From ₹3,740 to ₹16,200: This Mid-Cap Defence Stock Soars 333% in 2 Years

Do You Hold It?

New Delhi, May 29, 2025 – In an impressive display of resilience and growth, one mid-cap defence stock has turned heads in the Indian equity market by posting a jaw-dropping return of 333% in just two years. The stock surged from ₹3,740 in May 2023 to ₹16,200 in May 2025, outperforming both the Nifty 50 and the BSE MidCap indices during the same period.

The Company Behind the Surge

The company in focus is MTAR Technologies Ltd, a precision engineering player catering to the nuclear, aerospace, and defence sectors. Founded in Hyderabad, MTAR has capitalized on India’s growing defence indigenisation push and rising demand for sophisticated engineering components.

With a strong pedigree of clients including ISRO, DRDO, and the Nuclear Power Corporation of India (NPCIL), MTAR’s strategic position in high-barrier entry markets has helped it achieve consistent financial and operational milestones.

What’s Driving the Rally?

Several key factors have contributed to MTAR's extraordinary rally:

1. Strong Order Book and Execution

The company has seen its order book swell in recent quarters, especially from nuclear and defence sectors. Analysts estimate the total order book size has crossed ₹1,200 crore, providing earnings visibility for the next 2–3 years.

2. Government Push for Atmanirbhar Bharat

India's heightened focus on defence self-reliance and "Make in India" initiatives have led to a surge in domestic orders for companies like MTAR. The Defence Acquisition Procedure (DAP) reforms and increase in defence capital outlay have particularly benefited indigenous suppliers.

3. Financial Performance

In FY24, MTAR posted a revenue growth of 42% YoY and a net profit surge of over 60%, driven by higher margin orders and improved operational efficiencies. Its EBITDA margin also expanded from 24% to 28%.

“Companies operating in niche, critical technology domains are seeing sustained investor interest. MTAR’s product complexity, customer stickiness, and robust margins make it a unique play in India's defence ecosystem,” said Rohit Wadhwa, Senior Research Analyst at Axis Securities.

4. Entry into Clean Energy

MTAR’s foray into clean energy through hydrogen fuel cell components and electrolyzer manufacturing has added a new growth vertical. With global tailwinds in clean energy, this diversification is seen as a long-term strategic play.

Valuation and Market Sentiment

Despite the rally, MTAR is still seen by some analysts as having room for further upside, given its order pipeline and strategic relevance.

At ₹16,200 per share, the stock is trading at a P/E of around 72x its trailing twelve-month earnings—a rich valuation, but one that some market watchers argue is justified by high growth and return ratios.

“Investors must note that such mid-cap rallies come with inherent volatility. That said, MTAR’s growth trajectory is among the strongest in its peer group,” noted Anita Choudhary, Portfolio Manager at ICICI Direct Wealth.

Institutional holdings in the stock have also seen a rise, with several mutual funds and foreign portfolio investors (FPIs) increasing their stakes in the last four quarters.

Defence Sector Outlook: A Long Runway

India's defence budget for FY25 rose to ₹6.2 lakh crore, with a major chunk allocated toward capital expenditure and modernisation. The government also reserved 75% of the defence capital procurement budget for domestic companies, marking a significant shift.

Private players in the sector, especially those providing critical components or technology-based solutions, are increasingly being preferred for indigenous projects, from missiles and satellites to naval and nuclear systems.

This structural tailwind bodes well not only for MTAR but for the broader sector as well.

Should You Hold, Buy, or Book Profits?

With the stock already up 333% over two years, some investors may be tempted to book profits. However, those with a long-term horizon might still find value in holding, given the company's clear growth roadmap and entry into new business verticals.

Analysts suggest a balanced approach:

• Long-term investors could hold with a trailing stop loss.

• Fresh entry is advised only on dips or with a staggered investment approach.

• Short-term investors should monitor quarterly earnings closely due to high valuations.

“MTAR is no longer a hidden gem. It’s a proven performer now. While valuations are not cheap, the long-term story remains intact,” said Siddharth Bhagat, Equity Strategist at Motilal Oswal Financial Services.

Final Thoughts

The meteoric rise of MTAR Technologies from ₹3,740 to ₹16,200 in just two years is a classic example of how structural tailwinds, strong fundamentals, and government policy support can create wealth in the equity markets.

While the past returns are impressive, future gains will depend on continued execution, order inflows, and macroeconomic conditions. For retail investors, staying informed and aligned with personal risk appetite remains key.