News

This is a Mint Premium article gifted to you. Subscribe to enjoy similar stories.

Artificial Intelligence (AI)-led data center expansion is emerging as a structural demand driver across several industrial sectors, including power, clean energy and high-precision manufacturing. While the opportunity in India remains relatively small, the global market is already large and growing quickly, led by the US.

Power demand for data centres in the US is expected to more than double, from about 60 GW in 2025 to nearly 140 GW by 2030, driven mainly by AI-focused data centers. These facilities require significantly more – and uninterrupted – power than conventional data centres.

In India, a different but important cycle is playing out. Aerospace and defence, clean energy, and nuclear power are seeing faster growth on the back of defence modernisation, higher capital allocation, and a sustained push for indigenisation.

Nuclear power is also emerging as a key growth vertical, with the Union Budget allocating ₹9,966 to the department of atomic energy for capital expenditure. These trends frame the growth trajectory of MTAR Technologies, which has seen its stock surge 116% over the past year.

MTAR is a precision engineering solutions provider with three core engines of growth. In FY25, clean energy (fuel cells, hydropower and others) accounted for the largest share of revenue at 61.7%. It was followed by aerospace & defence at 13.9%, products & others at 21.7%, and clean energy (civil nuclear) at 2.5%.

The clean-energy sector broadly comprises three distinct segments: fuel cells, hydropower (often grouped with wind and others), and civil nuclear power. Of these, fuel energy is currently the largest revenue driver for MTAR, primarily because of its strategic, long-term partnership (14 years and counting) with American firm Bloom Energy.

Bloom Energy is a leader in solid oxide fuel cells (SOFC) and solid oxide electrolyzer (SOEC) technology. Its SOEC offers significant efficiency advantages, consuming about 45 kWh of electricity per kilogram of hydrogen produced, compared to 55 kWh/kg for traditional proton exchange membrane electrolyzers.

Its 20% higher efficiency means this technology is a good fit for industrial hydrogen production. This, combined with the global shift towards clean energy and the growing demand for power from AI data centers, is driving demand for Bloom Energy's products.

Notably, MTAR serves as a one-stop solution provider for Bloom's SOFC mechanical systems and is the sole supplier of its SOEC units. MTAR is the manufacturing partner, supplying the mechanical systems required to build the complete fuel cell. More importantly, it meets around 50-60% of Bloom’s hotbox (the core of a fuel cell system where electricity is generated) requirements. The company has increased its wallet share by indigenizing previously imported items such as bellows, fins and forklift bases.

Bloom recently signed a $2.65-billion ( ₹23,850 crore) agreement with American Electric Power to supply up to 1 gigawatt of fuel cells, bolstering demand for MTAR products. Bloom has also renewed and expanded its strategic agreement with South Korea’s SK Group, a deal expected to generate revenue of $4.5 billion ( ₹40,500 crore). This updated contract extends through 2027 and includes a recommitment of 250 MW from the original 2021 agreement, plus an additional 250 MW.

Bloom’s 20-year revenue outlook is divided into $1.5 billion ( ₹13,500 crore) from product sales and $3 billion ( ₹27,000 crore) from services. It also has agreements with Intel, Equinix, and CoreWeave to power high-performance computing data centers. Overall, Bloom is expected to add 2 GW of capacity by 2026 end and subsequently expand this to 4 GW.

MTAR management said these orders have led to a severe shortage of fuel cells and that demand is expected to be extremely high over the next five years. To meet this demand, MTAR is aggressively increasing its capacity to manufacture hotboxes from 8,000 units at present to 12,000 units by the end of March 2026, 20,000 units by December 2026, and 30,000 units in subsequent years. The existing plants are operating at 100% capacity, and the company is investing about ₹50-60 crore for this expansion.

To improve operational efficiency, MTAR is moving its entire Bloom operation to a new facility in the special economic zone near the Hyderabad airport. All of its nine manufacturing plants are in Hyderabad.

In the first nine months of FY26, MTAR recorded revenue of ₹387 crore from the clean energy (fuel cells) segment alone, or 68% of its ₹570 crore of total revenue. Fuel cells accounted for 97% of the clean energy segment's revenue, while hydropower and others ( ₹11 crore) accounted for the remaining 3%. Exports accounted for 81% of total revenue.

The company expects the fuel cells segment to add another ₹250 crore to the top line in Q4FY26 and close FY26 with around ₹637 crore of revenue, up 53% year-on-year, well ahead of the initial estimate of 20%. Revenue from this segment is expected to accelerate further as Bloom Energy itself projects 30-35% compound annual revenue growth through 2030, with new capacity coming onstream. MTAR already has ₹1,181 crore of orders in the segment, which proves strong revenue visibility.

Beyond Fuel cells, the company manufactures specialized fabricated structures such as draft tubes and spiral casings in the hydropower segment. MTAR serves global majors including Andritz Hydro, Voith, and GE Hydro, and recently finalized an order worth ₹40 crore with Andritz. This is expected to be an annual recurring order, which will help improve revenue visibility. This segment is supported by the Indian government's goal of increasing total hydropower capacity from 42 gigawatts of electricity (GWe) to 67 GWe by FY32 to enhance grid stability.

MTAR also supplies rotor and stator assemblies to wind-energy customers. This business aligns with India's growing wind capacity. India added 82% more wind capacity in H1FY26, nearly touching 3.5 GWe. The country's wind capacity is projected to increase more than 2.5-fold to nearly 25 GWe by 2028, driving demand for these components.

In addition, MTAR has identified battery energy storage systems (BESS) as a high-growth vertical, though it is currently in the developmental phase. The company has entered the equipment manufacturing space for BESS to diversify its portfolio, and has delivered a prototype enclosure to Fluence Energy.

Management said the global BESS market was projected to expand at a 26.6% compound annual growth rate (CAGR) to $54.3 billion ( ₹4.9 trillion) by 2032. However, it also acknowledged that opportunities in the domestic market were taking longer to materialise than initially anticipated.

MTAR reported revenue of ₹11 crore from the ‘hydropower, wind and other’ sector in 9MFY26, and expects this to increase to around ₹100-120 crore in FY27, up from ₹50 crore in FY25. Although the numbers are significantly lower in 9MFY26, the company believes that recent orders, including the ₹40 crore order from Andritz, will aid growth.

MTAR has served the Indian civilian nuclear power programme for more than 40 years and is a pre-qualified vendor for the Nuclear Power Corporation of India. It manufactures complex, high-precision equipment for the nuclear island (the core of the reactor), and supplies 15 different essential products, including fueling machine heads and fuel transfer systems.

The company's manufacturing infrastructure allows it to fulfill orders for up to four reactors at a time. Despite contributing only 2.5% of revenue in FY25, the segment is expected to expand quickly, with 35-40% growth projected in FY27. As of Q3FY26, the segment accounted for 27% of the total order book of ₹2,395 crore.

The segment is supported by strong industry tailwinds and government initiatives. India aims to increase its nuclear power capacity from roughly 7.4 GWe to 22.48 GWe by 2032 and up to 100 GWe by 2047. Union Budget 2026 allocated a total of ₹24,124 crore for the department of atomic energy, of which ₹9,966 crore is for capex.

The basic customs duty exemption on the imports of goods required for nuclear power projects has also been extended to 2035, and expanded to cover all nuclear plants, regardless of their capacity. The Indian government has approved 14 new pressurised heavy water reactors in fleet mode.

MTAR sees a medium-term opportunity of ₹1,500-2,000 crore from the remaining 10 fleet reactors that are yet to be tendered. Big orders are expected from the refurbishment of five existing operational reactors to extend their life. The company expects orders worth around ₹1,000 crore from Kaiga 5 and 6, and these refurbishment projects.

The aerospace and defence segment could be a future growth engine. MTAR is moving from the prototype and first-article inspection stage to production at scale, supplying aerospace parts to major global players such as GKN Aerospace, Rafael, Israel Aerospace Industries, and Thales.

It currently produces 80-100 parts per month, far more than the 300 parts produced by the wider industry every year. In 9MFY26, this segment recorded revenues of about ₹70 crore, of which ₹31 crore came in Q3FY26. Management expects to close FY26 on a strong footing and double revenue to around ₹150-160 crore in FY27.

The company is targeting ₹350-400 crore of revenue from this vertical by FY29. This growth is expected to be driven by a strong order book. As of 31 December 2025, aerospace & defence accounted for 13.6% ( ₹326 crore) of the total order book. Of this, MNC aerospace accounted for ₹120 crore, followed by space ( ₹120 crore) and defence ( ₹80 crore).

MTAR reported robust double-digit growth in 9MFY26. Revenue rose by 15.7% year-on-year to ₹570 crore, mainly driven by the clean energy segment, especially fuel cells. Ebitda grew faster at 26.2% to ₹109 crore, indicating improved operational efficiency and a favorable product mix.

Margins expanded 160 bps to 19.2%, leading to a 27% increase in net profit to ₹50 crore.

As of Q3FY26, the order book stood at ₹2,395 crore, providing revenue visibility of about three years. The company expects revenue to cross ₹900 crore in FY26, followed by around 50% growth in FY27. Over the following three years, it aims for average revenue growth of 25-30%.

Owing to low utilization of newly added capacity, the company’s return on capital employed (11.5%) and return on equity (7.6%) were low in FY25. It expects these ratios to improve with higher profitability and asset turnover ratios in the clean-energy segment. At ₹3,392, MTAR stock trades at a price-to-earnings multiple of 153, which is more than twice that of peers.

The business faces several key risks that could hamper expected performance. These include customer concentration and its reliance on the clean energy sector, long working capital cycle (240 days), and dependence on exports. Changes in technology and delays in project execution also pose risks to the business.

Madhvendra has over seven years of experience in equity markets and writes detailed research articles on listed Indian companies, sectoral trends, and macroeconomic developments.

The writer does not hold the stocks discussed in this article.

The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only.

Download the Mint app and read premium stories

Log in to our website to save your bookmarks. It'll just take a moment.

You are just one step away from creating your watchlist!

Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.

Your session has expired, please login again.

You are now subscribed to our newsletters. In case you can’t find any email from our side, please check the spam folder.

This is a subscriber only feature Subscribe Now to get daily updates on WhatsApp