Why MTAR Technologies Share Price is Falling

Over the past few years, the national government has actively worked towards becoming Atmanirbhar, or self-sufficient, in the defence sector.

The defense industry's prospects are bright.

However, the stock of the aerospace and military company MTAR Technologies, is facing a hard time. On Wednesday, June 29, shares of MTAR Technologies fell to a 10-month low of Rs 1,223.

Due to margin concerns, the stock has decreased almost 12% during the last five trading days.

What were the main factors that led to the fall?

Let's have a look...

#1 Change in Shareholding Pattern

It always lays a negative impact when promoters of the company sell off their stake.

This action exhibits internal conflict in the company or a disbelief in the promoters of the enterprise.

On Wednesday, 29 June, promoters sold a 1.95 % equity stake in MTAR Technologies, through open market transactions. The stock decreased 7.7% to close at Rs 1,245.15 on the NSE.

The promoters, Dwaram Anitha Reddy and Usha Reddy Chigarapalli, each sold 2 lakh shares at an average price of Rs 1,250.

According to bulk trades data, another promoter, Kavitha Reddy Gangapatnam, sold 2 lakh shares at an average price of Rs 1,251.81.

However, HDFC Multi-Cap Fund purchased 2 lakh shares at an average price of Rs 1,250. Segantii India Mauritius purchased 3 lakh equity shares in MTAR at an average price of Rs 1,249.74.

On the daily charts of MTAR, a bearish belt hold-style pattern has formed with significantly higher volume. Since this occurrence, the stock price of the company has fallen by 12% over the last three trading sessions.

#2 Financials

The year 2022, has been harsh for MTAR Technologies, and the share price has fallen about 49%.

It underperformed the market over the last three months, falling 30% as opposed to the S&P BSE Sensex's 8% decline.

Since reaching a 52-week high of Rs 2,555.65 on 3 January, it has fallen 52%. It's 52-week low is Rs 1,000, hit on 20 June 2021.

In its latest quarterly results, the company's revenue grew 42% to Rs 985 m which was Rs 691 m a year ago in the same period.

The company's net profit was Rs 198 m which was Rs 180 m a year ago, portraying a flat net profit.

Additionally, a rapid rise in employee addition resulted in a 10% increase in employee costs. Also a variable salary structure saw a 24% increase. This created a 34% rise in the employee cost.

As a result, the company's fixed cost increased and along with the current inflationary environment has resulted in weak financial figures.

Let's have a look at the company's performance in the year 2022.

About MTAR Technologies

MTAR Technologies, founded in 1970, has a diversified portfolio of 14 kinds of products in the nuclear sector, six kinds of products in the space and defense sectors, and three kinds of products in the clean energy sector.

It constructs nuclear and pressurised water reactors, aerospace engines, and numerous other important parts, and assemblies.

On 15 March 2021, MTAR Technologies made a spectacular debut in the stock market and rose 85% over the issue price.

However, it didn't take long before the company started to face headwinds and the volatility of the market.

The sectors in which MTAR Technologies operates - clean energy, space, aeronautics, defense, etc - hold bright prospects.

However, before investing one should always check the company's fundamentals and its recent financial performance.

To know more about the company, see the MTAR TECHNOLOGIES company fact sheet and quarterly results.

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...