MTAR Technologies: Navigating Q2 Dip for a Stronger H2 FY26

MTAR Technologies Limited, a leader in critical and differentiated engineered products, has released its Q2 and H1 FY26 financial performance, showcasing a mixed bag of results but with a strong forward-looking outlook. While the second quarter saw a temporary dip in key financial metrics, the management remains highly confident about a robust second half, driven by significant order inflows and strategic capacity expansions. The company has even revised its revenue growth guidance for FY26 upwards, from an initial 25% to an impressive 30-35%, signaling strong underlying momentum.

For Q2 FY26, MTAR Technologies reported consolidated revenue from operations of INR 135.6 crore. Gross Profit stood at INR 69.4 crore, translating to a Gross Profit margin of 51.2%. EBITDA for the quarter was INR 17.0 crore, with an EBITDA margin of 12.5%. Profit Before Tax (PBT) came in at INR 5.7 crore (4.2% margin), and Profit After Tax (PAT) was INR 4.2 crore (3.1% margin). The management attributed the Q2 dip primarily to prolonged discussions on tariffs with customers, which led to delayed dispatches for approximately three to three and a half weeks. However, these issues have been resolved without impacting the company's long-term margins or bottom line.

For the first half of FY26 (H1 FY26), the consolidated revenue from operations reached INR 292.2 crore. Gross Profit was INR 154.3 crore (52.8% margin), and EBITDA stood at INR 45.4 crore (15.5% margin). PBT for H1 FY26 was INR 20.5 crore (7.0% margin), and PAT was INR 15.1 crore (5.2% margin). Despite the Q2 moderation, the company's H1 performance sets the stage for a significantly stronger second half.

Financial Snapshot: Q2 & H1 FY26 Consolidated Performance

Strategic Growth Drivers and Capacity Expansions

MTAR Technologies' confidence in its future performance is underpinned by robust order inflows and strategic capacity expansions across its diversified portfolio. The company's order book closed at a strong INR 1,296.6 crore as of September 30, 2025, with an additional INR 480 crore worth of orders received post-Q2. Management anticipates the closing order book to reach approximately INR 2,800 crore by the end of FY26, a substantial increase from the previous year.

The Clean Energy segment continues to be a significant growth engine. The hotbox division, catering to the solid oxide fuel cell (SOFC) industry, is undergoing a major capacity expansion. The company plans to increase its capacity from the existing 8,000 units to 12,000 units by March, with a further expansion to 16,000 units by September next year, and ultimately 20,000 units by March FY27. This expansion, backed by an estimated capex of INR 35-40 crore for the initial phase, is purely demand-driven, as customers plan to double their manufacturing capacity to 2 gigawatts by 2026. In the Civil Nuclear Power vertical, MTAR expects to receive around INR 500 crore in orders for Kaiga 5 and 6, along with additional orders from refurbishment reactors, totaling approximately INR 800 crore in FY26. This is expected to drive significant growth from FY27 onwards.

The Aerospace & Defence segment is also gaining momentum. MTAR has commenced batch production for new products for key customers like GKN Aerospace, Rafael, Elbit, and Thales. First articles execution is in progress for Weatherford and IAI, which are expected to be major revenue drivers from FY26. The company has also participated in the Expression of Interest (EOI) for the Advanced Medium Combat Aircraft (AMCA) project in partnership with Adani Aerospace, a long-term strategic move for the Indian aerospace industry.

In the Oil & Gas sector, MTAR is establishing a dedicated facility, with volume production expected to ramp up from the next fiscal year, once the new plant becomes operational by June 2026. Furthermore, the company is working on prototypes for the Fluence battery storage program, with a long-term agreement expected by Q4 FY26 and batch production commencing in the second half of next year, projecting INR 200-400 crore in revenue over the next 2-3 years.

Segmental Revenue Contribution (Q2 FY26)

Financial Discipline and Outlook

Despite the temporary dip in Q2, MTAR Technologies maintains its annual EBITDA margin prediction at around 21%, supported by improved operating leverage and higher capacity utilization in H2. The company is actively managing its working capital, which is currently elevated due to inventory build-up for the strong second half. Management aims to reduce working capital days to around 220 by year-end, emphasizing sustainable and healthy growth. Cash flow from operations improved significantly to INR 39.8 crore in H1 FY26, a positive indicator of financial health.

MTAR Technologies is clearly focused on disciplined growth, strategically investing in capacity expansions and new projects across its diversified portfolio. The upward revision in revenue guidance and the robust order book underscore the management's confidence in executing its growth strategy and delivering exceptional performance in the coming quarters and years. The company's commitment to 'Building Nation with Exceptional Engineering' continues to translate into a strong and forward-looking business trajectory.