Detailed Narrative
Q2 FY26 Performance Overview
MTAR Technologies reported a moderated Q2 FY26 performance with revenues from operations at INR135.6 crores, a sequential decline from Q1 FY26's INR156.6 crores. EBITDA for the quarter stood at INR17 crores, resulting in an EBITDA margin of 12.5%, down from 18.13% in the previous quarter. Profit after tax was INR4.2 crores, compared to INR10.8 crores in Q1 FY26. Management attributed this temporary dip to prolonged tariff discussions with customers and a strategic build-up of inventory to support an expected strong second half.
Robust Order Inflow & Book
The company demonstrated significant order book growth, closing Q2 FY26 with INR1,296 crores, up from INR930 crores at the end of Q1 FY26. Post Q2, MTAR received additional orders worth INR480 crores, bringing the total order book to INR1,703 crores as of November 5, 2025. Management is highly confident in achieving a closing order book of close to INR2,800 crores by the end of FY26, driven by substantial inflows from the clean energy and nuclear segments.
Clean Energy & Hotbox Capacity Expansion
The clean energy segment is expected to deliver robust performance, with approximately INR340 crores in revenues anticipated in H2 FY26. To meet the surging demand, MTAR is undertaking a multi-phase expansion of its hotbox manufacturing capacity. The capacity will increase from the existing 8,000 units to 12,000 units by March FY26 (capex of INR35-40 crores), then to 16,000 units by September FY27, and finally to 20,000 units by March FY27 (additional capex of INR60 crores for the 12k to 20k expansion).
Nuclear Division Growth & Pipeline
The nuclear division is poised for significant growth, with approximately INR500 crores in orders for Kaiga 5 and 6 expected in November 2025. Including orders from refurbishment reactors, the company anticipates receiving about INR800 crores in total orders for the nuclear division by the end of FY26. Management confirmed that existing capacities can handle these orders with minimal additional capex of INR20-30 crores, with execution timelines ranging from 1 to 3.5 years for various packages.
Working Capital & Capex Strategy
Working capital days are currently elevated due to higher inventory levels built to support the expected doubling of sales in H2 FY26 compared to H1. MTAR aims to reduce working capital days to 220 by the end of FY26, further targeting 200 days next year and 180 days in the subsequent years. Total capex for FY26 and FY27 is projected to be over INR150 crores, with INR40 crores allocated for fuel cells and INR90 crores for oil & gas. The company plans to raise INR150-200 crores in additional debt to support growth, while existing long-term debt of INR100 crores is expected to be fully repaid within two years.
Aerospace & Defense Outlook
The Aerospace and Defense segment continues its strategic growth, engaging in key programs with leading MNC customers and domestic entities. While the current fiscal year is expected to see approximately INR100 crores less in orders, substantial growth is anticipated in coming years as first articles are completed and volume production commences. Management projects the aerospace business to reach about INR500 crores in revenue over the next 4-5 years. The company has also participated in the Expression of Interest for the AMCA project with Adani Aerospace, with the first prototype rollout planned for end of 2028.
New Growth Avenues: Oil & Gas and Fluence
The new oil and gas plant is expected to become operational by Q2 FY27, contributing to volume production. For Fluence, the battery storage program, MTAR aims to finalize a long-term agreement by Q4 FY26, with batch production commencing in H2 FY27. This partnership is projected to generate INR200-400 crores in revenue over the next 2-3 years. Additionally, the company is progressing on the semi-cryo engine, with the first hardware expected to be reported by the beginning of next year.