Ladies and gentlemen, good day and welcome to MTAR Technologies Limited Q4 FY25 earnings conference call. As a reminder, all participant lines will be in the 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 Vidhi Vasa from MUFG Intime Investor Relations . Thank you, and over to you, ma'am.
Thank you. Good morning, everyone. On behalf of MTAR Technologies Limited, I extend a very warm welcome to all the participants on Q4 and FY25 earnings discussion call. I hope everyone had an opportunity to go through our investor deck and press release that we have uploaded on Exchange 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 as of today. The statements are not guaranteed for our future performance and involves unforeseen risks and uncertainties. With this, I would like to hand over the call to Srinivas sir. Over to you, sir. Thank you.
Hello and good morning to everyone. Thank you for taking the time to join us today. Today on 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 the results highlights on the stock exchanges and company website. I hope everybody had an opportunity to go through the same. We are pleased to inform you that we have delivered a growth in FY25 with revenue from operations at INR 676 crores, representing 16.4% year-on-year growth, and EBITDA of INR 120.9 crores, demonstrating 7.2% year-on-year growth. The growth in revenues is primarily driven by increasing wallet share with existing clients and addition of products from new customers.
Our margin is slightly lower than the estimates by 200 basis points because of the delay of execution of new projects in aerospace and defense for Q1 FY26. In FY26, we look forward to a 25% growth in revenues on a conservative note with 21% EBITDA margins, plus/minus 100 basis points. We anticipate a sequential improvement in EBITDA margins in FY26 due to operating leverage and scale-up in production of new products developed over the past couple of years. Notably, we have successfully executed proto or various multinationals, and additionally, we are also working on first articles for leading multinationals like Fluence, Weatherford, IAI, GE Healthcare, etc. We have secured orders worth INR 720 crores in FY25, for which INR 178 crores are from Aerospace and Defense, which is a substantial improvement in this area, and INR 349 crores of orders are from Clean Eenergy, underlying our technological leadership in these sectors.
In clean energy, we have delivered around INR 417 crores of revenues. The company is presently working on increasing the wallet share with the customer in FY26. That is going to boost the revenues further in the vertical. In fabrication, hydropower, and other segments, we look forward to delivering around INR 60 crores of orders this year. We have completed the execution of proto 1 for Fluence Energy and are currently working on proto 2, and we are currently in discussion with Fluence for orders related to mass production. We look forward to growth in clean energy at a rate of 15%-20% in this sector, including fuel cells, hydropower, battery storage systems, and others. The aerospace and defense sector has witnessed significant progress in several key projects to ISRO, DRDO, and MNC aerospace, including the successful delivery of ammunition boxes, engine components for various customers, including Paris, GKN, and Elbit Systems.
We delivered around INR 93 crores of orders in this division. Aerospace and defense sector is in an exciting phase, supported by Make in India tailwinds and strong export interests. We anticipate a phenomenal growth of 80% from this sector in FY26. We have registered revenues of around INR 19 crores in the civil and nuclear sector in FY25, as against INR 157 crores of closing orders. We are in the advanced stage of executing nuclear orders currently, and we look forward to delivering around INR 60 crores of orders in this sector in FY26. Kaiga 5 & 6 reactors orders have been placed on the private entity, and we are expecting the orders soon as we have pre-qualified vendors for NPCIL. We started receiving tenders for refurbishment of reactors. In addition, we have also started working on budget reports for 220-MW Bharat modular reactors.
We recorded INR 148 crores revenue in products and other verticals, and we expect a 20% growth in this segment as well. The company is actively working on increasing the product base and expanding the customer portfolio. We have achieved a significant improvement in operating cash flows by generating cash flows of INR 101.3 crores in FY25, as against INR 57.4 crores in FY24. In addition, we have reduced our net working capital days to 229 days, and we expect to improve our cash flows and net working capital days further over the coming quarters. Successful delivery of first article orders for various new products across all sectors underscores our execution capabilities and commitment to operational excellence. The company continues to focus on quality, innovation, and process excellence to drive long-term shareholder value. We are optimistic about robust order inflows over the coming quarters, which will strengthen our order book.
Furthermore, we are in discussion with multiple customers in clean energy, oil, and gas, and aerospace sectors to enter into long-term contracts. The company has also entered into long-term contracts with some of the few domestic companies for execution of INR 20 crores year-on-year over the next five years. Our consistent revenue growth over the past five years demonstrates sustained growth momentum, and we remain confident in our ability to maintain this growth trajectory with an average growth of 25% year-on-year over the next three years due to multiple growth engines across various sectors. Our CFO, Mr. Gunneswara Rao, will discuss in detail our financial performance for FY25. Over to you, Mr. Gunnes.
Yeah. Thank you, Mr. Srinivas Reddy, and good morning and a warm welcome to our earnings call. I would like to extend my gratitude to all shareholders for your trust reposing on our company. Today, I will be discussing key financial numbers for Q4 FY25 and FY25 on a consolidated basis. Coming to quarter-on-quarter YOY, revenue from operations stood at INR 183.1 crore in Q4 FY25, as against INR 143 crore in Q4 FY24, which resulted in a 28.1% increase. EBITDA reported at INR 34.2 crore in Q4 FY25, as compared to INR 18.2 crore in Q4 FY24, with an increase of 87.5% on YOY. Profit before tax stands at INR 18.6 crore in Q4 FY25, as against INR 7.2 crore in Q4 FY24, a 159.6% increase on YOY. Profit after tax was at INR 13.7 crore in Q4 FY25, as against INR 4.9 crore in Q4 FY24, a 182.7% increase on YOY.
When coming to yearly numbers in FY25 versus FY24, our revenue from operations stood at INR 676 crore in FY25, as against INR 580.8 crore in FY24, a 16.4% increase on YOY. We would like to inform you that this is the highest-ever turnover in our company we have achieved in FY25. When it comes to EBITDA, it reported at INR 120.9 crore in FY25, as compared to INR 112.7 crore in FY24, a 7.2% increase on yearly YOY. Profit before tax stands at INR 71.6 crore in FY25, as against INR 73 crore in FY24, a 2% decrease year-on-year. Profit after tax was at INR 52.9 crore in FY25, as against INR 56.1 crore in FY24, a 5.7% decrease on YOY. I would like to also add key strategic focus areas. The company has been strengthening its financial position with a reduction of INR 15 crore long-term debt, bringing it down from INR 142.4 crore to INR 127 crore.
The total repayment obligation for FY26 is at INR 46 crores. 80% of the long-term debt, whatever we have, we are repaying by FY27. The balance will be in the next one to two years we are repaying. Cash flow from operations was robust at INR 101.3 crore for FY25, improved compared to FY24's total annual cash flow of INR 57.4 crore, with our monitoring, daily monitoring of the working capital and other areas, focus areas. When it comes to working capital, the net working capital to revenue days stood at 229 days in FY25, and also we would like to further try to reduce working capital for FY26 to 200 days. I also want to add, the company is in the key sectors we are catering as of today. India's engineering sector poised for growth driven by government initiatives promoting renewable energy, civil nuclear power, and defense indigenization.
MTAR, its diversified portfolio and engineering capabilities are well positioned to capitalize these opportunities. In the civil nuclear domain, we have a clear visibility to support India's nuclear energy expansion to 100 gigawatts by 2047, with its new reactor approvals, retrofit programs, of which five reactors are set for refurbishment, for which we are receiving inquiries from the customer. In aerospace and defense, we are seeing a positive outlook from our operations as explained by our MD, and in our new unit, which was commissioned in FY25, we are set to witness exponential growth in line with the government focus on self-reliant India and in defense, and also the global procurement by Taiwan and foreign OEMs. We have continued our engagement with major defense OEMs and PSUs by participating in Make in India defense tenders, which are gaining traction with increasing budgetary allocations.
Looking forward, the conservance of national priorities across clean energy, civil nuclear power, and defense self-reliance is creating a favorable environment for engineering companies like ours. So, we remain committed to sustain EBITDA margins 21% plus or minus, and with a 25% revenue growth in FY26. So, with this, I open the floor for discussion and welcome any questions if you may have. Thank you very much.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the 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. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Vipraw Srivastava from PhillipCapital. Please go ahead.
Hi, sir. I'm audible, right?
Yes, yes.
Yes, yes, Mr. Vipraw, you can go ahead.
Sure. So, quickly on the guidance path, I missed the nuclear guidance. So, what kind of growth are you expecting in the nuclear segment for FY26? Hello?
I was on mute. FY26 is going to witness a substantial, we closed the order book at INR 155 crores for nuclear, but it will witness a substantial inflow of orders during FY26. One is we have already received tenders for the refurbishment of five reactors, a couple of reactors from Tarapur, and refurbishment of reactors in Kaiga, Rajasthan, and MAPS, Madhya Pradesh. So, these tenders we are supposed to quote by next month, and we are expecting those orders because we have worked on this refurbishment of reactors in the past in a big way. So, we are expecting substantial orders to come in from the refurbishment of reactors. And secondly, also, the purchase order for the private entity MEIL has been released by NPCIL. Since we are qualified vendors, as I mentioned earlier, we are going to expect substantial kind of orders coming in from there as well.
So, we're looking at least around 700 to plus crores of orders flowing in from nuclear division. We have enough on our plate to have a consistent growth in these areas, but we have not considered any of these orders in our current business plan for FY26. What we have considered is what orders we have on hand as of today is what we have considered in our growth plan for this year, but we'll have a substantial exponential growth in nuclear division going forward, including the budget reports we have given for Bharat modular reactors with NPCIL as after-scope for the 220 megawatts. That's where we stand in the.
Yeah. So, nuclear will be more or less at this stage for FY26. Is that a correct understanding?
No, I think to add your point, from INR 19 crores what we have done in FY25, we are expecting to do INR 60 crores in FY26. It's from INR 19 crores to INR 60 crores. That is also whatever orders we are having in hand.
60, right? INR 60 crores?
60 crores we are planning for FY26.
Okay. Okay, sir. Noted. Noted. And, sir, in the products division, what's the guidance you have?
Product division, I think we have done last year, we have done around INR 148 crores, and we should have a growth of at least about 20% in this area. And we have developed various products, and we have improved this substantially. If you look at in the last three years to now, there is a huge growth in this area, and we continue to do that. So, our team has been working on various products which are getting qualified when we're doing first articles somehow related to government organizations like roller screws. We're already qualified technically. We're just waiting for the final confirmation. So, we'll be to be a 100% import substitute for the government of India for this sector, which we have been importing from Rollvis SA. So, we are working on a lot of products like EMAs, electromechanical actuators, and all that.
We should have at least about 20% further growth on the product division for this year.
Okay, sir. Okay. Noted, sir. And then lastly, on aerospace and defense, you had, say, 80% growth, right?
I would like to explain that. This is an area where we are doing substantially well, and it's something which is very interesting. If you look at the company's position in FY24, we are about INR 9-10 crores of business in this sector. In FY25, we have done INR 48 crores, especially with our new unit which was commissioned in Hyderabad. And then in FY26, we'll be looking at least about INR 145 crores of revenues being generated. This is growing at a rapid pace. The main reason is we are qualified and certified by a number of MNPs for exports in this area, and we have successfully executed various first articles. Now, we have gone into the ramp-up production for these areas.
Some of the customers where we have entered into long-term agreements with IAI, we have now already started working on the first articles, which we'll get converted into mass production as well. There is a substantial improvement in this area where the margin profile is also very good. They're all very complicated kind of assemblies which we are working on, and this is something which is really exciting us moving forward. Apart from this, we are also looking at various aerospace projects which we have been asked to work upon in terms of RFQs, which is not part of the discussion right now. As and when we have some traction on those things, we will obviously inform all of you on that particular segment.
All right, sir, and sir, last question from my end. Regarding Bloom Energy, sir, what's the commentary from their end? Because Bloom is seeing a lot of traction in the U.S., so what are they communicating to you regarding their order book and their growth prospects?
No, it is more or less see, what they have done is they have improved their wallet share also. They want us to increase. So, we are now doing additional assemblies for them within the system what we are making for them, which we are going to start executing it from this quarter onwards, which will ramp up in the subsequent quarters. So, what we have mentioned about 4,000 units which we are going to dispatch to Bloom with additional wallet share is what's going to happen this year. And there's no change in that. There might be further improvement on that. That we have to see. So, ultimately, the kind of guidance we have given in terms of growth and margins, we have factored every instance of what's external to the company. For example, the tariff issue which is going on with the United States.
We have considered all those factors in arriving at this particular growth percentage. And we feel that because of our diversification into various countries and exports, we are in a position where we are still able to maintain that growth and achieve the margins that what I have mentioned, 21% plus minus 100 basis points. And this, we have considered all the factors and any other factor which favors the company, then we'll be able to improve much better on what we have said.
Sure, sir. Thank you. Thank you. I'll join back with you. Thank you.
Thank you. The next question is from the line of Meet Jain from Motilal Oswal. Please go ahead.
Hi, sir. I'm audible.
Yeah, you are.
Yeah, sir. Hi.
Yeah, you are.
So my first question is on the spillover that we talked about. Can you throw some more light on this? It has been during the course of the last. What was the factor behind the spillover? And can we expect this in Q1? And because of that, can we see a better margin in Q1 as compared to last year?
No. Basically, what I can say is that one is the spillover is one on the domestic side because if you remember, we are working on the scramjet engines, which there have been certain corrections, certain design changes. So now, we are trying to finalize that. But more or less, there has been a little bit of a pause on certain export shipments as well because of the, if you remember, the April 2nd announcement by the United States on tariffs.
So they wanted to wait and watch and see. But post that, once the 90-day spot was released, then the situation became normal subsequent to that. But I considered all those things in the subsequent quarters. As I mentioned, we factored everything which is external to us to achieve at the growth and the EBITDA percentages. And what we will see here in the current year is we'll have a linear quarter-on-quarter growth throughout the year and as well as the EBITDA margins. So that's how it's going to be. And we're also working on reduction on outsourcing, which we are getting qualified for the certain products which we are outsourcing for the coatings. We're going to get qualified for that. So there'll be reduction in the other expenses.
And we have actually, if you remember, all of you remember, we have worked on investing not only in terms of capabilities but also in terms of having the right management bandwidth right from different levels in the company across the board, keeping the future growth in mind. So we have done that, and we are in good shape to take the company forward over the next three years in terms of our growth and as well as the improvement in margins quarter-on-quarter and year-on-year basis.
So when we see other companies, other export-heavy companies to the US, we have seen a huge outflow in Q4 in anticipation of this tariff. But when you say we are in our case, we are seeing a pause by some of the customers. So I just want to get some more clarity because of the anticipation of tariffs, the shipment from India to the US has seen a massive increase across the industry. So that has been the case for us as, right?
No, it is not the case. See, pause means there was not technically a pause, but there were few more shipments that could have taken, but not that it really affected us because there was a marginal INR 25 crores plus difference in terms of the revenue that we could have generated in additional in terms of domestic and a few shipments in terms of export. So that's where it got deferred by a few days. Not that it stopped, but post April 2nd, again, it continued, and it's in the normal routine right now. So that's what it is. And that's why I said that we have considered all this in the current year. Also, we have factored all these variables in our guidance for the current year as well.
Understood. In terms of our fuel cells and clean energy guidance, I didn't get that point. Can you just reiterate what kind of guidance have you given for FY26 for the fuel cells?
See, fuel cells, we are looking at almost like the hot box units. I can't spell out the number of boxes and all that based on the customer's feedback to us. But we'll be growing at a rate of 20% compared to the last year, what we have done. We have done around INR 450 crores plus last year. So we'll do around 20% more this year.
So will this include any electrolyzers orders? So what kind of orders are we getting for electrolyzers from them?
We have not included the electrolyzers orders as of today. So this is what I'm trying to explain, that we have taken the position as of last week, is what I'm talking about the numbers. So obviously, the electrolyzers orders come in, then it will add on to the numbers what we have said, but we have not considered that as of now.
Understood. And lastly, on this other expense part, we have seen an increase in other expense in absolute terms in this quarter. Any one-offs in that?
Yeah. Because if you look at it, the majority of that is the plasma coating, which we are doing in a U.S. company called Progressive. And now, we have done the samples. We are doing it for lab testing, and we are expecting the qualification to be done over the next one month. Once we do that, then our outsourcing will drastically come down, and we'll be able to supply without any kind of outsourcing expenses. So we'll see some kind of reduction happening partially this quarter and subsequently for the next three quarters. So we are looking at that as well. And the majority of that is that, the outsourcing part of it.
Okay. Thank you so much, sir. I'll get back to the team.
Thank you. The next question is from the line of Bala Murali Krishna from Oman Investments. Please go ahead.
Good morning, sir. So regarding the.
Good morning.
25% we are expecting, but in case of nuclear sector and aerospace and defense, we are expecting substantial increase. So the clean energy sector, I think there may not be much growth in this year, right?
No, we have the growth. That's what I mentioned earlier. The clean energy, we're looking at about at least 20% growth this year in the fuel cells, in the hydropower and those areas what we are working upon. The nuclear, we have not considered any of those orders which I said which will flow in this year, substantial orders. See, one good thing is that now it's already done in terms of Kaiga 5 and 6. The pressure has been released to MEIL. Now, they are working with us in terms of finalizing various contracts with us. That process is going on right now. Then the refurbishment of the reactors. So we're looking at anywhere between I don't want to spell out individual numbers because of certain confidentiality, but we're looking at around INR 700-800 crores of orders flowing in over the next one to four days.
So we have enough on our plate, and further, we're going to receive further orders as well. So we have enough on our plate to exponentially grow in the nuclear division moving forward. And we have the capacities to handle this as well.
Okay. So last year, I think in previous year, we were expecting to close the order book by INR 1,500 crores. We end up around INR 1,000. So this year, what would be the expectations of the closing order book considering all these factors?
Look, as I said, whatever number I give, we'll have a very strong order book because when we said INR 1,500 crores, we factored in Kaiga 5 and 6 orders coming in, but that's getting deferred to this and the subsequent quarters, right? And also the refurbishment of reactors. And then we'll be getting substantial orders from the aerospace division, which we are doing extremely well right now. Then the space sector as well. Defense as well is doing really well. We are doing substantially well in various areas. So we'll have a very strong order book, and we'll be able to further finalize the closing order book for this year, probably a month, a month and a half from now, once we have more clarity on all this.
But we'll have a very strong order book by the end of this year after executing what growth we've mentioned right now.
Okay. And this electrolyzer part, sir, I think there is some PLI scheme also announced on that one. So are we looking to participate in that one, that PLI?
We have already done the electrolyzers. We have proven it. But as I said earlier, we are yet to receive any further orders on electrolyzers as of today. Once we receive it, then we will look at our numbers at that point of time. So we have not considered that as of now, which I mentioned earlier.
But I think there is some traction in the domestic market also because some PSU entities are very aggressive on these electrolyzers, hydrogen production. So maybe other than Bloom, maybe we'll have some other scope in the good scope in the domestic also.
See, to establish this, to be very transparent about it, will take time in terms of the facilities and the infrastructure that we need to build for hydrogen storage, various other aspects. So that is where we are right now. But the good thing is we've already developed the product. So we're just waiting for the traction to happen internationally. So that's where we get the real volumes. I understand the domestic requirements, but that's something which I don't want to comment right now. So as and when something happens, we'll definitely inform all of you.
Okay. Lastly, on this new product we developed for the Naval Valves. So what could be the expectation from this product, sir, if it is going to the volume production or bulk production?
No, the requirements are very high because we have developed it, designed and developed it along with the D&D naval area. So we are expecting substantial volume production requirements coming in from that segment in the different side of the business. And that's what we are doing, right? Every year, we keep developing these products, and we'll see the traction happening subsequently in terms of volume production. So we are taking up, our product development team is taking up such products where it makes really economical sense in terms of having that kind of volumes moving forward. So what all you're seeing in our presentation is relevant to volume production moving forward. So those things, as and when they happen, they'll add on to our order book and the execution cycle, which we have not taken today, but it will definitely happen.
Okay. Lastly, on the instruments and other things, there's no further update. Any progress on that deals?
No, we have already mentioned about the updates. See, they have given us to do the prototypes. We have already done the first one. The second one is in progress, which we will most probably try to complete in this quarter. Once that is done, then we move on to the batch production and volume production. So that's what we're going to do. So we have not considered any of that volume production or batch production in the current growth what we have taken because we wanted to be very reasonably conservative in what guidance we give. But that's in the advanced stage of discussion in terms of not only the completion of the prototypes, but also in terms of signing off the agreement with MTAR which can happen this quarter or the next quarter moving forward.
Yeah. I think in further earlier discussion, I think when they receive any orders from India, so that we are going to execute. So as of now, do they have any orders on hand from India for execution purposes?
No, that situation has changed right now because what they are trying to do right now is that they're going to buy the skid and the port, the entire assembly from us, and the batteries are going to be installed at the site, so now we are open to the whole market, so that's the big advantage. That's how they've changed the whole business outlook in terms of manufacturing in India.
That's a good news, sir. Thanks a lot, sir. Thank you.
Thank you. The next question is from the line of Utkarsh Maheshwari from Reliance General Insurance Company Limited. Please go ahead.
Good morning, sir. Am I audible?
Yeah, good morning. You are audible, yes.
I think I just want to understand our medium-term perspective in terms of how we are guiding and how we are delivering. I mean, this is on a very pretty consistent basis.
Can you speak a little louder because we're not able to hear you?
My question is more from the structural thought process. I mean, from every time what we have guided, we have been running somehow short of our guidance. So this time, do you think that our guidance is almost at the lowest point of the thought process and maybe we can outperform this?
That's exactly the idea. See, what you've said is right, but what you have to also understand is that we have done over the last three years, we have guided, but over the last one year, there were some misses in terms of guidance. But the current financial year, we have ensured that we have given a situation of the worst-case scenario where we stand in terms of various external and internal factors, and we have guided in such a manner. So you can be rest assured that what we have guided for this financial year is what we'll be able to achieve for sure.
Maybe margins. So, I mean, we were thinking 24% on. Now, we are guiding 21%. So could this be the bottom? Or, I mean, we can expect some kind of outperformance on these margins. I mean, just want to understand the thought process.
That's what I said. We wanted to make sure that we are making every effort to improve our operating margins and also our EBITDA margins. We wanted to ensure that we guide in a manner that what we can definitely achieve. Probably, if things go in the right direction, probably we'll do better than this. We don't want to say that right now. This is a basic minimum guidance. What we have given is a basic minimum guidance.
Okay. Fair point. Thanks. That's it.
Thank you. The next question is from the line of Ayush Bansal from Niveshaay Investment Advisors. Please go ahead.
Hi. Good morning, sir.
Good morning.
Sir, like I wanted to ask, we make actuators for Tejas aircraft, right? And with more focus on indigenization and government planning to add almost 300 Tejas aircrafts, so how big opportunity do we see here? And out of the 36 Tejas aircraft in operation currently, how many of it has actuators provided by MTAR?
See, the electromechanical actuators we have supplied to the defense, and they have actually tested it. And they have proven they perform very well. And in fact, they've also used our roller screws to test these EMAs, indigenous roller screws. And they also perform very well. They passed the load test. They passed all the relevant tests to do it. So this is what I'm saying. When we have developed the product, we can see the traction happening in terms of EMAs in a big way. And in fact, we had a series of meetings with them recently as well because of the certain emergency procurements what they're looking at. And they're looking at a lot more EMAs which are going to come in the way of MTAR in the current financial year and the future years as well.
So when we talk about certain guidance, I keep repeating that we have not considered any of these opportunities which are already developed by MTAR, but we still have to get those volume orders coming in from the defense sector, which will happen very shortly. So that is where we stand. So we have a great opportunity because we already executed it. We have proven our product. So we are right on top of it to ensure that we can deliver such EMAs to the defense sector moving forward.
Sir, what are the other competitors providing the similar product? How much do we contribute to a single Tejas aircraft?
No, we can't quantify how much we contribute, but when we specifically talk about EMAs, our EMAs have proven the best in the market in terms of quality, in terms of performance. That has been also mentioned by the defense sector, and we are in good shape in terms of delivering the maximum requirements for the defense sector because ultimately, they look at the quality and the performance of the EMAs. Most of the EMAs, we are also importing earlier, and that also we have changed the whole scenario right now because of our capabilities to handle it, so we not only manufacture right from the basics, right from the component level to the assembly level to the entire system, so that's what we have done, so let's hope for the best in terms of getting the maximum kind of orders moving forward.
Okay, sir. And do you have any idea on LCOE of fuel cell versus solar? And how do you see demand for fuel cell shaping in the foreseeable time?
No, there is enough demand. See, that's why we are able to grow at that rate, right? Four, five years back to what we are today, we have done a lot of innovations to make it to where we are right now. So it is growing at a rate of 20%. It might grow even further higher. So it all depends on how the market moves. But we are in good space as far as the fuel cells are concerned.
Sir, can you just comment what's the cost of a hot box and how technically difficult component it is to make? Do you see high competition or something?
I'm only able to comment on the numbers on the hot box because we were asked not to disclose that by the customer because they have certain issues with that. But the entry barrier for manufacturing these systems is pretty long, and it's not easy as well. So it's not that competition can be created overnight. It is not going to happen that way. For MTAR itself, it took a number of years to develop it and also to innovate various products that we are indigenized with. So that's where we are. So we are in a very good space as far as the fuel cell technology is concerned.
Okay, sir. Thank you. That's all.
Thank you.
Thank you. Before we take the next question, participants are requested to limit their questions to two per participant. The next question is from the line of Vipraw Srivastava from PhillipCapital. Please go ahead.
Hello. Sir, could be on the recent bill which has come up in the U.S. where they are revoking subsidies for solar. So any thoughts that doesn't impact MTAR and Bloom positively and currently a potential trigger for MTAR in the longer run?
I don't think so because Bloom is in a very comfortable space right now in terms of their own order book and requirements. And we don't have any such information. And in fact, they're trying to increase their wallet share as well, which we are doing right now, as I said earlier, Vipraw. So I don't think we have any kind of effect or a trigger which might create an issue for us. There's no indication of that as well.
Sure. Sir, can you quickly on the Fluence part? So again, Fluence also supplies lithium-ion batteries for the U.S. market. And if the U.S. market faces issues, do you see it having any repercussions on the entire market, or are these two independent?
No, see, right now, as I said earlier, we are creating assemblies for them, excluding the batteries for now. They're going to do that at site. So that opens up the entire market. That's what Fluence is looking at. So it's a new design of theirs, which we have designed and developed along with them. We have successfully completed the first prototype, and now we are moving on to the second prototype. And once that is done, then we move on to the batch production and then the volume production as well. So we have to create mostly, as I said earlier, the finalization of all this will happen either in this quarter or next quarter where we're going to sign off a long-term agreement with them before we get on to the volume production.
Sure, sir. Thank you. Thanks, sir.
Thank you. The next question is from the line of Piyush Sewaldasani from Sundaram Alternates. Please go ahead.
Yeah, hi, sir. Thank you for the opportunity. So my first question is on the clean energy fuel cell side. If you look at the guidance of Bloom Energy, it's much higher versus what we are guiding. So can you help me understand why are we being conservative or we wait for more orders to come and then we see an upgrade there?
See, that's what I have said earlier. So we have taken. See, this is what we have guided the growth and handle
Sorry to interrupt. Sir, there seems to be a disturbance in your line.
Yeah. Can you hear me now? Can you hear me now?
Yes, sir. Please go ahead.
I think my line is fine actually, but.
O kay. So what I have said earlier is that we have considered the guidance or the numbers based on where we are today. But over the next one to quarters, many things can happen, but we have not taken any of those into account. So as of today, this is what we have done. This is what the guidance we have given as a base minimum. So the reason why we have done that is that we would like to make sure that what guidance we give, definitely we'll achieve that. And probably we might do better than that based on a lot of external factors, nothing to do with us. So a lot of good things are going to happen. For example, whether it's Bloom or whether it is Fluence Energy where we're going to sign an agreement.
We have not considered various things, what we're already working upon. But as and when those things happen, then we look at it and then we keep informing our investors on a regular basis. So that's the game plan for this year.
Sure, sir. So my second question is on the capex. We have done a 100-through capex for FY25 cells. If we understand what was this done for and incrementally, how should we see capex moving with segments and what would be the quantum?
See, it depends. See, right now, this year, we might the basic minimum bottleneck area. We're looking at about INR 50-60 crores of capex going in, not only for the requirements, not for this year, but for the next year, the next couple of years. But if you look at a specific project, like we are working on some very big projects, which I'm not able to disclose right now, but once those projects and agreements are signed, then it will be a separate capex required for that. We already have enough landbank both near the airport and SEZ and a few other landbanks that we have taken. So these will be used not only for our future projects and for the expansion programs, which we have a roadmap over the next three to five years.
Sir, just lastly on the nuclear segment, so the execution in FY25 was slightly on the weaker side. Can you help me understand why it was impacted? Was there any project delay or some clearance delay? And why are we expecting INR 10-INR 60 crores in execution?
See, basically, that's what we have dispatched, right? So we are working on two major projects. One is the FMDC and the fuel transfer systems, which are long-term projects. We have done substantial work in that, which is under work in progress. And we'll be executing those projects for the current financial year. So even though the sales are at INR 19 crores, we have done substantial work in these long-term projects over the last one year. And now we're going to move on to start dispatching them in the current year and the subsequent year. So what orders we are going to receive, substantial orders, we have not considered that in our business plan for this year. But we can see a nice exponential growth in nuclear division since everything is right there on our table right now in terms of order booking.
And execution will happen over the next three to four years. So we're looking at a pretty good exponential growth in nuclear division, which obviously got delayed, right, in terms of order booking because of the delays from various areas. But now it's already the paperwork has started moving, and we'll be able to book those orders over the next one to four days.
Sure, sir. Thank you and all the best.
Thank you.
Thank you. The next question is from the line of Balasubramanian from Arihant Capital. Please go ahead.
Good morning, sir. Sir, earlier guidance of working capital days to a target of 175 days. What are the strategic initiatives we are taking right now? Because right now, it's about 220 levels.
Yeah. No, see, we have guided working capital days 225 days for FY25. So we have achieved 229 days. 175 is a long-term goal. It cannot have.
I think FY27 target, sir. I think.
FY27, see, the moment we have the operating leverage and growth, we are expecting 25% year on year. And we are working closely on the receivables and inventory levels. Definitely, that number can be achievable. And we have the calculations also.
Got it, sir. Sir, in that Middle East side, oil and gas, especially D&C and Capex, are picking up, and how is our business doing in oil and gas? How are the things shaping up?
So we are working with the oil and gas customer with Weatherford. We are going to execute the first article's completion in this quarter, the end of this quarter or beginning of next quarter, and mostly, the agreement, a long-term agreement, is going to be signed off most probably in this quarter itself, and then we create the required infrastructure once the agreement is signed off for batch and volume production, so that's going in the right direction, and that's something which we have not again created in our business plan right now because that's how we have conservatively estimated our growth plan, so as and when it happens, we'll inform the investors about it.
Sir, we have taken a separate debt for this oil and gas segment, a INR 60-80 crore kind of debt. Are we still?
We have not yet taken that debt.
Okay. So when we can expect plan for this oil and gas, sir?
That's what I said. Mostly, in this quarter, we will be able to sign off the agreement. And once we do that, then the whole process will start. Because we are simultaneously doing the first article, which will be done by end of this quarter. And once that is done, then we move on to the batch production within our existing facilities. But for volume production, we have to create a separate infrastructure for them, for which we have the landbank. And once we do that, once we sign off the agreement, the whole kickoff will start off on the oil and gas, which will happen mostly in this quarter. We'll be able to sign off the agreement.
Got it, sir. So my final question on aerospace defense. I think we have initiated development order for compression assemblies of scramjet engines. And so when we can expect volume orders for these hypersonic missile developments?
No, first we have to execute these scramje t engines. We have to do that. We are in advanced stage of that. The raw material is coming. The manufacturing is going to commence. The sooner we do that, the whole team is working on it. So once we're able to do that, then progressively we'll be able to see a proper traction in this area as well, and that's a very highly sophisticated order which we are executing in terms of transit. So let's see how it goes, and we are on top of that issue. The whole team is working on it, especially right from the nuclear sorry, new product development team and the execution team. They're working on it to take it forward.
Got it, sir. Thank you.
Thank you. Ladies and gentlemen, in order to ask a question, you may press star and one at this time. The next question is from the line of Isha Murthy from I M Capital. Please go ahead.
Hello. Sir, can you provide me the guidance for clean energy, like civil nuclear power and aerospace and defense? And what are your plans to improve your cash flows?
So the improvement of cash flow, I think here, you want to answer that first, then I can go on that.
Sure.
See, we are monitoring. See, as you know, once the revenues are increasing, profitability increasing, the internal accruals will be there. We are working on the working capital days also, closely monitoring it. We have achieved INR 101.9 crores, but we are working with a lot of suppliers also to improve our credit period. Every year, our target is to make the positive cash flow from operations henceforth.
The second part of the question is, see, we are into various segments, multiple segments, as I mentioned earlier. We are seeing similar kind of growth pattern happening in every segment, especially in aerospace and defense. We are seeing a huge traction happening there. We have created those facilities. Our products have been approved. Certifications we have received, including our special processes for aerospace. We have Nadcap and we have one-stop shop for various multinationals.
They have been certified by Nadcap. It's a big achievement, which we'll receive the certificate now, so we have done a lot of work in terms of where we are today, in terms of moving forward with the right growth that we are looking at, so that's where we are today, and I should really congratulate the entire team to create that platform to have a consistent and good growth over the next three years with improved margins.
Okay. I also have one more question. You have indicated a sharp ramp-up in aerospace revenue from FY26 and higher in FY27 as well. So what gives you the confidence in this steep growth? And also, long-term contracts or visibility from MNCs already secured to support the scale-up?
Exactly. So the confidence level is one is we have already done a lot of first articles and moved on to the volume production. In some cases, we are already doing the first articles and they're getting approved. We got the required certifications as well. And that's why you can see in the current year itself, in aerospace and defense, it was not there before. As I mentioned earlier, in the aerospace sector, we did INR 9 crores and INR 45 crores last year. And this year, we're doing close to about INR 145 crores. It's purely the effort of the team, not only to develop the products for these MNCs in aerospace sector and getting it approved and certified. And that's what we are seeing the numbers growing rapidly. And we're also having the customer confidence in MTAR in terms of quality and performance, what they've already delivered.
These are the factors which have gone into it. We have created the right infrastructure in terms of special processes and machining and assembly of these products for us to be where we are today and how we are growing in this sector.
Okay, sir. Got it.
Thank you. The next question is from the line of Ayush Bansal from Niveshaay Investment Advisors. Please go ahead.
Hello, sir. Like I had one more question, that back in 2020, 21, we were sitting at gross margins of somewhat 67%-68%, which now stands at somewhat 47%-48%. So can you just tell for this drastic drop of 20% in gross margin, is this due to raw material cost or something else?
It's basically the product mix, right? So the gross margins for the clean energy segment are lower. The volumes are higher. The operating leverage is much better. But if you look at the way we are moving forward, we have diversified into the aerospace and defense sectors in a big way, where the margins are much higher. So basically, the gross margins are also going to be higher in terms of these segments. And also, we are moving into the volume production as well. So you can see a better gross margins moving forward as we move on in terms of diversification. And we are actually literally implementing it and executing those orders right now. So we can see that happening over the next three years with improved gross margins as well.
Okay, sir. Okay, thank you.
Thank you. The next question is from the line of Maitri Shah from Sapphire Capital. Please go ahead.
Yeah, hello. No address. Hello?
Yes, you are.
Yeah, I just had one.
Yes, go ahead.
Yeah, I just had one question on the battery storage system. So we were developing and designing it. So where have we reached with the prototype? And has there been any qualifications that we've received from it?
Yeah, we have done the first prototype. So that's been approved by the customer. And now we are moving on to the second one with a little bit more changes in the design. They wanted some improvements from their side. Nothing to do with it. We're working together with the design and development. So once we do the second prototype, so that will be the basis for our batch production moving forward. That's what I've said, and which we are mostly planning to complete it by end of this quarter or beginning of next quarter. Once we do that, then we move on to the batch production. Then all the designs will be frozen, and then we move forward for batch production and volume production.
Okay. And what kind of expectations do we have from this product in terms of revenue in FY27?
2027, we'll have a substantial revenue, but I'm not going to disclose that more in terms of numbers once we sign off the agreement with Fluence because we had to finalize the pricing and everything because we are doing the prototypes right now, but it's a fantastic opportunity for the company, and we are successfully executing the prototypes right now, so the market has also opened up because of batteries being installed at the site, so let's see how it goes, and once we sign off the agreement, we'll inform them, obviously know the kind of volumes, which is a substantial number that we're looking at.
Okay. And just one clarification. So you mentioned that we'll be growing at 25% for the next three years. Is that right? Did I hear that right?
Can you repeat that question?
At 25% for the next three years?
Yeah, that's right. Absolutely right.
Okay. Thank you so much.
Thank you. As there are no further questions, I would now like to hand the conference over to Mr. Srinivas Reddy for closing comments.
So I would like to thank everyone for taking time to attend this call. And I would like to mention that we are continuing to work towards our growth and also to improve our margins on a linear fashion, quarter-on-quarter basis. Even the growth, we're expecting to grow on a linear basis, quarter-on-quarter basis, year-on-year basis. And we are on track in terms of what we have done, which you cannot see in the form of numbers, but you can see moving forward over the next three years what kind of work we have done in the various segments that we are working on right now. 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 the lines.