A Hidden Bet on India's Space Ambition

India’s space economy is still tiny compared to what it could become.

Today, it is estimated at around $8.4 billion, or roughly 2% of the global space market.

The government’s ambition is to take this to around $44 billion, giving India roughly 8% of the global market, with an even bigger long-term ambition of reaching around 15%.

And there are some very strong reasons to believe this can happen.

The sector is opening up to private companies; IN-SPACe has been created to facilitate private participation, and the Indian Space Policy 2023 has provided a broader framework for private

players.

The startup ecosystem is already showing the impact.

India had just 35 registered space startups in 2021.

Today, that number is 400+, with cumulative investments crossing $500 million.

So the opportunity is clearly getting bigger.

But there is a catch for investors.

Most Indian companies don’t report “space” as a separate business segment.

For many of them, space is still a small part of a much larger defence, engineering or manufacturing business.

And that brings us to MTAR Technologies.

MTAR is already inside India’s space programme:

MTAR has been supplying components to ISRO for years.

One of its key relationships is around the Vikas engine, the liquid-propulsion engine used in the PSLV.

MTAR manufactures critical components such as turbopumps, injector heads, booster pumps, gas generators, and electro-pneumatic modules.

The interesting part is that this isn’t simply a company designing a component and hoping someone buys it.

ISRO designed the engine and transferred the manufacturing technology to MTAR.

HAL then assembles the final engine.

That gives MTAR a role inside a critical part of India’s launch infrastructure.

The company is also involved in components for the cryogenic engine, which powers the third stage, as well as hardware for the crew module being developed for Gaganyaan.

It is also supplying electromechanical actuators used in rocket navigation, a newer opportunity that could eventually become a ₹60–70 crore business.

So, from a technology and capability perspective, MTAR is clearly exposed to India’s space ambitions.

And India’s ambitions are getting bigger:

The government isn’t simply looking to launch more satellites.

India is targeting human spaceflight through Gaganyaan, with a longer-term ambition of a crewed lunar landing around 2040.

The latest Union Budget allocated roughly ₹13,700 crore to the Department of Space, including around ₹6,300 crore of capital expenditure.

That money is essentially going towards missions and infrastructure rather than just running the organisation.

And India has already demonstrated that it can compete on cost.

The country has launched 434 foreign satellites so far, generating more than $500 million in cumulative revenue.

That cost advantage could become increasingly important as satellite launches increase globally.

So the long-term opportunity is very real.

But this is where we need to separate the theme from the stock.

MTAR’s space business isn’t what is driving the stock today:

This is probably the most important point.

Space is exciting.

MTAR is definitely exposed to it.

But space is currently a relatively small part of MTAR’s revenue, and the business that is doing most of the heavy lifting for the valuation is actually elsewhere.

That business is solid oxide fuel cells, where MTAR supplies to US-based Bloom Energy.

And this is where the AI story comes in.

AI data centres need enormous amounts of electricity.

As data-centre capacity expands, alternative sources of reliable power are becoming increasingly valuable.

Bloom Energy sits in the middle of that theme, and MTAR is one of its suppliers.

So the market isn’t really valuing MTAR simply as an Indian space play.

It is increasingly valuing MTAR on the combination of AI data centres + Bloom Energy + future growth in space.

And that creates a very different risk-reward.

The problem is the price:

MTAR has become extremely expensive given the expectations being built into the business.

At current valuations, there isn’t much room for things to go wrong.

If the US AI infrastructure buildout slows, or if Bloom Energy sees a meaningful slowdown, the impact on MTAR could be significant.

And unlike the space opportunity, which is still a longer-term story, the Bloom/AI narrative is already reflected heavily in the stock price.

We don’t think the space opportunity itself is the problem.

The problem is paying a premium today for growth that may take time to show up.

The Indian space theme is still early.

We may need another year or more before the growth starts becoming meaningful in the financials of many companies.

Our Takeaway:

MTAR is a fascinating business. But fascinating doesn’t always mean investable at any price.

The company has genuine technological capabilities, deep relationships with ISRO and exposure to some of India’s most ambitious space programmes.

If India’s space economy moves from $8.4 billion towards $44 billion, companies like MTAR should have opportunities to participate.

But that opportunity is still developing.

And today, the bigger driver of MTAR’s valuation is Bloom Energy and the US AI power infrastructure cycle, not space.

That is why we would be careful. The space story can still play out beautifully.

For now, MTAR looks like a great company sitting inside a great theme, but at a price that leaves very little room for disappointment.