perspective, does it make any difference whether it is Santa Cruz or Yuma, or we are basically doing a similar size of work, just that the feel about the boxes, that it's largely different?

Srinivas Reddy

It is different, Deepak, for sure. Definitely, there is a difference. That's the reason why I said to ramp up, to do it, it takes a couple of quarters. So as NPR is concerned, we are already geared up for that. The supply chain activities, like some of the boxes were also airlifted by Bloom to adhere to their requirements for this quarter. And it's happening even in the current quarter as well. But by the end of this quarter, I think all the supply chain activities for the new model will get stabilized. Absolutely. And we are very clear about it. And we'll be back to normal. So what I would li

Yes, my questions have been answered. I'll get back to the queue.

Management

Yes, good morning, sir. Am I audible?

Srinivas Reddy

Absolutely. Go ahead. Sir, you mentioned that Keeylocko thing is not included in your revenue guidance. Is that the right understanding? Absolutely, yes. So basically, I just want to understand. You have mentioned about the inventory in the presentation for the raw material and WIP, which is like there. So how much of this could be fungible for this to be shifted into your Santa Cruz and this other thing, Santa Cruz as a model? Because there can be some inventory related write-off also, right? Is that the right understanding or how is it to be… It is absolutely right understanding. Part of the

The first question is on our order book. So this 1200 CR order book, so what is the expected execution period for the same?

Srinivas Reddy

So as I said, we're going to about INR900 crores of orders for next year, right, the revenue. So more or less, plus what we're doing currently, we are expecting some more orders next year. So almost like 35% of that would be executed for the next year.

Thank you, sir, for giving me opportunity. Basically, I wanted to know the department of the order. How long it will take? As you said, it will take around one to two quarters. I mean, is it coming FY24 end or is it coming to FY25?

Srinivas Reddy

Which one? Order book from Bloom. Yes, order book from Bloom. What is the question? Can you repeat? So as you said that some order book has been deferred for the next year, right? So does it come towards the end of FY24 or will it come in FY25? So that's what I said. You know, in FY25, we have taken an estimate of around INR300 crores for the hotbox division. It's roughly around 3,500 units. So it's back to normal. And whatever executions we do, what is getting deferred, we'll get executed and the upside to it, as soon as Bloom informs us, we'll have the upside to it. But we have not taken tho

Yes. Just you've explained, you know, I think the revenues for this year and next year quite in detail. Just wanted to understand on the promoter's stake, you know, there's been consistent selling. Just wanted to understand, is there any method to this? Would you continue to hold your stake at these levels? Because I think progressively it has come down. So just wanted to understand what is the view from the promoter's side?

Srinivas Reddy

See, basically, I don't have any control over it. But what I can say is that frankly, I have not sold any shares. I hold the highest number, almost the highest. I'm in the top two shareholders in the company. I truly believe in this company. The promoters also truly believe in this company, for sure. But they're all diversified promoters. It's a 50-year-old company. And they are different professions, living in different parts of the world. But I think the promoters getting into the market will come down drastically moving forward. That's what the information I have. And definitely, I will be

Thanks for the opportunity, sir. Could you please update on this defense license product, sir? Have you developed any new products? And whether we have received any orders against this defense product?

Srinivas Reddy

It's too early to say that because we just received the license. We are working on a lot of -- our R&D team is working on a lot of products which make sense for us. We are working on it. As and when we make a progress, we'll definitely let you know about it. But definitely, there is a lot of activity going on out there as well. Okay, sir. And secondly, on this, you've got substrate products like elbows and bar screws. So how's the traction on this? And do we have any incremental orders from the government? We will get to those orders. For example, the roller screws. No one in the country has d

Thank you, sir. Couple of questions, sir. First, I would like to understand, of the 3,500 hotboxes or the INR300 crores hotbox related revenues that we are guiding for next financial year, which variant should be contributing how much?

Srinivas Reddy

I've taken only Santa Cruz as of now, Santosh. I've said that very clearly. As of today, I've taken only Santa Cruz. Any other design development, anything happening upside, including electrolyzers, that is an upside. I have not considered any of those things. And this I've done because unless I was 100% sure of the number, I've not taken any of those assumption numbers for next year. And secondly, on the electrolyzers part, if I am not wrong, I think for last five, six quarters, we're working at different stages on the electrolyzers part. Despite such a big opportunity and Bloom claiming to b

Yes. Thank you for the follow-up opportunity. So, if you look at the non-clean energy segment, so in FY23, the revenue was about INR90 crores. And what you are guiding for FY25 is about INR450 crores of revenue from that non-clean energy segment, which includes space, defense, and the product segment. Incrementally, about INR360 crores, they are getting in two years from that particular bucket. So, what is one particular product that is contributing to such a high increase in these revenues?

Srinivas Reddy

Yes. So, that's exactly what I said. Yes. You're absolutely right. That's a very good question. See, what exactly I've said earlier also is that we have done a sizable amount of work with various customers in different segments over the last one year. And to come to this level of enhancing our revenues in different segments, I'll give you the break-up roughly also. And that's why your Hot Boxes division, because of this enhancement of revenues from other segments, which is very important for the company as well, as per our strategy, the Hot Boxes division, when I said INR300 crores, is roughly

Thank you all for attending this earnest call. It was very important for us as a senior management team to address all your concerns. And I hope we have addressed all your concerns about MTAR. You should not be concerned at all. Our worst phase is done. It's purely because of the product line change, what I've explained earlier, certain things for external factors. But we are back on track and whatever guidance we're given for the next quarter or the next year, we have taken in a very conservative manner with the experience what we had in the last two quarters. But I will assure all the invest

Management

Speaking time

Srinivas Reddy

Utkarsh Maheshwari

Moderator

Bala Krishna

Abhijeet

Deepak Krishnan

Yellapu Santosh

Mithun Aswath

Santosh

Gunneswara Rao

Opening remarks

Parth Patel

Thank you, Tushar and good morning everyone. On behalf of MTAR Technologies Limited, I extend a very warm welcome to all participants on Q3 and nine-month FY24 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, Ms. Srilekha Jasthi, 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 the 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

Hello and good morning to everyone. Thank you for taking the time to join us today. Today on the call, I'm joined by Mr. Gunneswara Rao Pusarla, Chief Financial Officer and Ms. Srilekha Jasthi, Senior Manager Strategy & Operations, and Orient Capital, our Investor Relations partners. We have uploaded our updated investor deck, press release and results highlights on the stock exchanges and company website. I hope everybody had an opportunity to go through the same. As you're aware, we have revised our earnings guidance in the last earnings call due to deferment of shipments in the clean energy sector, which had a significant impact in this quarter. Because of which, we clocked the revenue of INR118 crores, 26.1% decrease year on year. The impact is more than expected as supply chains of Bloom Energy in clean energy segment vertical are yet to stabilize due to the transition from one product line to the other, from Yuma to Santa Cruz Block 2. Normalcy is definitely expected to be restor

Gunneswara Rao

Thank you, Mr. Srinivas Reddy. Good morning, everyone, and a warm welcome to our earnings call. I will take you through the financial highlights, post which we will open the floor for the questions and answers. As discussed by our MD, our top line and bottom line were impacted primarily due to the deferment of export shipments in clean energy because they are transitioning from the one variant to another variant, which is Yuma to Santa Cruz Block 2. So that has impacted our bottom line and top line. And in case of our revenue from operation is INR118.4 crores in Q3 FY24, as against INR160.2 crores in Q3 FY23. We have registered an EBITDA of INR23.9 crores in Q3 FY24, as compared to INR45 crores in Q3 FY23. Profit before tax stands at INR12.9 crores in Q3 FY24, as against INR42 crores in FY23. Profit after tax is at INR10.4 crores in Q3 FY24, as against INR34.4 crores in Q3 FY23. All the numbers were negative because of the lower revenue that is due to clean energy sector export orders

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