MST Access | Update Report on XTEK Limited (XTE) – 30 June 23

Jun 30, 2023 | Research 2023

XTEK Limited (XTE.AX) | Analyst: Andrew Johnston

Update Report – Revenue upgrade, margins lower

Price: A$0.42; Valuation: A$0.82 (previously $0.88); Market Cap: A$43m


  • XTE upgraded FY23 revenue guidance from >$82m to between $86m – $88m. Pipeline is double a year ago.
  • Guidance for FY23 EBITDA of $9.0 – $10.5m is well short of our $15.6m forecast given mix.
  • Successful independent testing of XTclave helmets moves the Tata MOU to the next step.


  • XTEK now expects FY23 revenue to be ~$87m as it completes all but $1.9m of the $26.9m drone contract. The lack of a major international contract in this half means our previous $96m FY23 revenue forecast will not be achieved. Confidence around FY24 is improved with the pipeline of $200m – double what it was a year ago.
  • A higher proportion of hardware sales, and sharply lower Ballistics sales means that margins will be lower than we expected with the FY23 EBITDA guidance range well short of our previous $15.6m.
  • The MOU with Tata for the supply of helmets to the Indian Defence Force has progressed with successful results from independent testing of XTclave helmets.


We downgrade our FY23 forecasts to be within guidance with some minor downgrades to later years which already had limited growth factored in. We estimate a 12-month forward value for XTEK based on capitalising FY25 EBITDA at a discounted market multiple. Our valuation declines from $0.88 per share to $0.82.


XTEK provides front-line equipment for defence and law enforcement personnel. It manufactures body armour and helmets and has exclusive agency agreements for distribution of unmanned aerial and ground vehicles from which it has also built a service and support business. XTEK has also developed an innovative technology (XTclave) for use in body armour and helmets that it is now commercialising. It has operations in Australia and the US, but also has an international sales presence.

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