MTAR Technologies (NSE:MTARTECH) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the MTARTECH Technologies Limited Q2 and H1 FY 'twenty seven 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. Please note that this conference is being recorded. I now hand the conference over to miss from MUFG in time. Thank you, and over to you, ma'am. Thank you. Good morning, everyone. On behalf of MTARTECHNOLOGIES, I extend a very warm welcome to all the participants for q two and h one f y twenty seven earnings discussion call. Today on the call, we have mister, managing director and promoter, mister, chief financial officer, and miss, 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.

1:24 Now I hand over the call to Sri Neva, 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. Ganeshwarov, Chief Financial Officer Ms. Sileka Rajeshky, Head Strategy Investor Relations and Korean Capital Investor Relations 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.

2:13 During Q2 FY 'twenty seven, we reached a revenue of 406.8 crores 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 'twenty seven anticipated to be stronger than H1, supported by our robust order book and continued focus on execution. However, our growth journey is not nearly 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.

3:03 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 center infrastructure solutions, oil and gas, which we believe will contribute to our next phase of growth as well.

3:52 Starting with civil nuclear, as you're all aware, we are building specialized capability... 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 gigawatts of nuclear power capacity by 2047. We have a closing order book of $8.12 crores supported by order inflows from and also from the refurbishment programs. As you're 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, which tenders expected to be quoted over the coming years.

4:51 In addition, the company is actively submitting quotations to private sector players, intend... Intending to bid for the four proposed 700 megawatt nuclear reactors at Mahi Baswara, 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 'twenty seven, followed by a significant revenue growth from FY 'twenty eight 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 cell sector continues to witness accelerated growth, supported by strong industrial tailwinds and increasing demand for reliable and sustainable power solutions.

5:44 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 in multifold, 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, improve operational efficiency and better utilization of resources. In parallel, we have significantly strengthened our workforce by onboarding skilled personnel to support the anticipated growth.

6:32 We have substantially completed our training activities and made considerable progress in implementing various automation processes in the manufacturing area, and 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 steady 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 defensive space as well.

7:22 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 tactical qualifications, which are being done for existing customer.

8:10 Over the past few years, we have established customer specific capabilities at an accelerated phase, including our dedicated aerospace facility and Nat Cat approved special process facility. We have come a long way from generating revenues from a small number three years ago to an expiring to achieve about INR 150 crores plus revenue purely from our M and C aerospace business during the current fiscal year and which is expected to grow further year on year basis. We believe our sustained investments in building specialized capabilities, including our Natcam approved special process facilities and dedicated aerospace manufacturing infrastructure, coupled with an expanding portfolio of qualified products and long term customer relationships have made a strong foundation for scaling our MNC ever scale business in the coming years.

9:03 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 actuated assemblies for the LCA stages program in the coming period. 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 infrastructure. In the space segment, we continue to witness steady growth supported by our long standing association with ISRO.

9:52 We continue to supply critical professional systems and electromagnetic models 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 with strategic, 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're also evaluating the establishment of new greenfield manufacturing facilities with further development 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 execution of the first article orders valued at approximately 45 crores.

10:43 To support this initiative, we're also establishing a manufacturing facility and are in the process of establishing the necessary infrastructure and capabilities. And this facility should be operational in a full fledged manner by end of March twenty twenty seven. We have 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 $3.50 to $404.50 crores 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.

11:33 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 the other code and further first articles with other customers are currently in progress. With the necessary infrastructure, gigabit is being established. We anticipate a meaningful ramp up in production volume from FY 'twenty eight onwards, pushing this vertical as another growth driver for the company. I'm also glad to share that we have commenced exports of wall 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 and expanding our presence in international markets.

12:30 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 4,002 crores during H1 FY 'twenty seven, 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 'twenty seven.

13:26 With this, I would like to reaffirm that we have a robust road map 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 our CFO, who will provide a detailed overview of the company's financial performance.

14:16 Yeah. Good morning, Thank you for joining us today. I'm pleased to share that we have delivered highest ever quarterly revenue of INR 406.8 crores in Q2 FY 'twenty seven. 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 to the financial performance. When it comes to year on year, revenue from operation was 406.8 crore, against $1.35.6 crore, a growth of 200%. EBITDA was 99.2 crore. Aggressive 17 crore, a growth of 483.3%. Profit before tax was $80.80.3 crore.

15:03 Aggressive 5.7 crore, a growth of 1,314... Thirteen fourteen point six percentage. Profit after tax was 59.8 crore. Aggressive 4.2 crore, a growth of $13.00 9.5 crore, five percentage. When it comes to quarter on quarter, revenue from operation grew at 12.8 from $3.60.7 crore to $4.00 6.8 crore. EBITDA grew at six... At 16.6% from $80.85.1 crore to 99.2 crore. Profit before tax grew 19.1% from 67.4 crore to 80.3 crore. Profit after tax grew 19.1% from 50.2 crore to 59.8 crore.

15:54 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. And EBITDA margin was 24.4% compared to 12.5% in q two FY twenty six and twenty three point six percent in q one FY twenty seven. This improvement came from the higher revenue, a better mix, and operating leverage. PAT margin was at 14.7% compared to 3.1% in q two FY twenty six and thirteen point nine in q one FY twenty seven. Earnings per share was at 19.45 for the quarter and 35.78 for the first half of the year.

16:44 When it comes to the balance sheet and cash flow, our working capital days came down to 50 as of September 2026 from one seventy two days in March 2026. This was helped by better margins, tighter working capital management. By end of FY '27, we expected to maintain working capital at around hundred days. This is due to higher revenue forecast for the h two of FY '27 and also FY 2028. ROCE is expected to improve to around 23% by end of FY twenty seven from 17.2 in FY twenty six. And our cash flow from operation was at $3.50 crore, a positive number in h one FY twenty seven compared to... Compared with 39.8 crore in h one FY twenty six.

17:36 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 debt... Our total debt is around 465 crore, of which $191.89 crore is a long term debt and $2.76 crore is a short term debt. Having said that, our investment stands at $3.58 crores. It literally means we have around a 107 crores debt in the... After adjusting the investments. When it comes to our our outlook, so we continue to expand the capacity in new high growth verticals. Our immediate priority is to complete this expansion on time so that we can execute smoothly.

18:24 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 1 on their touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. 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 Abhijit Singh with Systematics Group. Please go ahead. Yes. Thank you for the opportunity, sir, and good to see some great results.

19:17 First question is on the fuel cell business. Sir, after the Phase II, what would be our hot box capacity there? And 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's my first question. See, the Phase two capacity, as I said, it's a smaller expansion. It's about 30% higher than our existing capacity. And that multiple expansion, as I said, should be ready by June of next year. And, look, the order inflows are continuous. I mean, we are receiving substantial orders, and the demand is lot more than what we can expect.

20:06 And most important thing is to get the expansion plan in place, which we are working on that. And fortunately, we are exactly as per our timelines, what we have mentioned, and we are working towards that. And, sir, for this expansion of phase three, how much CapEx we are doing in all, including phase two and phase three? And how do we plan to fund that? Jair, you want to answer that? Yeah. Actually, our total CapEx plan is in the company around 500 crores, of which 350 crores for the fuel cells business and remaining $1.50 for... $1.50 crores for other sectors, like oil and gas and aerospace and other verticals.

20:55 And it is actually 75% planned to... Through the debt and 25% through internal Our debt position is as of today, as you... We said earlier, $1.89 crores only. We have a long term debt. So we have comfortable debt to equity ratios out there. So there's no issue as far as the raising funds into consideration. Right. And, sir, lastly, on the aerospace and defense business. So I think you have mentioned that we are expecting some actuators in the order from the previous program. So apart from that, what are the other programs that we are, you know, 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 different space.

21:46 No. As I clearly mentioned, we're working on some of the product headquarters for the Mtar project, and all these are going to... The volume production are going to come much later. So looking out looking out on various areas where we'll have potential business in the future, which I mentioned earlier as well, and that's what we're trying to do right now. So right now, in terms of volume, it is only status. Right? Yeah. In other programs. We are working on the programs also in the case of landing gear support structure assembly and push like core assemblies and things like that. It's a continuous effort in adding on to the product portfolio in these various programs that we're working on right now, which will eventually get into volumes at a later date.

22:34 Understood, sir. Thanks a lot for answering, and I'll get back in queue. The next question comes from the line of with Philip Capital. 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's 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'll definitely have improvement. As I said, we want to stick to a... 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.

23:22 But I've always said that we'll perform better than that, both probably in the revenue set... Revenues wise and as well as EBITDA margin. Let's see how it goes. But definitely, we are confident that we'll be on the higher side in terms of the guidance what we do. Fair enough, sir. And also 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, you know, we are seeing this from the end of Bloom Energy. So what's your view on this working capital day? Do you expect it to remain sustainable over next couple of years?

24:10 See, our sector... Yeah. Well, we have achieved through various initiatives in the company, like advances from all the customers from all the sectors, and also payment cycles, have negotiated better terms. And also, we we have... We are getting a refund of GST also around 70 to 80 crores. So per year, we are expecting to get. So we are working on the... All the elements of the working capital. But, see, when you look at the... Though we have not given any official guidance, so you may be knowing where is the... Where is article. So next year is the the moment our our, you know, targets are higher, definitely working capital cycle will be higher.

24:55 But as of by end of this finance year, we are targeting 100. In the long term, our goal is to maintain at around a hundred and fifty days, but which whatever required organically, we will continue to do and monitor on a weekly basis, the working capital. Sure. Sure. Thank you. Thanks a lot. Thank you. Thank you. The next question comes from the line of Bala Subramaniam with Aryant Capital. Please go ahead. Good morning, sir. Thank you so much for the opportunity. Sir, if you look at more than 33 percentage of revenue comes from products that have been developed over the past four to five years. So just want to understand the new vertical side, especially in the data center and SLP class A components, all are in first article stage.

25:51 So 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 already mentioned this. As far as we have sent, our oil and gas facility is going to be ready by end of November. And... But we are simultaneously working on the first articles in our existing units where the volumes will kick in from FY twenty eight, which will be substantial. And, obviously, data center, the first article itself is 45 close. I've said that the volume growth here can be between 50 to 40 crores of revenues generated from this. And the facility for this in all aspects will be ready by end of December for data center infrastructure facilities. So we're working towards all this, and all this are on track as well as we are concerned.

26:45 Yes, sir. So especially on the data center side, I think after this 45 crore first article, I think the customer have mentioned eight times of requirement. So it's the right way to understand another INR $3.50 crores to INR 400 crores kind of order inflows, especially in the data center space. We may expect. That's exactly right. And that's how we are ensuring that the phase one we are splitting this into two phases. The phase one of the plan the plan what we have established the facility should be ready by end of November or beginning of second half of December. And then the phase will be ready by June of next year. So we are on track with that requirement of the customer that what you have said that eight times the first article.

27:36 Sir. Sir, actually, you're guiding 80% revenue growth. But if you look at inventories, nearly $6.80 crores, almost five months of your FY 'twenty seven revenue guidance. So shall we assume that's a very minimum base case at 80 percent, maybe 100% to 120% kind of range growth rate maybe in Q3 and Q4? I will not be able to comment on that. I have said that we don't want to change the guidance at the middle of the year. What we have said initially, right, it was but we'll definitely do better than what we have said, both in terms of revenue and margins. Sir. Sir, my last question, if you look at our defense and Eurosays, we did INR 100 crore in FY twenty six.

28:27 If you look at in H1 FY '27, INR 80 crore or maybe it might reach to INR 150 to INR 200 crore by FY '27. But we have either nearly INR 600 crores, 700 crores by FY 'thirty. The same way, if you look at the product side, 134 crores we did in FY 'twenty six. But the guidance is more than INR 1,000 crores by FY 'thirty. So 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. And especially also you can mention customer alloy backed side. See, look, the product division, we have been working on this from quite some time now, and they're also implementing the capacity required for this, which is part of our CapEx plan, which was explained earlier.

29:18 And our growth trajectory for this, as I said earlier, will grow rapidly year on year basis. So it's backed up by clear customer forecast and orders and the capacities have been put in place. So I don't think we should have any issues with achieving the ultimate goal of the number what you mentioned. The next question comes from the line of Meet Jain with Systematics AMC. Hello. Am I audible? Yeah. You are. Hello? Yeah. Hi. Congratulations, sir, on a very strong set of numbers. I... My first question is just a clarification on the working capital days. So sort of said that this year, we're gonna end at around at a hundred one capital days for long term sustainable guidance is one fifty days.

30:16 Am I correct? Yes. Yeah. You are correct. So this hundred days, as I mentioned, is because of the GST refunds and other measures. And also earlier, you mentioned No. After getting all those actions, we are thinking of getting 100. The reason being is h two will be stronger compared to h one as our MD said. So when we do more in the quarter four and all those will be in the receivables and all. And also for next year, execution, we need to involve at least one, two months before the the year end. So I will have the more inventories. So for the next year, stronger execution targets, whatever we have, we have to involve 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... We'll be at 50, 50, 60 on this range only.

31:13 But we are in a growth trajectory, so that will increase. The incremental revenue will require incremental working capital, as you know. So that's why our long term target is 150 over the next two, three years, and by the end of year is 100. Understood. And also on the receivables side, have we, like, kind of... Like, the other client agreed to do some advances for the orders? Yeah. See, whatever the fifty days we achieved, we got advances from the from the... All the sectors of our existing customers. So we received advances also. We negotiated better than commercial terms with our customers, be it civil nuclear power and the hydro sector and the fuel cells. And every customer, we are expect... We are actually negotiating advances.

32:09 Understood. Second thing is on the CapEx. So we continue to stick to our earlier CapEx guidance around the $5,300 this year. First, the 100 next year kind of guidance. It will find it close of CapEx spend in the next two years. Yes. See, 500 crores per day 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 500 crores. It all depends on the, you know, the timely execution of the projects and all. We are working to complete our expansion plan as as we committed. So that's 500 crores CapEx outlook this year for '27? Yes. So it's partially being incurred in the last year also. And they said by end of FY 'twenty seven, whatever we incurred partially around INR 100 crores we incurred in FY 'twenty six plus INR 400 because all these are continuous projects in oil and gas. So, yeah, as you know, it started in the in the month of January. So we incurred from that time to end of this financial year. So 500 will be... 100 is f I 26. 400 will be f I 27.

33:20 And going ahead, because this is a major CapEx spend, we see and. So whatever money we are spending not for this year, it is for the next financial year also. And in the... Every year, we need to incur some sustenance CapEx and also growth CapEx we have to incur. That will be around 50 to 100 crores in a year for the next one, two years. What our CapEx we are putting as of today, it will generate at least three x of the revenue, whatever we are doing presently. Understood. And last thing is on the nuclear power. Like, we have received a major kind of finance orders in PQF five twenty six. It's all already been one year, like, with the addition of three years. So can we expect some major revenue booking happening from the second half of this year on nuclear power?

34:14 Yeah. No. We can expect certain revenues coming in in this year, but the majority of the revenues will kick in from FY '28 onwards, going up to FY '29 and FY '30. Okay. They even kind of finance recorded as well. Yeah. Because there's a lead time for raw materials and everything and specialized bottles. So we have that much time to do in any case. So I've 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. So this is spread over three, three and a half years. So we're right on track with that. And the major revenues will come in from FY twenty eight onwards. So this $1.34 crores of order in nuclear this quarter is towards the.

35:02 Yes. That's right. And what's the existing payment 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 Aventis Spark. Please go ahead. Yeah. Thanks for the opportunity. Yeah. My question is on the new product segment. We have seen a sharp decline in execution this quarter. So is it was there one off execution in last quarter where you have reported INR100 crores of top line in this? And secondly, what is the execution period for this new product order book? That's my first question.

35:52 You are talking about the product division. Right? Yes. Yeah. There was a small error in that. There was almost 60 crores of classification done in other segment which was supposed to go into the product division, which they're correcting it right now. So technically, it is on track with what we have said earlier. Okay. So so you're saying that last quarter, crore number, the 60 crore was misclassified in the segment? Yeah. So the... No. No. This quarter, around 60 crore was classified wrongly, which they're going to correct it now and upload it. Basically, it is around 126 for this quarter.

36:40 And which segment is classified into in this quarter instead of this quarter? Yeah. Am I audible? Yeah. I can hear you. Yeah. So the... For revenue for products and others, it is given us 65 crores. Actually, it is one twenty five crores. So, basically, we are supplying the box bills for multiple customers, which got categorized under clean energy vertical. So we will upload the presentation again. Similarly, in the order book related to products and others, the inflow... Like, we need to add an inflow of around 60, which will get deducted in Clean Energy. These two changes will be made, and the presentation will be uploaded again.

37:31 Understood. So what is the time line 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, it's all continuous orders that we're 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 INR500 crore plus and will run rate segment for you compared to less than 100 crore in the last few years. Yeah. Exactly. So we have been working on that for number of years,, you are aware of it, and it's going pretty rapidly. So we move in that direction, and they'll they'll make those corrections and upload it again as you like I said. Sure. The second question is on the... So Bloom Energy continues to talk a lot on this 800 work 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 products?

38:32 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. And just last question, just a bookkeeping one. Of the full receivables, how much will be the bill discounted as of now? We have not discounted a lot. We have done it organically. Only around $1,000,000 is discounted and stuff. Okay. Alright. Thank you. Thank you for answering. Mhmm. Thanks. The next question comes from the line of Balakrishna with Oman Investment Advisors.

39:22 Please go ahead. Hi. Good morning, sir. Congratulations on a good set of numbers. Sir, my question is on the nuclear sector. On Maheep and Swada, if the orders gets coming, so what could be our potential from that order, sir? Like you said in this FBR, we have around 1,500 horse potential per reactor like like that too. See, my buzzword is about four reactors. It depends on it's directly given to major private players and, like, what we are doing in. So is two reactors and is a four reactors. So, hopefully, we should be close to the number of thousand crores between, I would say, 700 to thousand crores roughly.

40:15 Oh, okay. That's good. And CapEx trends are... So down the line, maybe three, four years. What kind of CapEx you are expecting nuclear, we don't need expected 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'll see how it goes over the next one year and then we'll plan for a major facility based on the demand what has been created right now in the market. My question is regarding the overall company, maybe three, four years down the line, what could be the expected CapEx? We have catered to CapEx so far on INR500 crores would be good enough, but it all depends on we'll have some areas which our CFO has mentioned, INR 50 crores to INR 100 crores every year.

41:12 But if any major project comes in, probably do we have to relook at the CapEx requirement at that time. And also, thanks to Mr. For reducing his working capital. Is a drastically improvement in the working capital days in the last 0.5, sir. That's all from my side. Thank you very much. The next question comes from the line of Vedant with Nivasche. Go ahead. Hello. Hi. Good morning, sir. Thank you so much for the opportunity. So firstly, I wanted to understand, especially, like, you mentioned about the electromechanical actuator program that you are working for the ESRO. So how big will be the opportunity for us?

42:06 No. This is a opportunity of $1.50 crores approximately, but we're expecting these orders to come in at the earliest. So we're waiting for that. And normally, it takes we don't we don't have special timeline for this because certain organizations take... Who take time to release the orders. But it's a... It's an option. We have developed all these actuators over a period of time, and then we're expecting a good amount of volumes coming in over the years and that's that's where we are right now. Okay. Okay. Got it. And secondly, on the fuel cell, like a lots of company are trying to enter that particular market. Like, there is a company in Nesteger, Netherlands, which is also trying aggressive to enter in the Indian market for the fuel cell. So any agreement that we are also trying to tap these all other players for the fuel cell for this products hot boxes and all or we are being on the bloom only?

43:08 No. It's not exactly we are being on only bloom or anything like that. See, a lot of companies are trying lot of things, but they need to come up to the level of Bloom. This a far fetched one. You know, it's not a... Bloom itself took out twelve to fifteen years to develop where they are today. So we'll see how it goes from time to time, and then we'll take it forward from there. Okay. Got it. Lastly on the product division only, like how much do you... When you expect for the product division like you were mentioning about the 100 crores, 100. Right now you have trying that reclassification what happened and it was a $1.25 crore code. So going forward, you expect that similar run rate you will be able to maintain on that side? Absolutely.

43:53 Yes. Okay. Okay. Thank you so much, Mtar. The next question comes from the line of Janesh Karya 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. So 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 preintegrated and sent by Mtar? So any sense on that? No. It's a complete assembly. I don't want to go into the specifics because of the NDA signed, but it's a complete assembly of the unit that we ship to the customer.

44:47 Understood. But the assembled parts, are they sourced domestically, or are we import dependent on that? Any color on that? Some of the bottles are imported, but most of them are domestic. And we have developed a lot of bottles 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 dependent on the vendor ecosystem that we have developed? Yeah. We... 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. And certain areas, we have to import, but most of it is indigenous right now.

45:35 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 Manor with Trust Mutual Fund. Please go ahead. Yes. Hi. Thanks for giving the opportunity and congratulations on great set of numbers. Sir, I wanted to understand on room side. I mean, if the five gigawatt kind of a deployment was to occupy by 2029 or 2030, will we further need to expand our capacity beyond the 30,000 units? And if yes, by how much? If if that five gigawatt were to 55 and, you know, other in talks happening on that side. So I don't wanna talk about the number of units or whatever, but our capacities are being implemented to cover what the requirement of the customers in totality. So that's where we are. So the the multiport capacity was they're implementing will cover all the requirements of the customers, whatever has been given to us.

46:37 Sure. Sure. And as of now, there are just two suppliers, right, for our boxes, even the South Korean company. Are there any other supplier with the group? No. Nobody else. Okay. Sure. 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 INR $4.50 crore of top line, $4.50 crore INR $4.70 crore per quarter. If I consider a 92%, 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. So I mean, is there any local challenge or local entrance or local government issue, some project specific issue, which is basically making keeping us on the ground on the check of not increasing the guidance? Is there any specific reason for it?

47:31 No. There is no check from the local government. They have been very supportive on every aspect of it. And 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're doing at the beginning of the year. That's it. Sure. Understood. So, let me say, is no, I mean, you know, local government or local hesitation challenge over there for you. No. There's no there's no challenge, sir. Understood. Sure. That's it for my sir. Thank you, sir. Thank you. The next question comes from the line of Abhijit Singh with Systematics Group. Please go ahead. Yeah. Thank you for the follow-up opportunity.

48:17 Sir, just wanted to understand the impact of, you know, the best Asian situation on our business. So in terms of cost escalations or, you know, 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's no such impact for us right now because whatever we do is all experts, and there's no such impact. If there are certain cost increases in terms of certain consumables, which we have we have looked into because of the current geopolitical situation, which we are all aware of. Other than that, I think there are no such issues right now.

49:05 How much is the ForEx gain in the other expenses or other income? Yeah. Can you answer that, please? Yeah. So the ForEx gain is only in second quarter $2.2.0.3 crores out of the total 8.5. Alright. Alright, sir. And and, sir, in the aerospace business, I mean, you mentioned that there's a customer that we are working for on the first article score, and you expect them to be done by the year end. So overall, sir, how many customers do we have in terms of SKUs or or number of customers? If you can throw some light on that aspect, and what is our pipeline of first articles going forward?

49:50 So how we... How do we look at that business, you know, scaling from from here? See, basically, we are working with four different customers. Some are into volume production, some are into first articles. So by end of this year, we are completely... We'll be finishing the first articles and moving into volume production. But then lot of opportunities on our table and many new customers are coming and approaching us, but we are taking this step by step to make sure that we cater to the existing customers. But the issue here is the existing customers themselves are increasing their product portfolio with us. So 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 MSC 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.

50:45 That's the right and prudent way to do it. And 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 NatCap and each individual customer qualifications we have been cleared. So that is a major service that itself would take about one and a half years or so. We have done that as well. So we are on track with what we are planning to do. Yeah. I mean, there are some of our peers have reported strong inflows in the past one year. Like, the entire industry is booming with good inflows. So from that perspective, we've been working on, you know, these upper articles for a long time. So, 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.

51:30 That was where I was coming at. And Yeah. Absolutely. You're right. Absolutely. You're right. So it's going to be in that direction itself, and that's what we're working on. See, when you talk about first article, it depends on how many of them and what kind of package we're dealing with. For example, with one customer where they were sourcing from 16 different companies, the entire package has been given to MTARTECH execute the whole thing. So it depends on the kind of package you're dealing with. Right? So that's how it works. Right, sir. Thank you for answering my questions. Yeah. The next question comes from the line of Devang Patel with Samiksha Capital. Please go ahead. Sir, you mentioned earlier that you expect to end the year with a strong order book.

52:19 Should we infer that you are expecting order book to grow further from where it ended at Q2? And on the same point, if you can explain at what intervals do you expect to get replenishment orders for the hot boxes? We can't really say that probably we might get at the end of the year or beginning of next year. So it all depends on the timing of it. But more than the orders that we have very, very strong forecast, obviously, the multiple expansion is happening because of that. So whatever we have said, we'll stick to that for now, and we'll see how it goes. But we'll definitely have a very strong order book at the end of the year and moving forward as well. Okay. So, secondly, you mentioned earlier how our working capital has come down. You're getting better payment terms. What are the advances we get now as a percentage of the orders?

53:14 And whatever that improvement has happened, can you expect that to sustain? Yeah. Do you want to answer that? Yeah. It is various percentages, not only linked to percentages, also future others also. So civil nuclear power has some 30, 40% advances are there as per the tender document. And in case of other customers, we negotiate various manner. It depends on the customer. Some people may give 20%, some may be 20. Some may be giving in the future deliverables advances. So it is a mix of so many things. But whatever we do, we'll see... We'll ensure that there is no impact to our profitability. So that's how we we always take a call. And, also, we don't want to increase working capital and debt.

54:01 So our aim is to get more advances wherever is possible, and it it depends on the customer to customer. Those percentages vary. Those are my questions, sir. Thank you. Thank you. The next question comes from the line of Parthakkar with GM Financial. Please go ahead. Thank you for the opportunity. I just wanted to ask what is driving the product's revenue, and can you also clarify the overall guidance for the revenue of products? See, what is driving the product revenue is various aspects. You know, we are looking at various products that we have developed in place of ball screws, roller screws, water lubricate bearings. We've come into exports of ball screws as well this quarter.

54:50 Then we have the various other assemblies that go to different sectors, box builds for different customers. So it's a combination of number of things that we are doing, and we'll consistently grow in this area, which we have been working for quite some time, and we're working on further products as well to add on to this portfolio that we have. Okay. And what would be the high risk for the revenue for this particular vertical for this year? It should be around close to about INR 500 crores. Okay. Thank you. Those are all my questions. The next question comes from the line of Ashraj Seth with Ventura Securities. Go ahead.

55:38 You for the opportunity, sir. Firstly, congratulations on a wonderful set of results. So firstly, I wanted to ask about there might be some fears of the slowdown in AI CapEx. So what we are doing as a company to, let's say, mitigate those risks? Can you repeat your question? Yes, sir. So firstly, my question was about the risks of AI CapEx slowdown. So we have seen over the past few days in The U. S, so there might be some fear that AI CapEx might actually slow down. So as a company, what are we doing to mitigate those? Is heavy the current any alternate risk factors?

56:24 This is all unwanted speculation, but we are growing at... We are growing in different segments as you have seen very clearly. We're not just depending on one segment as such. But all this is unwanted speculation that people are talking about, but we have very strong forecast, which has been given by customers, so there's no issue with that. Okay. Got it, sir. Sir, I mean, could you help us understand how much of the kind of the order book is actually executed in the next twelve to eighteen months versus the order book, which is giving us long term visibility? And more importantly, 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?

57:14 Do you see a decline in the revenue conversion ratio? I don't see any decline. See, most of our order book, if you have seen, it's not like over a period of ten years. Nuclear it over a period of three, three and a half years. Fuel sales is spread over one year or whatever it is. So basically, most of our order book is to be executed within a period of... Majority of it within a period of twelve to eighteen months. That's how it works. And it's not a order book which shows, like, to be executed over the next ten years or so. It doesn't work like that with Mtar. So whatever order book we have shown is on a timeframe of what I've mentioned to you right now. So lastly, wanted to ask about the asset turnover that we are targeting. So we are targeting three weeks. So can you give us specifically the asset turnover different verticals that we might do? So what do you expect the asset turns for our fuel cell business, aerospace, oil and gas on those verticals?

58:19 Yeah. Do you want to answer that? See, is it turnovers are there for different sectors or different sectors, but it is a confidential. We can't share the sector wise as today because of some NPS we signed it with some of the some of the customers of some sectors. So as you know, our grass block is not... As of today, see, if you look at our debt is... No. Our fixed assets are not much. So even if we are incurring INR 500 crores, also it will become 1,200 maximum. As I said, it is 3x revenue. We will get it compared to whatever is targeted for this financial year. So 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.

59:12 But our aim is to maintain at least three x of revenue from 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. So because of the scale of operation, we can't use 100%. So across all the units, suppose we have 16 units out there, around 15 units are fungible fungible. All around 15 units, what are equipments we have, it is fungible. Okay. Got it, sir. Thanks for answering all my questions, and all the best for you, sir. Thank you.

59:59 Ladies and gentlemen, due to time constraints, we would take that as the last question for today. I would now like to hand the conference over to the management for the closing remarks. So 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 MTARTECH for their committed work to to be part of our growth strategy. 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 for attending this earnings call. Thank you so much.

1:00:46 Thank you, sir. Ladies and gentlemen, on behalf of MTARTECHOLOGIES, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.