MTAR technologies order book will stand around Rs 700-800 crore by the end of the year: Srinivas Reddy

Srinivas Reddy, Managing Director, MTAR Technologies Limited, talks about Q4FY21 numbers, growth drivers, the impact of COVID, order book and client addition among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts: 

Q: Q4FY21 has been a good quarter for you. Please run us through the key highlights and do you think that the performance is sustainable in the future as well?

A: It will be sustainable. Growth has come in each of our segments, i.e. space, defence and nuclear on the domestic side. We are doing good in terms of exports as well. So, the performance will definitely improve in FY22 in spite of the COVID related issues. We have planned things in a better manner on the supply-chain side, so the performance will remain good in the future as well.          

Q: In terms of growth drivers, you said that growth has been good in every vertical. Please can you provide the breakup and where the prospects are stronger and what were the most important growth drivers? Also, what is your outlook on the margins and will there be any improvement in terms of profitability? COVID has had some impact in the first two months of Q1FY22. So can we see that it will have some impact in the first quarter?

A: Definitely, COVID will have some impact in the first quarter. But we had planned on the supply chain side and operations didn’t stop but we had to reduce our shift hours because of the lockdown conditions. But still, we were able to meet our goals in spite of the COVID related issues. As far as the growth drivers are concerned, nuclear growth is growing well and in space also we are doing pretty well. Clean Energy will be exported a lot in the first quarter and even in the subsequent quarter also our order book is of Rs 415 crore as of March 31, 2021. We are completely booked with our orders for the current year also and the orders that we will get in Q3 and Q4. So, we have a very-very strong order book for FY23 as well. So, we are going in the right direction and as far as the raw material is concerned, supply chain issues, we have signed contracts for those in the advance. So, the impact of the cost increase will not be there. So, the guidance for FY22 in spite of the COVID issues will show a revenue growth of 30-35% in FY22 with margins being maintained at the same level, if not 50-100 basis points higher.

Q: Tell us about the new orders that you received in the fourth quarter and where does the total order book stand at? What is the revenue growth visibility from the current order book? What can be the quantum of the new orders about which you are talking? 

A: The orders we have in hand; we are completely covered for the current year. And, the orders that are about the come, we are expecting at least 2X of the current FY22 that we will do. So, we are expecting substantial orders from the nuclear segment and space as well and the clean energy also. So, the overall order book will be much higher than what we are seeing as on March 31 of FY22, at least, close the revenues of FY22 about 1.6 times of the order book what we have to maintain by the end of this year. So, more tenders have been leased in the nuclear segment for freight reactors and we have already received the tenders. Since there has been a lockdown and in Mumbai, everyone knows that there were issues related to lockdown. So, we are expecting major orders flowing in Q2, Q3 and Q4 for the big way. So, we are expecting a very-very strong order book by the end of this year.

Q: What is the percentage jump just to give us a sense of what is the current order book and how are you seeing this two times, three times? What is the current number of the order book?

A: the current number is around Rs 400 crore plus. In Q1, there has been a lockdown and we have been able to be L1 in a number of projects and a lot of specific projects are under finalisation. So, if you are looking at the order book number for the end of the year, we expect at least 2X of the current FY22 revenue. So that is somewhere around Rs 650 to Rs 700 crore of the order book that we should have at the end of this year.

Q: Maximum of the orders is coming from Nuclear is this what you said?

A: We will be getting maximum orders from nuclear because freight reactor orders have been released. In space, we already have the orders finalised just official purchase orders are awaited because of the lockdown official orders are expected to come by July. In clean energy, numbers are going up, almost like 50% and we will get major orders, which are released every six months by the customers which will happen in Q2. So, overall, if you look at it, after taking care of FY22, we will have a closing order book of at least Rs 700 to 800 crore approximately, if everything goes well over the next 8-9 months.

Q: Have you been able to add any new clients in this quarter? What is the current revenue dependency on your biggest client Bloom Energy?

A: It’s not about dependency on Bloom Energy. Our new certifications have been received and it has been announced, which is definitely required for very big MNC companies from the US and Europe. We have already been certified, so we are expecting a lot of new customers in the new business that we will start and we have started prototypes with some of the customers. During the course of the year, customer diversification will happen. With regards to Bloom, we are not depending on just one product and we are introducing two more products Hydrogen units and electrolysers. The prototype has been established and batch production has started. By the end of this year, we will ramp up the other two product lines also. So, we are expecting a good ramp up and traction from those products as well.