I am glad that you liked the note, @akacker !
I will try to respond to your thoughts in the order than you typed them out.
Risks/Opportunities with Bloom Energy
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I am not too worried about Bloom Energy’s financial situation. It enjoyed the growth at all costs phase of the markets in North America. However, since sentiment has changed, with investors demanding a path to profitability, Bloom Energy is expected to become free cash flow positive in 2024. If they really need cash in the interim, they have the ability to do a follow-on public offer, as interest in the green H2 space is very high, and I am sure that the offer will have multiple suitors
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I am of the view that Bloom is in the right place, at the right time. Renewable energy generation usually has peaks and troughs, and the ability to store the energy as H2, or further converting that H2 to ammonia (which is better for long haul transport), will be a game changer. Having read a few industry reports, it appears to be that Bloom’s fuel cell and electrolyzer offerings are definitely in the top half of the market (if not top quartile)
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You are spot on about the huge opportunity that exists in South Korea, and an even larger opportunity in Europe. Given Bloom Energy’s desire to keep costs low, and the management’s preference to outsource a chunk of their manufacturing, Bloom’s growth will lead to MTAR’s growth as well
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All this being said, I still do not like MTAR hitching its wagons to a single player in the electrolyzer and fuel cell space. I hope that they work with at least one more player, to capture the phenomenal upside in these domains, and to also de-risk the division’s revenue streams a bit
Risks/Opportunities in Space
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Regarding MTAR’s own two stage LEO launch vehicle, I expect it to be ready by FY26. I really love this news, as it shows that MTAR does not just rest on its laurels. It forward integrates, and moves from providing parts, to providing systems, all the way to providing its own products. Having one’s own rocket will be no small feat, and I do not think that the market is pricing any of this right now, as it is a bit far out into the future, and like you said, it would require seeing new and proven capabilities in the space division
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During the Q3FY23 earnings call, management conveyed that ISRO intends to become more of an R&D heavy organization, with other private players being brought in as partners to do the heavy lifting in terms of manufacturing, etc. ISRO keeps checking with the management as to what would be required for MTAR’s space division to triple its capacity, which is a great sign
Risks/Opportunities in Nuclear
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I fully agree with your view that nuclear power would be a great base load candidate, and it is nice to see that MTAR is active in this domain, especially since India intends to massively increase its nuclear capacity from 6.8 GWe to 22.5 GWe by 2031
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Though I do not understand this domain very well, just by looking at how MTAR grew its capabilities in the space sector, I do not see why they cannot do the same in the nuclear industry. A stretch goal would be to develop their own reactor, but I am hopeful that MTAR will be able to offer a greater number of systems and sub-systems in this industry, both in India and internationally
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Unlike the fuel cell and electrolyzer space, where I expect that maintenance requirements will be very low, I think that the nuclear division is such that MTAR will be able to tap into refurbishment and maintenance related revenue streams
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However, also unlike fuel cells and electrolyzers, I do not see mass manufacturing taking place over here, and I expect that there will be long lead times, higher working capital days, and fairly lumpy revenue (with the exception of well-written maintenance contracts). Therefore, I do not expect revenue growth to be anywhere close to the opportunities in the clean energy division
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