Ladies and gentlemen, good day and welcome to the MTAR Technologies Limited Q2 H1 FY26 earnings conference call. As a reminder, all participants' lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Parth Patel from MUFG. On time. Thank you, and over to you, sir.
Thank you. Good morning, everyone. On behalf of MTAR Technologies, I extend a very warm welcome to all participants in Q2 and H1 FY26 earnings discussion call. Today on our call, we have Mr. Srinivas Reddy, Managing Director and Promoter. Mr. Gunneswara Rao , Chief Financial Officer. Ms. Srilekha Jasthi , Head Strategy and IR. I hope everyone had an opportunity to go through our investor deck and press release that we have uploaded on the exchanges and 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 belief, opinion, and expectations of today. The 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 Mr. Srinivas sir. Over to you, sir.
Hello and good morning to everyone. Thank you for taking the time to join us today. Today in the call, I'm joined by Mr. Gunneswara Rao , Chief Financial Officer, Ms. Srilekha Jasthi , Head Strategy and Investor Relations, 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. To begin with, in Q2, we have recorded revenues of 135 crores with 12.5% EBITDA, and we are looking forward to a very strong second half, almost 2x of the sales done in the first half, with a revised guidance of 30%-35% increase in revenues for FY26 compared to our initial guidance of 25%, which is driven by robust order inflows scheduled for execution within the fiscal year.
While there is a temporary dip in EBITDA in this quarter, this is a short-term phenomenon, as we expect a strong performance in the second half of FY26, which is clearly indicated by the kind of orders which have come in, which have to be executed within this fiscal year itself. Our annual EBITDA margin is projected to remain around 21%, in line with our initial guidance, supported by improved operating leverage and higher capacity to play H2. Notably, the order book we have closed at 1,296 crores at the end of Q2 compared to 930 crores at the end of Q1, and further, we have received orders worth 480 crores post-Q2 as of date.
Based on the expected inflow of orders during the year, financial year FY26, we are expecting a closing order book of close to INR 2,800 crores by the end of the year, which is a substantial increase compared to last year, based on the additional orders coming in from clean energy segment, nuclear space, etc. We expect a robust performance in the clean energy segment, in fuel cell vertical itself, in the second half of FY26, with revenues of approximately INR 340 crores anticipated during the previous. The Solid Oxide Fuel Cell SOFC industry continues to witness strong growth momentum, with the customer announcing plans to double its manufacturing capacity to 2 GW by 2026, supported by large-scale deals with various customers.
Based on this, we have already planned the required expansion plans for the Hot Box division, from the existing 8,000 units to about 12,000 units by the end of March, which is a substantial increase. And further expansions are being planned for additional up to 16,000 units by September of next year, and by March of next year, to go up to 20,000 units capacity for this particular division. These expansions are purely based on the kind of orders we are receiving and the forecast we have for the subsequent years as well. The much-anticipated PHWR orders are expected to be received in the coming weeks, totaling to approximately around INR 500 crores for Kaiga 5 and 6, where all the details have been finalized, and the POs are expected anytime during this month itself.
The execution schedule over the next three years with various packages that we are going to work for Kaiga 5 and 6, and this is the highest order that we have received, which we are going to receive in this month for the nuclear division. So based on this, from FY27 onward, this vertical is expected to record significant growth backed by a strong pipeline of all these new orders. And also, the orders are expected from the refurbishment reactors of five reactors being refurbished, where tenders have been floated, and we have participated in all such tenders in the recent past. And we expected these orders would be expected within this financial year from the refurbishment reactors as well.
We should end up with close to about additional, overall, about INR 800 crores of orders kicking into the company by the end of the year in the nuclear division itself. In the aerospace and defense segment, the company continues to follow a strategic growth path, engaging in key programs with leading MNC customers and domestic defense entities as well. As you are all aware, we have also participated in the recent AMCA Expression of Interest, aligned with our long-term strategy. We have also initiated discussions with new global OEMs and expanded program engagements with existing aerospace partners as well. We are definitely in line with the development of various first articles, and some of them have also gone into volume production during the course of this year.
We are witnessing a notable margin improvement in this vertical as well and expect to execute close to about INR 100 crores plus worth of orders in this vertical during the current financial year. And the momentum of this, with the completion of the first articles for the various projects that we are doing, there will be a substantial growth happening in the coming years as well. In addition to this, the company expects a robust performance across the products and other verticals as well, with annual revenue exceeding about INR 100 crores in this products vertical as well during the current financial year. And moving forward, the products vertical as well will show a substantial improvement in terms of revenues based on the kind of orders we have received in the recent past.
We are also clearing the first articles to our oil and gas division, Weatherford in Q2, and the volume production is expected to ramp up from next fiscal year once the new oil and gas plant becomes operational by June 2026. With strong order visibility across multiple sectors, the company is well positioned to accelerate its growth over the next two to three years. We remain enthusiastic about the new opportunities and challenges that lie ahead as we continue to capture this growth momentum. While working capital days are currently elevated due to higher inventory levels built to support purely the expected growth in Q3 and Q4, which is almost 2x of sales compared to the first half, the company anticipates reducing them to around 220 days by the end of this fiscal year.
This improvement will be driven by current efforts to streamline inventory management amidst the strong growth of the company, which is poised to witness. We continue to closely monitor working capital and cash flow management to ensure sustainable and healthy growth as revenues expand across all business verticals. Now, I would like to hand over to our CFO, Mr. Gunneswara Rao. He will discuss in detail on the financial performance for Q2 FY26. Over to you, Gunnes.
Okay. Thank you, Mr. Srinivas Reddy. Good morning, all. Thank you for joining us over the earnings call. I'm going to take care of quarterly performance, Q2 FY26 versus Q1 FY26. Our performance is moderated. That is due to inventory build-up for the next two quarters. So revenue from operations stood at INR 135.6 crores in Q2 FY26, as against INR 156.6 crores in Q1 FY26. EBITDA reported at INR 17 crores in Q2 FY26, as compared to INR 28.4 crores in Q1 FY26. Profit before tax stands at INR 5.7 crores in Q2 FY26, as against INR 14.8 crores in Q1 FY26. Profit after tax was INR 4.2 crores in Q2 FY26, as against INR 10.8 crores in Q1 FY26. So I just want to discuss the working capital days. As our MD has already highlighted, we wanted to bring down to 220 days.
Present higher working capital days due to the inventory WIP build-up for the next two quarter revenue forecast, which is almost 2x of the first half of the year. Whereas in absolute terms, the working capital is reduced by 21 crores compared to the last quarter. Though the number of days were higher, the absolute working capital is lower by 21 crores. So we remain committed to improving this further and are targeting to 220 days by the end of FY26. Other positive sign is the cash flow from operation improved significantly to 39.8 crores compared to the - 1 crore in the previous quarter. We expect this momentum to continue and are confident of surpassing last year's full-year cash flow performance.
The order book position of the company as of 30th September 2025 stood at 1,297 crores, whereas as of 5th November , it was 1,703 crores, which is already disclosed to stock exchanges. Recent orders, whatever we have received. We expect a strong acceleration in order inflow during the second half of the quarter and remain committed to sustainable growth. Our outlook and strategic priorities in the company, immediately the company wanted to achieve the turnover 2x in the second half of the year. And as you all know, our customer is increasing their capacities in the fuel cells domain. So we expect a significant growth in this sector and also civil nuclear power. In case of civil nuclear power, as our MD told, we are going to receive around 500 crores of orders in this month. Almost everything is finalized. It is in the last moment, last stage.
In case of aerospace also, our verticals continue to scale at a healthy pace. We are seeing encouraging traction from the existing customers. Also, the existing customers have additional, they have added additional scope into our product portfolio, whatever we are delivering in timely manner and in quality, 100% quality. I just want to highlight that we are setting up the oil and gas sector in a dedicated SEZ facility, which is going to be commissioned in the next year, second quarter onwards. Over the past year, we have seen strong tailwinds driven by national priorities from clean energy and civil nuclear expansion to greater self-reliance in defense manufacturing. These shifts are creating an encouraging environment for our company that combines engineering depth with execution strength.
Our diversified portfolio, our people, and steady investment we have made in capacity give us the confidence to keep building on this momentum. In the near term, our focus, as our MD told, is maintaining EBITDA at around 21% and achieving around 25% above revenue growth in FY26 compared to the previous year. Thank you for your continued support. We will now open the floor for questions and answers. Thank you.
Thank you very much. We will now begin the question-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. The first question is from the line of Sandeep Tulsiyan from Sundaram Alternates. Please go ahead.
Yeah, very good morning, sir. Thank you for sharing the roadmap for capacity expansion in clean energy, going from 8,000 to 20,000 units over the next 18 months. So if you could also share some details, how much of this expansion would require you to set up a new facility and what kind of CapEx will it entail?
See, basically, initially, from 8,000- 12,000, we are doing in our existing plant, which will be commissioned by March. That would be approximately roughly INR 35 crores-INR 40 crores. Already, the plan is to ensure that the expansion plan is completed by the end of March. We already have the infrastructure in place. It's only the equipment, furnaces, and the related balancing equipment to be received, which we have already issued the purchase orders, and we should have them by March. Then, based on the commitments given by Bloom and the forecast and the way we are looking at things, we need to expand further by another 8,000 units, going up to 20,000 units. We are trying to set that up in our existing infrastructure next to EOU. That's the plan.
The initial phase of 4,000 will be done by September of next year, and the additional 4,000 should be done by March of next year. So it should be close to about, since we have the infrastructure in place, it should be close to about INR 60 crore of CapEx, which might require to go up to 20,000 level from 12,000- 20,000. So that's the overall plan. The way the demand has been created, a sudden upsurge in the overall demand. This is what we are looking at, having the capacity of 12,000 by the end of March and 16,000 by the end of September of next year and 20,000 by the end of March FY27.
Good morning. Thank you for clarifying that. Second question is also regarding you mentioned earlier that the Hot Boxes would probably get upgraded from 55 kW- 75 kW configuration. And also, you have, in the meanwhile, doing a lot more components for these Hot Boxes, which has increased your wallet share within the total output for Bloom Energy. So I just wanted to understand now what proportion of the final box do we address here. And second related question to that is, in light of these tariffs, there was a plan to assemble these Hot Boxes in future in India. Where are we in terms of the talks progressing on that front?
See, we have already added as much of wallet share as possible in the Hot Boxes. That has been done over the last over Q2, actually, and it's a continuous process. And at this point of time, the tariffs are not being affected in terms of what we are doing today because of the kind of BOM percentage of Hot Boxes compared to the overall broader picture of what we see with Bloom right now or with our customer right now, so as far as the overall estimate, something that's a long-term plan moving forward over the next two to three years, but today, we would like to focus on the Hot Box-related items, then we also have the products division of ASP, which is also we have received substantial orders compared to what we were doing in the first half of this year.
So almost like 125,000 units each quarter we have to execute. And we also planned additional smaller expansion plan to enhance the capacity from 80,000 units per quarter to 125,000 units per quarter over there as well. And similarly, you can see a similar kind of upsurge in enclosures as well from our sheet metal industry, where they're looking at they were buying actually around 500 units per quarter. Now it's gone up to 1,000 units per quarter. So we are seeing a substantial increase, incremental increase in every area involved in the fuel cell segment, apart from the Hot Boxes as well.
All right, sir. Thank you so much for that, and I wish you all the best.
Thank you.
Thank you. The next question is from the line of Viraj Parekh from Carnelian Asset Management. Please go ahead.
Thank you. Am I audible?
Yeah, you are.
Thank you, sir. Just a few questions. First, I think we laid out a good CapEx plan of approximately INR 60 crores for Hot Boxes. I think for Weatherford also, we are doing an amount of CapEx in the range of INR 100 or 120, given we are expecting a significant nuclear order and our working capital cycle is quite high. So I want to understand that over the next three years, how do I look at the fund flow of the company? Are we going to be taking more debt? How are we looking to fund the CapEx and manage the working capital as we are going exponentially over the next second half and even the next two years going ahead?
All right. Gunneswara, you want to answer that, please?
Yeah. So regarding the working capital, as we all know, whenever we get orders from our existing customers, be it civil nuclear power or fuel cell, our working capital cycle in the fuel cells is around 180 days. So any incremental revenue will require 180 days of working capital required. So presently, what we are trying to do is whatever is possible in the case of inventories and other things, we wanted to reduce as much as possible. In case of fuel cells, the credit period is 45 days net, which means after reaching USA, 45 days it is to be counted. Around 100 days, it is our working capital. And 60 days for inventory and operating cycle. So around 160, not 180. 160 days is working capital required.
We are targeting to raise a debt as of now, but we will use our internal accruals both for CapEx, also for the working capital requirement. Presently, if you look at my working capital debt, it is only INR 77 crores out of INR 400 crores of almost INR 420 crores of working capital deployed in the company. So we are going to raise a debt of additional, say, maybe INR 150 crores-200 crores to support the growth, and even if I take my debt, it won't be more than INR 250 crores at any given point of time in the near future.
Got it. So are there any other?
So we are receiving advances. CapEx also, we are going to raise a debt. As of today, our long-term debt is around INR 100 crores only. And every year, we are repaying INR 46 crores every year. So by next two years, existing debt will be zero. And we will have a new debt of, say, maybe INR 150 or 200 crores we will raise for the proposed expansions in oil and gas and fuel cells capacity build-up.
Are there any other CapEx plans apart from hardcore fuel cells and oil and gas?
Whatever I told you, that no, that INR 150 crores as of now for the existing plants, whatever we have. As and when the new revenue opportunities arise, we will take up at that point of time. So we are not incurring any CapEx on the anticipation of orders. Only once we have a confirmed forecast or orders, then only we are incurring the CapEx.
Right. I had a question on the nuclear side. I think we are expecting around orders this month or this financial year for kind of Kaiga 5 and 6. And you also said that we participated in a few refurbishment tenders. So keeping both of these in line, do we have in the tenders we are expected to receive and the ones we participated in, provided that whatever the win ratio we have, we achieve it, do we have enough capacity to cater to these orders? Or is it like nuclear CapEx will come back and then?
Yeah, we have a capacity to handle whatever orders we are anticipating, around INR 800 crores from both refurbishment and Megha Engineering. So we have a capacity of only bottlenecks we have to address, which is not going to be more than 20 crores-30 crores. Our existing capacities are there and which we can use for these INR 800 crores orders.
Got it, sir. And we want to understand there was a news article about some tariffs on some AMCA project. So if you could elaborate a bit on that, it would be helpful for us to understand the defense space, what are we looking over the next five, 10 years?
This is regarding, can you come again?
I think that was the advanced aircraft targets.
Okay, AMCA project. No, see, presently we have signed an EOI with the Adani Aerospace, and we have submitted our Expression of Interest with ADA. So they will finalize the qualified people out of the six, seven people who have participated in this race. So ADA will decide based on the qualification criteria, and then they will issue the RFP to all the eligible people. Based on the quotation submission of our quotations, it will be decided. And initial first six, seven years, we have to develop five prototypes. Later on, 126 numbers of the aircraft missile is required.
Okay. And then last question, this quarter, kind of margins and certain operating expenses led to kind of a weak kind of an operating margin for us. Anything specific this year? Is this the trajectory that will continue going ahead?
No, there are some projects in the domestic sector which has a long lead time. We have to build the inventories. If you look at our working capital, which is almost INR 204 crores of working capital, all this working capital is made to order scenario, not made to stock scenarios. So we are building up the inventories for the future sales. That's what, as we told earlier, second half of the year will be 2x of the first half of the year, our revenues. We have a confirmed order. We are in the line we are in the process of achieving that target.
Got it, sir. Thanks a lot. I'll get back in queue.
Thank you.
Thank you. The next question is from the line of Meet Jain from Motilal Oswal. Please go ahead.
Hi, sir. Thank you for the opportunity. My first question is on the fuel cell part itself, so we are seeing a good traction from the Bloom Energy in terms of ordering, so my question is regarding our margin profile with them going ahead with the bulk of the order coming in and the ASPs, what we are seeing, and any operative intensity we are seeing from our Taiwanese partners also from this fund?
Absolutely not, Meet, because basically the demand is so high right now. In fact, the customer is looking at even 16,000 kind of units at this point of time, but we are trying to expand to 12,000 by the end of the year, and also moving forward, as I mentioned earlier, we are looking at additional expansion of 8,000 more units in two different phases. Phase one will be by September and phase two by March, but as far as the Hot Box is concerned, even regards to the products, if you look at the ASPs as well, we had a capacity of roughly around 70,000 units, and now we are moving up to 125,000 units per quarter, so there is an incremental expansion plan at different divisions that we are looking at at this point of time.
And I don't think there is any kind of pressure in terms of pricing or tariffs or anything at this point of time. And even Bloom is expecting the tariffs to come down, but let's see how it goes. But that's not going to really affect the plan, what we have in place today.
Understood. So sir, on this, can you more clarify this? What you're talking about is 125,000 units. What exactly that it is?
That's the ASPs that we are doing, right? That's a separate division we have in the products division, which we supply again to Bloom as well, where we are going up to 125,000 units, which translates to a substantial increase compared to the first half of this year.
Understood. Second part is on the working capital, as Mr. Gunneswaraji already mentioned the working capital days. More on that part. As you know, the working capital has been a bit of a concern in terms of fuel cells and seeing a good strong growth in this segment. Any measures are you taking in terms of inventory management or vendor side management or receivable side to bring it down to a substantial level? Any thoughts on that?
No, we are working on that. Gunneswara, you can answer that.
No, you go ahead, Gunneswara.
Yeah, yeah. We are working on various initiatives in reduction of inventories and trying to increase our payable days. In case of Bloom, it is only 160 days compared to our targeted working capital days of 220 days. The more is a Bloom production, it will be 160 days. It is always going to be lower in the total number. As far as the working capital, we are trying to ensure that we are just in time bringing the material into the factory. All those measures we have taken now, staggered deliveries, we have already initiated staggered deliveries based on the production requirement. We'll try to achieve 220 days in the current financial year. Our long-term target is around 200 days next year and 180 days post a couple of years from now.
Okay. And sir, last question is on the current quarter. So if you see current quarters, we have seen a decline in each of the segments, like be it aerospace, be it nuclear, be it fuel cells. So any light on that? Is there a deferment of execution or what led to us slow down in this quarter?
No, there is not. See, we are really not concerned about Q2, the reason being that there are a number of factors. One is there has been a prolonged discussion on the tariffs with our customers during the quarter. And while doing that, it almost looked like three, three and a half weeks to push back the whole thing because we are exporting also in aerospace to the U.S. We are also exporting, obviously, Bloom to the U.S. So we have stuck to our position in terms of where we are and not to get the tariffs affected because we are in the technology area. And we have developed various innovative things for our customers over the years, which has put us in a very strong position to get them also the savings over the years.
So that took some time to really push back and to discuss and finalize various things. And that's what we look at right now. And the surge also happened at the same time subsequent to that and in a big way. So a lot of planning had to be done in terms of what we need to do. So that's why you can see the second half, we have a clear position where we have the strongest order book ever MTAR has seen before. And we are very confident of achieving twice the sales in the second half with higher margins so that we end up with our guidance of 21% margin on a conservative basis. And also, we had said the guidance of 25% for revenue growth, which now we are saying it should be between 30%-35%.
That's around close to about INR 900 crores of revenues that we can generate for this year. And we see a very positive kind of forecast for the next financial year as well. I don't want to talk about numbers right now, but based on the kind of expansion plans we have, which I have explained, all of you can simply analyze all that stuff. But that's how it's going to be. So we'll give more details in the Q3 earnings call for the next financial year as well.
Sure. Okay. Last clarification is the closing order book number. You mentioned around INR 2,800 crores, right?
That's right, yes.
Okay. Okay. Thank you so much, sir.
Thank you. The next question is from the line of Bala Murali Krishna from Oman Investment Advisors. Please go ahead.
Good morning, Mr. Gunneswara.
Good morning.
My question is regarding this partnership, the partnership with the Adani. So what is our scope in that one for the Jet Engines, AMCA Engines? How much share we are expecting in that one if it is go through?
Yeah. Srilekha, you want to answer that?
Hello?
Srilekha, are you there?
Sir, I'm on mute.
Yeah. They were asking about the AMCA program with Adani in the details. Can you answer that, please?
Yes, sir. So when it comes to AMCA, we just participated in the Expression of Interest along with Adani as a non-lead partner, where Adani will be the lead partner with 50% equity stake, and we will be the non-lead partner with 50% equity stake. So the whole concept of this AMCA is whichever consortium wins this order, they need to form a joint venture, and they need to take up the production of five prototypes. Later on, they'll be able to take up the production of 126 aircraft manufacturing orders. So when it comes to this project, it's a very prestigious project that has been taken up by Indian ecosystem, and every company has participated. We have also participated in the EOI. Once entities will get shortlisted in the EOI, we'll be able to participate in the bidding phase. We need to submit the bids.
All that only will get to know what are the winning chances. So it's a long-haul thing. We'll get to know who stands where in the coming five to six months.
So, overall this process, how long it will take? This five to six months, we'll be able to know? And further, any timelines, ballpark timelines?
Coming to the timelines, they might announce who got shortlisted in the EOI in the coming couple of months. Suppose that we need to participate in the bid, which will take around three months or so. By May 2026, hopefully, they'll be announcing who has won the bid. Then within three months, they need to form a J
V, and they need to take up that five prototypes order. Government of India is planning to roll out first prototype probably by end of 2028 or so. The timelines are very ambitious when it comes to AMCA against LCA Tejas, which took a lot of years to develop. They are trying to get these five prototypes in the next 10 years, which is a very ambitious timeline. If this program takes off well, it's going to be very good for Indian aerospace industry.
Good. Sir, on the Bloom side, I think this year maybe we may close by around INR 500 crores from the Bloom. So I think Bloom has also won so many orders in the recent time. So what is the indication from their end for the supply of this Hot Box in coming years? How much we can expect?
No, I've already explained that, right? Basically, we are expanding from 8,000 capacity to 12,000 by March. That's purely based on the order inflows what we have. And then we are progressing to 16,000 by September and 20,000 by March of next year. So that itself is an indication the way it is going in terms of the demand cycle what we have and moving forward as well. It's not about just one year, two years. I think we see a very good traction coming in for the future years as well.
Okay. So some follow-up on these boxes. So we are directly shipping them to U.S. So I think we had a plan to make a complete assembly of the [audio distortion] . So if it is done, then maybe we can supply these boxes directly to the customer side, like maybe South Korea, like that. Is it possible, sir? Is it on cards or anything needs to be done in this regard?
No, that's going to happen over the next two, three years. But at the end of the day, most of the orders, if you see the AI data centers, most of them, the orders are booked in the U.S., and they also have enough demand in South Korea as well. And they're also entering into Europe in a very big way. So it's a transition which will happen over the next two, three years. And there are a lot of outside factors also involved in that. But look, we have enough on our plate right now in terms of executing all these orders, substantial surge compared to what we had earlier, right? We were looking at hardly 3,500 or an odd per year and stuff like that.
Now we are looking at almost a phenomenal amount of see. We are expanding purely based on the demand and the orders received. I think we should go step by step and ultimately achieve what we want to do, as you mentioned.
Good. So any update on this electrolyzer, sir?
Not as yet. There's enough surge on the existing Hot Boxes itself. And electrolyzers will take a little more time. We have already executed it. We have done it. We have proven it. So the hydrogen part of the story will take a little bit longer than what we can think about right now.
Okay. That's all from my side. Thank you.
Thank you. The next question is from the line of Balasubramanian from Arihant Capital. Please go ahead.
Good morning, sir. Thank you so much for the opportunities. As despite the tariff hurdles, we are facing strong order inflows. So my first question regarding the Bloom Energy, it can be that a dominant driver, maybe INR 140 crore-INR 150 crore per quarter kind of revenue from FY27 kind of we may expect. And sir, first thing, Bloom Energy is entering big into a data center side. What is our scope of work in data center and what kind of opportunities we have? And secondly, on the fuel side, battery storage program, when we expect commercializations and what kind of opportunities and revenue size we may expect over the next four to five years typically?
See, look, I've said this earlier as well. See, basically, our job is to supply the units to Bloom. The power generation is done by Bloom for all these data centers, which is really in a very big demand right now. There is a huge power shortage, and that's what they're capturing more and more orders. That's getting translated into our order book position out here in terms of what supplies we do to Bloom, right? That's point number one. And as far as so that's on a really good uptrend. The surge is also very high. So we have planned everything very well in terms of execution, in terms of expansion plans, which I have said by March, we'll have 12,000 units of expansion plan in place. And by next year, we'll have another 8,000 moving forward in a couple of phases in September and March.
So that's the plan what we're looking at, purely based on the order inflows and the forecast given, strong forecast given to us, and to plan ahead of time. So fortunately, we had enough capacity to begin with, around 8,000 units, which we never used in the past. So we had that capacity, so which we were able to service quickly to the requirements of the customer at this point of time. And we are increasing it to 12,000 by March. So that's what we're looking at. And if you look at even over the next four, five years, this uptrend is going to continue. And coming to Fluence, we are still working on the prototype, second prototype that we are doing.
Once that is done, hopefully, I was talking to a team, and they said that we should be able to finalize the long-term agreement sometime during the year, mostly by Q4 of this year. To begin with, then we have established the required facilities for them. We're looking at second half of next year to slowly start the batch production. Then we look at probably around revenue growth of what we're looking at between INR 200 crore- INR 400 crore of revenue coming in over the next two, three years. Then it can keep going higher and higher from there on. That's what we're looking at right now.
Okay, sir. Sir, we are targeting 2x kind of revenue in H2 compared to H1. I just want to understand what are the key challenges we have faced in Q2 and what kind of implementations we are going to do to achieve those targets, and I have seen inventories have been ballooned to nearly INR 450 crore kind of range, and these inventories especially dedicated to current order book executions or spread out over long-term supply contracts also?
Basically, most of the inventories, whether it is in raw material or in work in progress, are related to the existing orders that we have and also the orders that we have received, right? All our existing we don't build inventories without any orders. Some are short-term orders that are getting executed and some are slightly longer term. The challenges that we faced in Q2, as I mentioned earlier, is the tariffs, which we had to really negotiate and push back on various aspects. Then we were successful in terms of finalizing with our customers without affecting our bottom line. That is more of a priority for the company, looking at the long term of the company, and not to get in a situation where we get into a situation where we reduce our margins and all that.
So we stuck to our position in terms because we are in the technology area. And the overall BOM cost for Bloom Energy is not much compared to what we do. So overall, it was a , see on the positive side, we have done everything possible to circumvent the tariffs and to ensure that the company's long-term growth and margins are maintained. That's what we were able to achieve in Q2. Obviously, during this process, it took almost three and a half weeks to do this stuff, which got a lot of dispatches delayed. But subsequent to that, everything is back to normal right now. It doesn't matter what the tariffs are. And we will be in a position to achieve the 2x of sales in the second half and also adhere to the much higher revenue guidance than what we have given earlier.
And also, we'll be able to maintain the overall annual margins what we had guided earlier. So that's where we are today.
Okay, sir. Sir, on the margin side, last Q1, we did 18% and Q2, 12.5%. Now you're guiding 21% kind of margins. What are the levers to achieve those margins in H2?
So basically, the higher revenues, point number one, in terms of what sales we have forecasted for Bloom, we have confirmed dispatches close to around the Hot Box units itself. We've been looking at around INR 340 crores of revenues being generated there, which is very clear on dispatch plan. And then the various other segments and products that we are shipping out. So obviously, with those kind of revenues, which we have never achieved before, right? We didn't even touch INR 200 crores in a given quarter in the past. Now we're looking at almost close to INR 300 crores of revenues each quarter for this year. And I'm not talking about the next year. The next year is a different ballgame altogether. So that's going to compress our overheads, going to the percentage. Overheads are going to come down drastically and reduction in inventories.
So a lot of things are going to happen to have much improved margins over the second half of the year to average out at around 21% EBITDA for this year. And we can see a substantial growth in the subsequent years with much better margins moving forward.
Got it, sir. Thank you.
Thank you. The next question is from the line of Abhijeet Singh from Systematix. Please go ahead.
Yeah, thank you for the opportunity. And it's very encouraging to see such good order inflows.
If you're very low on your voice, can you come closer to the screen?
Yeah. I hope I'm audible now.
Hello?
Yeah. So the first question is
Abhijeet, you are actually breaking up, and we're not able to hear you.
The last question is disconnected. So the next question is from the line of Nikhil Agrawal from Kotak Non-Discretionary PMS. Please go ahead.
Yes, thank you for the question. So my question is more on the data center side. So while we are tapping the data center boom in the U.S. through Bloom Energy, do we see India as a market as well relatively as a country in a much better place in terms of power supply?
Yeah, see, India needs to have the infrastructure as well, right? You need to have the gas pipelines and all that stuff. So already Intel has our units there in Bangalore. So it all depends on the kind of infrastructure that can be built within the country to have this. So that's where we stand. So probably in the long run, we'll have that. It's not today, tomorrow, subsequent years. So look, right now we have enough demand abroad in the U.S., Europe, everywhere, South Korea. So we need to have that kind of infrastructure to have those kind of systems out here.
I can't hear you well.
Hello?
Yeah.
You said.
I can't hear you well.
Hello?
Yeah. Can you repeat your question, please?
Can you say that the people receive INR 500 crores of orders this month itself?
You are breaking up. I'm not able to hear you.
Okay, sir. I'll take it. I'm repeating. Okay. Yeah. Thank you. That's it from me.
Thank you. The next follow-up question is from the line of Abhijeet Singh from Systematix. Please go ahead.
The opportunity again. I hope I'm audible this time.
Yes, sir, you're audible.
Yes. My first question is a clarification on the CapEx number. So we are going to do a CapEx of 150 crore in the next two years. Is the number correct?
No, INR 150+ crores is for this financial year and the next financial year. Whatever we are committing now, it is going to spend in the next financial year. The equipment, everything will come in June month. Some will come in this financial year. So it is not for next two years. It is for this year and next financial year. Probably some more sustenance and bottlenecks, CapEx, we will incur after the March.
Right. And out of this, the INR 60 crore is for the fuel cell clean energy business?
Around INR 40 crores for the fuel cells and INR 90 crores for oil and gas. So remaining for the multiple units, multiple sectors.
Right.
And sir, what will be the peak revenue once we ramp up our Hot Boxes capacity to 20,000 per annum? What will be the peak revenue that we can generate from this capacity?
We're not able to disclose that. We cannot disclose that right now. We are under NDA, so we cannot disclose that.
Sure, sir. Sure, sir. But we just wanted to understand one thing. Sir, what is, is there going to be a realization impact on account of increased tariffs? So what is the kind of arrangement of the increased costs? Who is going to absorb it, and how will it work in terms of margins?
That I have already said, right? So that's why we took some time in Q2 to discuss all that, but we're not impacted by the tariffs. Our overall BOM cost compared to overall picture with Bloom is hardly less than single-digit percentage. So that's not really going to affect us at this time, and the tariffs come down is good for the customers as well. So that's where we are right now. We're not looking at a commodity kind of a product to get worried about it at this time.
Right. Sir, on the nuclear side, apart from Kaiga 5 and 6, what are the potential pipeline in the next three, four, five years for different reactor products that we can supply?
See, basically, let's talk about what we are going to get right away, right? Nuclear, we keep saying so many things, but as of now, the most positive picture is that we should receive overall orders of INR 800 crores this financial year, right? Not only from Kaiga 5 and 6, but also from the refurbishment reactors. And then there is Mahi Banswara project. There are I think four reactors which are being done with NPCIL and NTPC. So those will come into picture over the next six months. So there are progressively a number of projects which they're planning in the nuclear division. So we can see it's not like in the past, but now we have seen the real situation happening in terms of these projects getting cleared and to be executed pretty quickly. So that's how the whole situation has come to right now.
So that's the reason why our nuclear division will see a real exponential growth moving forward based on the kind of orders we are going to receive.
Right, sir. I was referring to those Mahi Banswara and the Chutka, I think the two PHWRs.
Yeah. So Mahi Banswara is in the advanced stage. So those tenders will start coming in over the next three-four months or five months.
All right. And sir, just one related question. On the SMR technology, are we going to participate in that, or have you given any thought on the smaller reactors based on that SMR technology?
No, we will when it comes to that. Right now, it's just the discussions going on. So when it comes to that, obviously, Intel will get involved in that.
Right. Right, sir. So thanks a lot. I'll get back to you.
Yeah, sure.
Thank you. The next question is from the line of Vinayak Kariwal from Xponent Tribe. Please go ahead.
Hi, sir. Thank you for the opportunity. Sir, on the Bloom call, I think PR mentioned earlier, the product cost is going to go down in double digits. So the running cost is going to go down in double digits. And also, there was some data where I could see that your product cost has decreased over time. So how much of a risk do you see the realization going up over the next two to three years?
No, can you repeat your question? Because the voice is a bit broken.
Sorry, sir.
Okay.
Hello.
Yeah, can you repeat your question? Because the voice was breaking a lot.
Sir, am I audible right now?
Yeah, you're perfect now. Go ahead, please.
Yeah. So, sir, just wanted to know, so on the Bloom call, PR mentioned that the RM cost is going to go down in double digits. So going ahead, how big of a risk do you see that the RM cost, the product realization going down over the next two to three years?
See, the realization is not going to go down. See, the basic thing is the raw material supply is what we talk about. For example, we buy Inconel, or we buy steel, we buy some alloys. A lot of negotiations are going on to bring down those costs, right? So I don't see that we are going to really get affected in terms of the final product that they're producing for them. But the input costs have to come down. So that's what they're looking at primarily in terms of, see, our operating margins are at 40%. So 60%, there's a lot of scope for Bloom to reduce those costs as much as possible. So that's what they're working on right now. So that basically has a cost model where if the BOM cost comes down, we proportionately adjust the price.
Other than that, it will not affect our value add or anything that we are going to do moving forward.
But ultimately, you will get those price increases from your suppliers, then you will pass on. So if you are able to do that, then you are saying that you will be able to pass on. But if you are not, then maybe your price realization goes down, and maybe Bloom pushes you to bring down your prices because you are anyways getting high volume from them, like maybe $200 million in next year. So.
No, it's going to be hardly. No, no, no, no. It's going to be hardly any marginal change. But what I'm trying to tell you is there's so much of requirement and demand right now. Their primary focus is on the bill of materials that they are buying on their behalf, where they have to bring down those costs. So it's not that we have already informed to Bloom during the tariff stage as well that we are doing our best in terms of our value add, but the main focus for them has to be on the input costs. So that's what they're looking at right now.
Sure. Sure. Sure. And sir, I wanted to ask one of the comparative questions. How do you compare yourself with the competitors in Taiwan and India in terms of pricing and the product quality? I mean, how does Bloom choose if it wants to purchase between you three peers? How does it choose in terms of does price matter a lot, or the diversification criteria is a big thing for them, or there is a certain product quality which is why they choose you and not the other two peers?
See, there are a lot of factors which go into it. We have done a lot of innovation of various of the parts which we have indigenized for them, which we are doing exclusively for them here, right? And in terms of quality, we have always adhered to the standards what Bloom wanted all the time. It's not necessarily the pricing all the time. It's about how you execute and what kind of quality that we supply to the MNC customers. Are we on-time deliveries? How we stand there? So we have been in the green all the time in terms of OTDs. And also, the most important is the quality. So we have been always maintaining that. And that's why they're adding more and more wallet share into our system. And also, we are working with them on various other projects, right?
For example, some products we are doing for them and the enclosures and all that stuff. So we are moving in the right direction with them. And it's not about competition. It's about how well we can do to ensure that our customer is extremely happy in terms of what we are delivering to them. So we primarily focus on that and nothing else.
Sure. Sure. And the last question would be, sir, if you could give me an idea, the ASP assemblies which you supply, how many ASP assemblies go per box, like per Hot B ox? How many ASP assemblies go in a single Hot B ox? So I could maybe understand how big ASP assemblies could get for you if the number of Hot B oxes increased.
Around 16.
16 ASP assemblies per Hot Box?
Yeah.
Okay. And sir, just I could add like this last question. So you said there would be no impact of tariff. There is no impact on tariff on you. But so could we deduce from that that even if the tariffs come down from here, there would be no material advantage for you?
Yeah. See, the tariffs come down, it's fine. It's fine for the customer, right? So as of now, I've said very clearly that in Q2, most of our time was in discussion about these tariffs and how to go about it and all that. And finally, we were very clear from our thought process that there is so much of demand for Bloom right now. So basically, we said that there's nothing much we can do back in India. That is something which is external, and we will not be able to do much on them because we are not a commodity kind of a product to worry about that, right? So we're very clear in that. So if we absorb the tariffs, then we don't stand a chance. So it doesn't make any sense. So that is something that the American companies have to figure it out.
But hopefully for them as well, tariffs should come down in India probably in November, December, hopefully. We should help them a lot, so that's where it is. As far as we are concerned, we are clear about that aspect.
That helps a lot, sir. Thank you so much.
Thank you. The next question is from the line of Nilesh Jain from Astute Investment Management Private Limited. Please go ahead.
Hi, sir. Thank you for the opportunity. My first question is on the nuclear side. Given that you are expecting orders on Kaiga 5 and 6, and also from the refurbishment orders, whenever we get these orders, what would be the execution timeline for these?
It depends on the package, right? It ranges from one year to three years. That's the execution time. So if you're looking at INR 800 crore, at the maximum, a few products can go up to three and a half years, but all these needs to be executed within the next three, three and a half years.
And given that we have strong capabilities on PHWR side, wanted to understand on FBR and PWR, what would be MTAR per reactor? What would be the opportunity we would have here?
The FBR, 500 reactors, we have done. MTAR is the one which has done it in Kalpakkam, right? So we have done that. Those reactors still have to get commissioned. So once they're commissioned, then they'll come up with the next batch of reactors. So let's wait and see for that. We have not seen. Once that is done, then we should be able to address that because we have done the core of the reactor for the FBRs.
My third question is on the product side. Wanted to understand the scaling and scope on the EMA and roller screws. What can be the potential opportunity for both these two businesses and FY27 converts?
See, Roller Screws, they're already qualified. It's only the defense is taking little time for their procedures for testing and all that. Probably it's a matter of time that they will clear it in this quarter itself. The ask is for final analysis to be done, which I think my team is doing it right now. And EMAs, we've already started supplying to them. So there is a lot of potential. So these are various products that we have developed. And in engineering, it takes some time to get qualified. They do a lot of testing. Everything goes well, and then they start placing orders and trying to take it to their requirements. So we're almost in the last stage of that situation right now.
Okay. Sure. And on the aerospace side, wanted to understand scaling on IAI side, IAI as a client, and also other aerospace customers, given that we are seeing good traction in this side of the business?
Absolutely, yes. In fact, I'm very excited about it because see, what we are trying to do, which all of you should understand, is apart from the fuel cell sector, we are really focusing on various other growth engines in MTAR, whether it is aerospace, oil and gas, nuclear, space, defense, or whatever. We are into multiple segments. So we have diversified. We have diversified strong growth engines at every area. So aerospace is one such segment which we are really focusing upon, primarily in exports. And we are doing a lot of first articles right now for IAI, and we should complete, hopefully, all the first articles for the project what they've given us by June of next year. And then the volume production will start. And we're also doing for an American company called GKN. We're already into volume production for them after doing the first articles.
They're giving one more project to us, which we are doing the first articles right now. So, a lot to see, there is more. It's not that we are worried about the orders. A lot of customers are coming in, but we are going step by step in terms of what we can actually capture and take it forward and then doing it in a step-by-step manner. So we don't want to mess up with the existing customers, and the new customers will come in. Once we are free from all these first articles, we can move on to volume production. Then it becomes a plug-and-play situation, right? So that's what we are trying to do right now. So this is going to be a continuous process year-on-year basis, not only within the existing customers, but also adding the new customers.
This business, if I look at it from five-year timeline, it has potential to go to INR 100 crores to INR 500 crores. Can we look at that picture? Aerospace.
Absolutely. You've got right on target that our goal also is over the next four to five years, the aerospace business should easily be touching about INR 500 crores+ .
And just last question is on the space side. We have been working on SSLV, I think, for almost more than three years now. So how.
No, no. SSLV, no, no. SSLV, we put a pause to it because we have so much on hand right now. And we didn't want to risk too much at this point of time in terms of a huge outlay of budget for that, which can be an issue in terms of our bottom line and the kind of money that we're going to spend on that. So we have taken a timely decision to put a hold on that and focus more on the areas to strengthen all our growth engines first and then look at that at a later date. We are waiting and watching what's going to happen with the other companies also. And we have got certain feedback that it's better to pause a little bit on that and move forward.
Just to follow up on that is on semi-cryogenic because there was some design change. So, are we progressing on that, or has that also been on pause?
Yeah, we are progressing on that finally. We had one of the assemblies. There was a design change, and not only the design change, but also we had some issues in terms of the brazing method being used for one of the assemblies, which has been resolved right now. So now we are progressing smoothly on that. So in all probability, beginning of next year, we should be able to deploy the first hardware of semi-cryo.
Sure. Thank you so much, and I wish you all the best.
Thank you.
Thank you. The next question is from the line of Mihir from TRUST Mutual Fund. Please go ahead.
Oh, yeah. Thanks for taking the opportunity. So on the tariff side, you mentioned that expected tariffs being hit. Given the cost of percentages for.
No, I can't hear you. We're going a lot. Can you?
Yeah. Is this audible now?
Yeah, you're fine now. Please go ahead.
Yeah, sure, sure. Some of the tariff side you mentioned, I mean, despite tariffs keeping coming in, they will still be able to maintain the margins. Are we going to have a higher credit period for compensating the increasing tariff, which you said?
No, absolutely not. There's no change in our payment terms at all.
Okay. Understood. Then let's go ahead.
It's the same as before.
Understood. Then let's go ahead and take it. Sure. On Kaiga 5 and 6, right, what stage of awarding I mean, what stage of process is it there currently? And who others are also there in evaluation for the component supply that you are going to be doing?
No, Kaiga 5 and 6 is already finalized. It's only the paperwork which is pending. That's why I said it's a confirmed order that they're going to get, most probably in this month itself, anytime this month. It can happen anytime this month. So there is no doubt everything has been done, and it's in the final stage of releasing the purchase orders. That's it.
Understood. Sure. Sure. How is the fuel cell, I mean, Hot Box's fuel cell demand, apart from Bloom Energy? I mean, which all customers are they the only customers who are showing strong demand over here?
No, SOFC is Bloom is the only company which does in the world, right? So we are working with them right now. So the demand is very high. I explained it in earlier discussions as well. So the demand is much more than what we can actually take.
Okay. Understood. I hear there was a South Korean company also which was trying over here, but that's not showing any traction at all.
You see, South Korean company, Bloom is working with them, right? So we're getting confused there. South Korean company, Bloom is working with them as a joint venture.
Understood. Sure. And the last question was on the INR 2,800 crores number that you mentioned. So this is after the execution, right? After the execution that you will do in FY26?
Absolutely. That's what I meant. Closing order book means after execution. So INR 2,800 crores after execution.
Sure. Yeah. That's it from my side. Thank you very much, sir.
Thank you. Ladies and gentlemen, due to time constraints, we have reached the end of the question-answer session. I will now like to hand the conference over to management for closing remarks.
So thank you all for saving your valuable time to participate in MTAR's earnings call. As I always mentioned, that we are right on track in terms of our growth, both in terms of revenue and margins. And we have taken all steps required over the last couple of years to be where we are today and how we are going to move forward over the next five years. And it's a continuous process in MTAR. And we will see better and better performances moving forward based on the efforts that we have done over the last couple of years. And I would like to thank once again for all the support from all the investors, shareholders of MTAR, and also the fantastic contribution which are being done by the senior management of MTAR and all the employees of MTAR. Thank you so much.
Thank you. On behalf of MTAR Technologies Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.