Ladies and gentlemen, good day and welcome to the MTAR Technologies Limited Q2 and H1 FY 2027 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 this conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Vidhi Vasa from MUFG Intime. Thank you, and over to you, ma'am.
Thank you. Good morning, everyone. On behalf of MTAR Technologies, I extend a very warm welcome to all the participants for Q2 and H1 FY 2027 earnings discussion call. Today on our call, we have Mr. Srinivas Reddy, Managing Director and Promoter, Mr. Gunneswara Rao, Chief Financial Officer, and Ms. Srilekha Jasthi, Head Strategy and IR. I hope everybody had an opportunity to go through our investor deck and press release that we have uploaded on the exchange and on 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. These statements are not a guarantee of our future performance and involve unforeseen risks and uncertainties. Now, I hand over the call to Srinivas sir. Over to you, sir.
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 Investor Relation Partners. We have uploaded our updated investor deck, press release, and results highlights on the stock exchanges and the company website. I hope everybody had an opportunity to go through the same. I'm pleased to share that we have delivered another strong quarter, continuing our track record of consistently surpassing the performance of previous quarters.
During Q2 FY 2027, we reached a revenue of INR 406.8 crore, with an EBITDA margin of 24.4% and a year-on-year EBITDA growth of 483.3%, reflecting our record quarterly performance and sustained growth momentum. We expect this momentum to continue into the second half of the fiscal year, with H2 of FY 2027 anticipated to be stronger than H1, supported by our robust order book and continued focus on execution. However, our growth journey is not merely about delivering a robust set of financial numbers.
It's equally about strengthening our presence across key business segments, building differentiated capabilities, and strategically positioning ourselves in high-growth sectors ahead of broader market adoption. Over the decades, we have established a strong reputation for our niche product portfolio and our ability to identify emerging opportunities, develop specialized capabilities, and establish an early presence in sectors with significant long-term growth potential. This forward-looking approach continues to remain an integral part of our business model and long-term growth strategy.
Against this backdrop, I would like to share our outlook on emerging opportunities across our key business segments, including clean energy, comprising of civil nuclear and fuel cells, aerospace and defense, along with the progress we are making in our new business verticals like data center infrastructure solutions, oil and gas, which we believe will contribute to our next phase of growth as well. Starting with civil nuclear, as you are all aware, we are building specialized capabilities for this sector since the inception of our company.
Over the decades, we have patiently invested in strengthening our manufacturing capabilities, and we now see significant opportunities emerging as Government of India targets to achieve 100 GW of nuclear power capacity by 2047. We have a closing order book of INR 4,075.5 Crore, supported by order inflows from Kaiga and Gorakhpur, and also from the refurbishment programs. As you are aware, we have played a significant role in Prototype Fast Breeder Reactor program, having supplied the majority of the assemblies for the reactor core.
Leveraging this technology expertise, we have also submitted our budgetary quotations for the upcoming fast breeder reactor program, with tenders expected to be quoted over the coming years. In addition, the company is actively submitting quotations to private sector players, intending to bid for the four proposed 700 MW nuclear reactors at Mahi Banswara, further strengthening our pipeline of opportunity in the civil nuclear program. With respect to execution of our existing orders, we expect a meaningful ramp-up during H2 FY 2027, followed by a significant revenue growth from FY 2028 onwards.
Given our long-standing experience, established capabilities, and strong positioning in this sector, we believe civil nuclear will be an important growth driver for the company in the coming years. Moving on to clean energy, fuel cells as sector continues to witness accelerated growth, supported by strong industrial tailwinds and increasing demand for reliable and sustainable power solutions. Our phase II capacity expansion is nearing completion, with the facility expected to be operational by end of November.
Phase III, which will enhance our manufacturing capacity manifold, will be housed in a new dedicated facility, with the overall expansion expected to be completed by June 2028. As discussed during our previous earnings call, the facility being developed for fuel cells is designed to accommodate multiple products under one roof, enabling us to achieve greater scale, improved operational efficiency, and better utilization of resources. In parallel, we have significantly strengthened our workforce by onboarding skilled personnel to support the anticipated growth. We have substantially completed our training activities and made considerable progress in implementing various automation processes in the manufacturing area.
These initiatives are aimed at improving productivity and supporting a seamless ramp-up in production as capacities will be in place in the near future. The company also continues to witness a stable growth in hydropower and wind energy segments as well, and we continue to pursue select products in this segment. Moving on to aerospace and defense, we continue to witness phenomenal growth in our MNC aerospace business while actively participating in several prestigious programs across domestic defense and space as well. Our MNC aerospace business continues to witness a robust demand with products that have already been qualified, seeing a significant ramp-up in volumes.
We expect to complete the qualification process of the first articles for one of our key customers during the current financial year, with volume deliveries under long-term agreement commencing from next fiscal year. To support the anticipated increase in volumes across various customers, we have established multiple units within our existing dedicated aerospace facilities. In parallel, we are actively working on inquiries for new products from existing customers and intend to pursue opportunities with new customers following the completion of the first article qualifications which are being done for the existing customer.
Over the past few years, we have established customer-specific manufacturing capabilities at an accelerated pace, including our dedicated aerospace facility and NADCAP-approved special process facility. We have come a long way from generating revenues from a small number three years ago to aspiring to achieve about INR 150 crore+ revenue purely from our MNC aerospace business during the current fiscal year, which is expected to grow further year-on-year basis.
We believe our sustained investments in building specialized capabilities, including our NADCAP-approved special process facilities and dedicated aerospace manufacturing infrastructure, coupled with an expanding portfolio of qualified products and long-term customer relationships, have laid a strong foundation for scaling our MNC aerospace business in the coming years. Moving on to the domestic defense, we are centering our focus on high-value structural assembly programs for fighter aircrafts.
We are currently undertaking structural assembly projects, including the main landing gear support structure assembly and fuselage door assembly for the Advanced Medium Combat Aircraft program. We are also expected to receive volume production orders for actuator assemblies for the LCA Tejas program in the coming periods. In addition, we anticipate significant order opportunities for various other assemblies and electromechanical actuators, which are expected to further strengthen our presence in the domestic defense sector.
In the space segment, we continue to witness steady growth, supported by our long-standing association with ISRO. We continue to supply critical propulsion systems and electro-pneumatic modules for PSLV and GSLV launch vehicles. To conclude, we are well-positioned for the next phase of growth in aerospace and defense, supported by our increasing participation in prestigious domestic and global programs, which provide us with multi-decade growth visibility. To cater to the anticipated increase in demand and support our long-term growth ambitions, we are also evaluating the establishment of new greenfield manufacturing facilities, with further developments expected over the coming quarters.
Moving on to our diversification to data center infrastructure solutions, which forms part of our clean energy vertical, we are currently working on the execution of the first article orders valued at approximately INR 45 crore. To support this initiative, we are also establishing a manufacturing facility and are in the process of establishing the necessary infrastructure and capabilities. This facility should be operational in a full-fledged manner by end of March 2027. We have a significant potential for scalability following the successful completion and qualification of these first articles, with the business having the potential to scale up to INR 350 crore- INR 450 crore over the next two years.
With the rapid expansion of data center infrastructure globally, we believe this emerging business vertical presents a substantial growth opportunity, enabling us to further diversify our product portfolio and strengthen our presence in high-growth sectors. Moving on to oil and gas, our dedicated manufacturing facility is expected to become operational by end November, while the development and first articles qualification has already been completed with Weatherford, and further first articles with other customers are currently in progress.
With the necessary infrastructure and capabilities being established, we anticipate a meaningful ramp-up in production volume from FY 2028 onwards, positioning this vertical as another growth driver for the company. I am also glad to share that we have commenced exports of ball screws as well, marking a significant milestone for the company. This achievement demonstrates our capabilities in developing import substitute products, not only to meet domestic requirements, but also to cater to global programs, further strengthening our confidence in expanding our presence in international markets.
In addition, our net working capital days continue to remain among the lowest in the industry, reflecting our prudent working capital management and disciplined approach to capital allocation. Our operating cash flows continue to witness significant growth, further strengthening our financial position and supporting our ongoing expansion initiatives. Our CFO will provide a detailed overview of our working capital position, cash flow performance, and overall financial management. We have witnessed a record order inflows of INR 4,102 crore during H1 FY 2027, reflecting robust demand across our business segments.
With strong industry tailwinds and a growing pipeline of opportunities across the sectors in which we operate, we expect to sustain this momentum in the coming quarters and anticipate a strong closing order book by the end of FY 2027. With this, I would like to reaffirm that we have a robust roadmap for the next five years, supported by significant growth opportunities across our business segments and continued investments in building specialized capabilities.
While our long-term growth outlook remains strong, execution continues to be our key priority in the near term, as we remain focused on translating these opportunities into sustainable growth. I would like to take this opportunity to thank all our shareholders for their continued trust and confidence in the company. We remain committed to delivering sustainable growth and creating long-term value for all our stakeholders. With this, I would like to hand over to our CFO, who will provide a detailed overview of the company's financial performance.
Good morning, everyone. Thank you for joining us today. I am pleased to share that we have delivered highest ever quarterly revenue of INR 406.8 crore in Q2 FY 2027. This is a strong growth over the same quarter last year and over the previous quarter, driven by a good execution across our product portfolio. Let me take you through the financial performance. When it comes to year-on-year, revenue from operation was INR 406.8 crore against INR 135.6 crore, a growth of 200%. EBITDA was INR 99.2 crore against INR 17 crore, a growth of 483.3%. Profit before tax was INR 80.3 crore against INR 5.7 crore, a growth of 1314.6%.
Profit after tax was INR 59.8 crore against INR 4.2 crore, a growth of 1309.5%. When it comes to quarter-on-quarter, revenue from operation grew at 12.8% from INR 360.7 crore- INR 406.8 crore. EBITDA grew at 16.6% from INR 85.1 crore- INR 99.2 crore. Profit before tax grew 19.1% from INR 67.4 crore- INR 80.3 crore. Profit after tax grew 19.1% from INR 50.2 crore- INR 59.8 crore. When it comes to margins, our gross margins improved to 46.8% from 45.5% in the previous quarter, mainly because of a better product revenue mix.
EBITDA margin was 24.4% compared to 12.5% in Q2 FY 2026 and 23.6% in Q1 FY 2027. This improvement came from a higher revenue, a better mix, and operating leverage. PAT margin was at 14.7% compared to 3.1% in Q2 FY 2026 and 13.9% in Q1 FY 2027. Earnings per share was at INR 19.45 for the quarter and INR 35.78 for the first half of the year. When it comes to the balance sheet and cash flow, our working capital days came down to 50 as of September 2026 from 172 days in March 2026. This was helped by better margins, tighter working capital management.
By end of FY 2027, we expect to maintain working capital at around 100 days. This is due to higher revenue forecast for the H2 of FY 2027 and also FY 2028. ROCE is expected to improve to around 23% by end of FY 2027 from 17.2% in FY 2026. Our cash flow from operation was at INR 350 crore, a positive number in H1 FY 2027 compared with INR 39.8 crore in H1 FY 2026. This was driven by stronger profitability, better working capital management, and it gives us a solid base for our capacity expansion and future growth. Our total debt is around INR 465 crore, of which INR 189 crore is a long-term debt and INR 276 crore is a short-term debt. Having said that, our investment stands at INR 358 crore.
It literally means we have around INR 107 crore debt after adjusting the investments. When it comes to our outlook, we continue to expand capacity in new high-growth verticals. Our immediate priority is to complete this expansion on time so that we can execute smoothly. We remain confident of achieving our annual guidance. With this, I would like to open the floor for question- and- answers. Thank you very much.
Thank you. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touchtone 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 comes from the line of Abhijeet Singh with Systematix Group. Please go ahead.
Yeah, thank you for the opportunity, sir. Good to see some great results. First question is on the fuel cell business. Sir, after the phase II, what would be our hot box capacity there? Given that our customer Bloom Energy has reported strong results, upgraded guidance also, how do we see order inflows looking going forward in the next two to three years in the medium term from this particular pocket? That is my first question.
See, the phase II capacity, as I said, it is a smaller expansion. It is about 30% higher than our existing capacity. The multifold expansion, as I said, should be ready by June of next year. Look, the order inflows are continuous. I mean, we are receiving substantial orders, and the demand is a lot more than what we can expect. Most important thing is to get the expansion plan in place, which we are working on that. Fortunately, we are exactly as per our timelines, what we have mentioned, and we are working towards that.
Sir, for this expansion of phase III, how much CapEx we are doing in all, including phase II and phase III, and how do we plan to fund that?
Gunneswara, you want to answer here?
Yeah. Actually, our total CapEx planned is in the company around INR 500 crore, of which INR 350 crore for the fuel cells business and remaining INR 150 crore for other sectors, like oil and gas and aerospace and other verticals. It is actually 75% planned through the debt and 25% through internal accruals. Our debt position is, as of today, as we said earlier, INR 189 crore only we have a long-term debt. We have comfortable debt-equity ratios are there, so there is no issue as far as the raising funds into consideration.
Right. And sir, lastly, on the aerospace and defense business. I think sir had mentioned that we are expecting some actuator assembly order from the Tejas program. Apart from that, what are the other programs that we are developing products for, or we expect some kind of a production order maybe in the next year or next one to two years in the defense space?
No, as I clearly mentioned, we are working on some of the prototype orders for the AMCA project, and all these are going to The volume productions are going to come much later. So, we are working out on various areas where we will have potential business in the future, which I mentioned earlier as well, and that is what we are trying to do right now.
So right now, in terms of volume, there is only Tejas, right? In other programs.
We are working on the AMCA programs also, in the case of landing gear support structure assembly and fuselage door assemblies and things like that. It is a continuous effort in adding on to the product portfolio in these various programs that we are working on right now, which will eventually get into volumes at a later date.
Understood, sir. Thanks a lot for answering, and I will get back in queue.
The next question comes from the line of Vipraw Srivastava with PhillipCapital. Please go ahead.
Hi, sir. Good morning. Great results. Just quickly, sir, given that we are expecting a higher ramp-up in H2 compared to H1, what is the view on EBITDA margins? Can we see a further expansion of EBITDA margins from here on, or are you expected to remain around 24% only?
No, we will definitely have improvement. As I said, we don't want to change our guidance in the middle of the year, quarter-on-quarter basis. We have given certain guidance, initially at 80% revenue growth and 24% EBITDA margin. But I have always said that we will perform better than that, both probably in the revenues-wise and as well as the EBITDA margin. Let's see how it goes. But definitely, we are confident that we will be on the higher side in terms of the guidance what we will give.
Fair enough, sir. For this rapid improvement on the working capital side, which we have been seeing for last two quarters, just wanted to understand that is this going to be sustainable or, I mean, is it primarily because of the CapEx spending happening on the AI side, and hence, we are seeing this from the end of Bloom Energy? What's your view on this working capital there? Do you expect it to remain sustainable over next couple of years?
See, what our Yeah, we have achieved through various initiatives in the company, like advances from all the customers from all the sectors, and also payment cycles, we have negotiated better terms. Also, we are getting a refund of GST also, around INR 70 crore-INR 80 crore per year we are expecting to get. So, we are working on all the elements of the working capital. But see, when you look at the—
Though we have not given any official guidance, you may be knowing various article Next year, the moment our targets are higher, definitely working capital cycle will be higher. But as of by end of this financial year, we are targeting 100. In the long term, our goal is to maintain at around 150 days, for which whatever required organically, we will continue to do and monitor on a weekly basis, the working capital.
Oh, sure. Thank you. Thanks a lot. Thank you.
Thank you.
The next question comes from the line of Balasubramanian with Arihant Capital. Please go ahead.
Good morning, sir. Thank you so much for the opportunity. Sir, if you look at more than 25% of revenue comes from products that have been developed over the past four to five years. Just want to understand the new vertical side, especially in the data center and SLB classic components, all are in first article stage. What kind of cumulative investments are required and how do we look at the new verticals in terms of revenue over the next four to five years?
I have already mentioned this. As far as our oil and gas facility is going to be ready by end of November. We are simultaneously working on the first articles in our existing units, where the volumes will kick in from FY 2028, which will be substantial. Obviously, data center, the first article itself is INR 45 crore. I have said that the volume growth here can be between INR 350 crore- INR 400 crore of revenues generated from this. The facility for this, in all aspects, will be ready by end of December for data center infrastructure facility. We are working towards all this, and all this are on track as far as we are concerned.
Yes, sir. Sir, especially on the data center side, I think after this INR 45 crore first article, I think the customer have mentioned eight times of requirement. So, is it the right way to understand another INR 350 crore- INR 400 crore kind of order inflows, especially in the data center space? We may expect?
That is right. That is exactly right, and that is how we are ensuring that the phase I. We are splitting this into two phases. The phase I of the plan, in fact, the plan what we have established for the facility should be ready by end of November or beginning of second half of December. Then the phase II will be ready by June of next year. So, we are on track with that requirement of the customer, what we have said that eight times the first article value.
Okay, sir. Sir, actually, you are guiding 80% revenue growth, but if you look at inventory is nearly INR 680 crore, almost five months of your FY 2027 revenue guidance. So, shall we assume as it is a very minimum base case at 80%, maybe 100%- 120% kind of range growth rate, maybe in Q3 and Q4?
No, I will not be able to comment on that. I have said that we do not want to change the guidance at the middle of the year. What we have said initially, the 80% revenue growth, but we will definitely do better than what we have said, both in terms of revenue and margins.
Okay, sir. My last question, if you look at defense and aerospace, we did INR 100 crore in FY 2026. If you look at in H1 FY 2027, INR 80 crore, or maybe it might reach to INR 150 crore- INR 200 crore by FY 2027. We have guided nearly INR 600 crore, INR 700 crore by FY 2030. The same way, if you look at the product side, INR 134 crore we did in FY 2026. The guidance is more than INR 1,000 crore by FY 2030. I just want to understand, these are that large claims, so I just want to understand what kind of capacity or CapEx we need to achieve those aspirations. Especially, also you can mention customer LOA backed side.
See, look, the product division, we have been working on this from quite some time now, and we are also implementing the capacities required for this, which is part of our CapEx plan, which Gunneswara has explained earlier. Our growth trajectory for this, as I said earlier, will grow rapidly year-on-year basis. It is backed up by clear customer forecast and orders, and the capacities are being put in place. I do not think we should have any issues with achieving the ultimate goal of the number what you mentioned.
Okay, got it, sir. Thank you.
The next question comes from the line of Meet Jain with Systematix AMC. Please go ahead.
Hello, am I audible?
Yeah, you are.
Yeah, hi. Congratulations on a very strong set of numbers. My first question is just a clarification on the working capital days. Rao said that this year we are going to end at around, let us say, 100 working capital days, but long-term sustainable guidance is 150 days. Am I correct?
Yes, you are correct.
This 100 days, as you mentioned, is because of the GST refunds and other measures. Also earlier you have mentioned
No, after getting all those actions, we are thinking of getting 100. The reason being is H2 will be stronger compared to H1, as our MD said. When we do more in the quarter four, and all those will be in the receivables and all. Also for next year execution, we need to invest at least one, two months before the year end. So, I will have the more inventories for the next year, stronger execution targets, whatever we have. We have to invest those materials.
So, that will actually give the revenue in the next year only. The main reason is, that is the only reason. Otherwise, if everything goes as per the same manner, we will be at 50, 60, on this range only. But we are in a growth trajectory, so that will increase. The incremental revenue will require incremental working capital, as you know. That is why our long-term target is 150 over the next two, three years, and by the end of the year is 100.
Understood. Also on the receivable side, have we kind of had the client agreed to give some advances for the orders?
Yeah. See, whatever the 50 days we achieved, we got advances from all the sectors of our existing customers. We received advances also. We negotiated better commercial terms with our customers, be it civil nuclear power and hydel sector and fuel cells, and every customer we are actually negotiating advances.
Understood. Second thing is on the CapEx. We continue to stick to our earlier CapEx guidance of around, let's say, INR 300 crore this year, INR 200 crore next year kind of guidance. Total INR 500 crore of CapEx spend in the next two years.
Yeah. See, INR 500 crore by end of this financial year, compared to whatever we incurred and what is in work in progress, what is going to be incurred is around INR 500 crore. It all depends on the timely execution of the projects and all. We are working to complete our expansion plan as we committed.
We are seeing INR 500 crore CapEx outflow this year, FY 2027.
Yes. Partially we incurred in the last year also, and this year by end of FY 2027, whatever we incurred partially around INR 100 crore, we incurred in FY 2026 plus INR 400 crore, because all these are continuous projects in oil and gas. As you know, it started in the month of January. So, we incurred from that time to end of this financial year. So, INR 500 crore will be, INR 100 crore is FY 2026, INR 400 crore will be FY 2027.
Going ahead, because this will be the major CapEx spend we will see in FY 2028.
Yeah. So, whatever money we are spending, not for this year, it is for the next financial year also. In every year, we need to incur some sustenance CapEx and also growth CapEx we have to incur. That will be around INR 50 crore- INR 100 crore in a year for next one, two years. Whatever CapEx we are putting as of today, it will generate at least 3x of the revenue, whatever we are doing presently.
Understood. Last thing is on the nuclear power. We have received a major Kaiga 5 and 6 orders in Q2 FY 2026, and it has already been one year, like it is execution period of three years. So, can we expect the major revenue booking happening from the second half of this year for nuclear power?
No, we can expect certain revenues coming in this year, but the majority of the revenues will kick in from FY 2028 onwards, going up to FY 2029 and FY 2030.
Okay. The even Kaiga 5 and 6 order as well?
Yeah, because there is a lead time for raw materials and everything and specialized bottles. We have that much time to do in any case. I have said that we are completely full on the plate, and then we have further orders also kicking in. We got even refurbishment orders as well. This is spread over three and a half years. We are right on track with that. The major revenues will come in from FY 2028 onwards.
So, this INR 134 crore of order inflow in nuclear this quarter is towards refurbishment?
Yes, that's right.
What's the execution timeline for this?
That is two years.
Two years. Okay. Thank you so much.
Participants, in the interest of time and fairness to others, please restrict yourselves to two questions. For any more questions, you may rejoin the queue. The next question comes from the line of Gaurav Nagori with Avendus Spark. Please go ahead.
Yeah, thanks for the opportunity. My question is on the new product segment. We have seen a sharp decline in execution this quarter. Was there one-off execution in last quarter where you have reported INR 100 crore of top line in this? Secondly, what is the execution period for this new product order book? That is my first question.
You are talking about the product division, right?
Yes.
Yeah, there was a small error in that. There was almost INR 60 crore of classification done in other segment which was supposed to go into the product division, which they are correcting it right now. Technically, it is on track with what we have said earlier.
Okay. So, you are saying that last quarter INR 100 crore number, the INR 60 crore was misclassified in this segment?
Yeah. No, this quarter around INR 60 crore was classified wrongly, which they are going to correct it now and upload it. So, basically it is around INR 126 crore for this quarter.
Okay. And which segment it is classified into in this quarter instead of this product? Yeah.
Am I audible?
Yeah, I can hear you.
Yeah. So, for revenue for products and others, it is given as INR 65 crore. Actually, it is INR 125 crore. Basically, we are supplying box builds for multiple customers, which got categorized under clean energy vertical. We will upload the presentation again. Similarly, in the order book related to products and others, we need to add an inflow of around INR 60 crore, which will get deducted in clean energy. These two changes will be made, and the presentation will be uploaded again.
Understood. So, what is the timeline for the execution of this new product order book? Is it one year or more than that?
No, this is all one year. I mean, these are all continuous orders that we are receiving, and you will see a growth happening quarter-on-quarter basis in the product division. So, these are all short cycle within one year also.
Okay. Which means this segment would become a INR 500 crore+ annual run rate segment for you, compared to less than INR 100 crore in last few years.
Yeah, exactly. So, we have been working on that from number of years, Gaurav, as you are aware of it, and it's going up pretty rapidly. So, we move in that direction, and they'll make those corrections and upload it again, actually, like I said.
Sure. The second question is on the Bloom Energy continues to talk a lot on this 800 V DC architecture and introduction of the products in that segment in the coming time. So, have you started also designing or working with them for these new product? And what do you think, when do you think tentatively the ordering for those will start for you?
It's too premature to say right now, Gaurav. We are working with them on various projects on a continuous basis. Our team is working on. We have a separate team for that, which is working on it. So, we'll update you as and when we have more traction on that.
All right. Just last question, just a bookkeeping one. Of the full receivables, how much would be the bill discounted as of now?
We have not discounted. Whatever we have done is organically. Only around $1 million is discounted. That is all.
Okay. All right. Thank you for answers.
Mm-hmm. Thanks.
The next question comes from the line of Bala Krishna with Oman Investment Advisors. Please go ahead.
Hi, good morning, sir. Congratulations on good set of numbers. Sir, my question is on the nuclear sector. On Mahi Banswara, if the orders gets coming, so what could be our potential from that orders, sir? Like you said, in this PFBR, we have around INR 1,500 crore potential per reactor, like that.
See, Mahi Banswara is about four reactors. It depends on it's directly given to major private players and like what we are doing in Kaiga 5 and 6. So, Kaiga 5 and 6 is two reactors, and these are four reactors. So, hopefully, we should be close to the number of INR 1,000 crore, between, I would say, INR 700- INR 1,000 crore roughly.
Oh, okay. That's good. And CapEx spend, sir, so down the line, maybe three, four years, what kind of CapEx you are expecting?
For nuclear, we have already implemented. For nuclear, we do not need expensive. Probably for some bottleneck areas, but other than that, we will see how it goes. The kind of growth what we are seeing in nuclear division, we will see how it goes over the next one year, and then we will plan for a major facility based on the demand what is being created right now in the market.
Yes, sir. My question is regarding overall company, sir. Maybe three, four years down the line, what could be the expected CapEx?
What we have catered to CapEx of around INR 500 crore would be good enough, but it all depends on. We will have some areas which, as CFO has mentioned, INR 50 crore- INR 100 crore every year. But if any major project comes in, probably we have to relook at the CapEx requirement at that time.
Okay, sir. Also, thanks to Mr. Gunneswara for reducing this working capital days. There is a drastic improvement in the working capital days in the last two quarters, sir. That is all from my side. Thank you.
Thank you very much.
Thank you very much.
The next question comes from the line of Vedant with Niveshaay. Please go ahead. Vedant, please unmute your line. Yes.
Hello. Hi, good morning, sir. Thank you so much for the opportunity. Firstly, I wanted to understand, sir, like you mentioned about the electromechanical actuator program that you are working for the forces. So, how big will be the opportunity for us?
No, this is an opportunity of INR 150 crore approximately, but we are expecting these orders to come in at the earliest. So, we are waiting for that. Normally, it takes We do not have special timeline for this, because certain organizations do take time to release the orders. But it is an We have developed all these actuators over a period of time, and then we are expecting a good amount of volumes coming in over the years, and that is where we are right now.
Okay, got it. Secondly, on the fuel cell, a lot of companies are trying to enter that particular market. There is a company, Nedstack, Netherlands, which is also trying aggressive to enter in the Indian market for the fuel cell. Any agreement that we are also trying to tap these all other players for the fuel cell for these products, hot boxes and all, or we are being on the Bloom only?
No, it is not exactly we are being on only Bloom or anything like that. A lot of companies are trying a lot of things, but they need to come up to the level of Bloom, which is a far-fetched one. You know, it is not easy. Bloom itself took about 12- 15 years to develop where they are today. We will see how it goes from time to time, and then we will take it forward from there.
Okay, got it. Lastly, on the product division only, how much revenue you expect for the product division? You were mentioning about the INR 100 crore run rate, right? Now you are trying that reclassification was happening, and it was a INR 125 crore. Going forward, you expect that similar run rate you will be able to maintain on that side?
Absolutely, yes.
Okay. Okay, thank you so much for answering.
The next question comes from the line of Jenish Karia with Union AMC. Please go ahead.
Yes, thank you for the opportunity. Good morning, sir, and congratulations on a very strong set of numbers, both on operational front and cash flow front. My question is slightly on understanding the product for the clean energy segment. The hot boxes that we fabricate, is it currently shipped as it is, or does it include critical diagnostic thermal sensors kind of thing, which are pre-integrated and sent by MTAR? Any sense on that?
No, it's a complete assembly. I don't want to go into the specifics because of the NDA sign, but it's a complete assembly of the unit that we ship to the customer.
Understood. But the assembled parts, are they sourced domestically, or are we import-dependent on that? Any color on that?
Some of the bought outs are imported, but most of them are domestic, and we have developed a lot of bought outs which we use in the hot box assembly as well.
Okay, so vendor ecosystem is well present within India, and do we plan to further forward integrate internally, or will we be dependent on the vendor ecosystem that we have developed?
Over the years, we have done a lot of indigenization of various of these products which go into the assembly, and we continue to do that moving forward as well. Certain areas we have to import, but most of it is indigenized right now.
Understood, sir. Thanks for explaining me, and all the best for the future. Thank you.
Thank you.
The next question comes from the line of Mihir Manohar with TRUST Mutual Fund. Please go ahead.
Yeah, hi, thanks for giving the opportunity, and congratulations on great set of numbers. Sir, I mean, if the 5 GW kind of a deployment was to fructify by 2029 or 2030, will we further need to expand our capacity beyond the 30,000 units? And if yes, by how much? If that 5 GW were to fructify, and are there any talks happening on that side?
See, I do not want to talk about the number of units or whatever, but our capacities are being implemented to cover the requirement of the customers in totality. So, that is where we are. The multi-fold capacity what we are implementing will cover all the requirements of the customers, whatever is being given to us.
Sure. As of now, there are just two suppliers, right, for hot boxes, you and the South Korean company, or there any other supplier who has developed?
No, nobody else.
Okay, sure. Thanks. Second question was just on the guidance side. I mean, I agree that we have, numbers have been coming quite well. First half, very good numbers. When I see balance part of the year, that translates to around a INR 450 crore of top line, INR 450 crore- INR 470 crore per quarter, if I consider a 90%-95% growth.
Now, this is despite the fact that we will be having 30% capacity addition from the phase II facility, plus non-fuel cell divisions are also expected to do quite well. I mean, is there any local challenge or local hindrance or local government issue, some project-specific issue, which is basically keeping us on the ground, on the check of not increasing the guidance? Is there any specific reason for it?
No, there is no check from the local government. They have been very supportive on every aspect of it. We only don't want to change our guidance each time, each quarter. That's what we have taken a decision. But as I said very clearly that we will definitely perform better than the guidance given, and we would like to stick to the guidance what we have given at the beginning of the year. That's it.
Sure, understood. I mean, local government or local hesitation challenges out there for you?
No, there's no challenge as such like that.
Understood. Sure. That's it from my side. Thank you, sir. Thank you.
The next question comes from the line of Abhijeet Singh with Systematix Group. Please go ahead.
Yeah, thank you for the follow-up opportunity. Sir, just wanted to understand the impact of the West Asian situation on our business. In terms of cost escalations or trade disruptions, we all know that trade cost has been rising substantially. Is there any impact on our export business or shipments or sourcing?
No, there is no such impact for us right now, because whatever we do, it is all exports, and there is no such impact. Yes, there are certain cost increases in terms of certain consumables which we have looked into because of the current geopolitical situation, which we are all aware of. Other than that, I think there is no such issue right now.
How much is the forex gain in the other expenses or other income?
G.R., can you answer that please?
Yeah. See, the forex gain is only in second quarter, INR 2.3 crore out of the total INR 8.5 crore.
All right. All right, sir. In the aerospace business, I mean, you mentioned that there's a customer that we are working for, on the first articles for, and you expect them to be done by the year-end. Overall, sir, how many customers do we have in terms of SKUs or number of customers? If you can throw some light on that aspect. What is our pipeline of first articles going forward? How do we look at that business, scaling from here?
See, basically, we are working with four different customers. Some are into volume production, some are into first articles. By end of this year, we are completely will be finishing the first articles and moving into volume production. There are a lot of opportunities on our table, and many new customers are coming and approaching us. We are taking this step by step to make sure that we cater to the existing customers. The issue here is the existing customers themselves are increasing their product portfolio with us. We are going step by step. We also need to look at our capacities to move forward. That's what we are doing.
As I said, the MNC aerospace business is to grow rapidly, and we're also going to expand in that area over the coming two, three years to cater to the new customers as well on a step-by-step basis. That's the right and prudent way to do it. The qualification process for aerospace is a pretty long time, which we have gone through it, and we have completed it in all aspects, including NADCAP and each individual customer qualifications we have been cleared. That is a major step, which that itself would take about one and a half years or so. We have done that as well. We are on track with what we are planning to do.
Yeah. I mean, sir, some of our peers have reported strong inflows in the past one year, and the entire industry is booming with good inflows. From that perspective, we have been working on these first articles for a long time. I mean, I would assume that there would be one year, maybe two years down the line, or three years down the line, when we transition to a higher volume business in the aerospace segment. That was where I was coming at.
Yeah, absolutely you're right. Absolutely you're right. It's going to be in that direction itself, and that's what we're working on. See, when you talk about first articles, it depends on how many of them and what kind of package you are dealing with. For example, with one customer where they were sourcing from 16 different companies, the entire package has been given to MTAR to execute the whole thing. It depends on the kind of package you're dealing with, right? That's how it works.
Right, sir. Thank you for answering my question, sir.
The next question comes from the line of Devang Patel with Sameeksha Capital. Please go ahead.
Hi, sir. You mentioned earlier that you expect to end the year with a strong order book. Should we infer that you are expecting order book to grow further from where it ended at Q2? On the same point, if you can explain at what intervals do you expect to get replenishment orders for your hot boxes?
We cannot really say that. Probably we might get at the end of the year or beginning of next year. It all depends on the timing of it. But more than the orders that we have very, very strong forecast. Obviously, the multifold expansion is happening because of that. Whatever we have said, we will stick to that for now, and we will see how it goes. But we will definitely have a very strong order book at the end of the year and moving forward as well.
Okay. Sir, and secondly, you mentioned earlier how working capital has come down, you are getting better payment terms. What are the advances we get now as a percentage of the orders? Whatever that improvement that happened, can we expect that to sustain?
G.R., you want to answer that?
Yes. It is various percentages. Not only linked to percentages, also future orders also. Civil nuclear power has some 30%, 40% advances are there as per the tender document. In case of other customers, we negotiate various manners. It depends on the customer. Some people may give 20%, some maybe 20%. Some may be giving in the future deliverables advances. It is a mix of so many things. But whatever we do, we will ensure that there is no impact to our profitability. That is how we always take a call. Also, we do not want to increase working capital and debt. Our aim is to get more advances wherever it is possible, and it depends on the customer to customer, those percentages vary.
Those were my questions, sir. Thank you.
Thank you.
The next question comes from the line of Parth Thakkar with JM Financial. Please go ahead.
Thank you for the opportunity. I just wanted to ask what is driving the products revenue, and can you also clarify the overall guidance for the revenue of products?
See, what is driving the products revenue is various aspects. We are looking at various products that we have developed in space of ball screws, roller screws, water lubricated bearings. We have commenced exports of ball screws as well this quarter. Then we have the various other assemblies that go into different sectors, box builds for different customers. So it is a combination of number of things that we are doing, and we will consistently grow in this area, which we have been working from quite some time, and we are working on further products as well to add on to this portfolio that we have.
Okay. And what would be the guidance for the revenue for this particular vertical for this year?
It should be around close to about INR 500 crore.
Okay, thank you. Those were my questions.
The next question comes from the line of Ashray Sheth with Ventura Securities. Please go ahead.
Thank you for the opportunity, sir. Firstly, congratulations on wonderful set of results. Firstly, I wanted to ask about, there might be some fears of the slowdown in AI CapEx. What we are doing as a company to, let's say, mitigate those risks?
Can you repeat your question?
Yes, sir. Firstly, my question was about the risks of AI CapEx slowdown. We have seen over the past few days in the U.S., there might be some fear that AI CapEx might actually slow down. As a company, what are we doing to mitigate those risks? Have we deployed any alternative strategies?
No, this is all unwanted speculation, but we are growing in different segments, as you have seen very clearly. We are not just depending on one segment as such. But all this is unwanted speculation that people are talking about, but we have a very strong forecast which has been given by customers, so there is no issue with that.
Okay, got it, sir. Sir, could you help us understand how much of the current order book is actually executable in the next 12- 18 months versus the order book which is giving us long-term visibility? More importantly is, how much revenue conversion of the order book do you expect structurally going forward when the nuclear and aerospace part of the order book scales up? Do you see a decline in the revenue conversion ratio?
I don't see any decline. Most of our order book, if you have seen, it's not like over a period of 10 years. In nuclear, it is over a period of three and a half years. Fuel cells is spread over one year or whatever it is. Basically, most of our order book is to be executed within a period of, majority of it within a period of 12- 18 months. That's how it works. It's not a order book which shows like to be executed over the next 10 years or so. It doesn't work like that with MTAR. Whatever order book we have shown is on a time frame of what I've mentioned to you right now.
Sir, lastly, I wanted to ask about the asset turnover that we are targeting. We are targeting 3x. Can you give us specifically the asset turnover for different verticals that we might do? What do you expect the asset turns for our fuel cell business, aerospace, oil and gas, on those verticals?
G.R., you want to answer that?
Asset turnovers are there for different sectors, but it is confidential. We can't share the sector-wise as of today because of some NDAs we signed with some of the customers of some sectors. As you know, our gross block is not, as of today, if you look at our debt is, no, our fixed assets are not much. Even if we are incurring INR 500 crore also, it will become INR 1,000 crore, INR 1,200 crore maximum.
As I said, it is 3x revenue we will get it compared to whatever is targeted for this financial year. I think it is a little bit difficult because all our assets are fungible across all sectors. That also a little difficulty in answering that question. But our aim is to maintain at least 3x of revenue from the existing CapEx and whatever we have in the company.
Sir, how much of our assets would be fungible as per you?
See, out of the total, entire assets are fungible, except in some areas. Because of the scale of operation, we can't use 100%. Across all the units, suppose we have 16 units are there, around 15 units are fungible. Around 15 units, whatever equipment we have, it is fungible.
Okay, sir. Got it, sir. Thanks for answering all my questions, and all the very best for the future.
Thank you.
Thank you.
Ladies and gentlemen, due to time constraints, we will take that as the last question for today. I would now like to hand the conference over to the management for the closing remarks.
I would like to take this opportunity to thank all the shareholders for their continued trust and confidence in the company. I would also like to thank every team member of MTAR for their committed work to be part of our growth trajectory. We remain committed to delivering sustainable growth and creating long-term value for all our stakeholders. I would like to thank each one of you too for attending this earnings call. Thank you so much.
Thank you, sir. Ladies and gentlemen, on behalf of MTAR Technologies, that concludes this conference call. Thank you for joining us, and you may now disconnect your line.