After a 15% drop in 2024 YTD, why InCred Equities is bullish on MTAR Technologies, sees 42% upside potential

livemint.com:

₹2,644."MTAR Technologies is a precision machining company with exposure across niche sectors like fuel cells (for Bloom Energy), nuclear, defence, and space. Rising power costs in the US due to grid problems, coupled with the rising cost competitiveness of Bloom Energy, will result in significant tailwinds for MTAR. We value the stock at 45x FY26F EPS to reach our target price of ₹2,644.

Initiate coverage on it with an ADD rating," said the brokerage.InCred forecasts that MTAR is likely to register a 41 percent topline growth over FY24-26F, with margin improvement by roughly 500 bps due to operating leverage kicking in. Moreover, going ahead, even if Bloom Energy (MTAR’s largest client) misses its consensus revenue estimates for CY26F by 5 percent, it will only have a 10 percent negative PAT impact on MTAR, owing to its ramp-up in other revenue segments, thus providing a reasonable margin of safety. The brokerage expects MTAR to register an 80 percent PAT CAGR over FY24-26F.The stock has shed 4.5 percent in the last 1 year and 15 percent in 2024 YTD.

This year so far, the stock has given negative returns in 4 of the 6 months. While it rose 3.5 percent in June till now, it had lost 4.5 percent in May. Meanwhile, in April, the stock jumped 12 percent.

Before that, the stock was in the red for 6 straight months between October 2023 and March 2024, crashing almost 34 percent in this period. In the first 3 months of 2024, the stock fell 12 percent in March, 8.8 percent in February and 5 percent in January.The stock had hit its record high of ₹2,920 on September 11, 2023, and its 52-week low of ₹1,601 on June 4, 2024. Currently trading at ₹1,862.65, the stock is over 36 percent away from the peak and has risen over 16 percent