Buy Astra Microwave Products Ltd For Target Rs.1,256 By Sushil Finance
Strong order book position along with improvement in Revenue mix should be the catalyst for growth.
The company has a strong order book position of Rs.2,304 cr (more than 2x of revenue) as on March 2025, which is to be executed in next 12 to 18 months. Approximately, 90% of the orders are domestic, primarily build to spec, which are more accretive to the margins. During FY25, the company received orders worth Rs.1,098 cr, of which 80% are from defence and 20% in space and metrology, while order intake target is Rs.1,400 cr in FY26. The company has managed to achieve a revenue of Rs.1,051 cr in FY25 as against Rs.909 cr in FY24, a growth of 15.7% yoy, while in FY26, the company has guided for 20% yoy growth, on account of strong order book.
Government's push for Defence manufacturing presents great opportunities.
Defence electronics (radars, EW, communications, etc.) is one of the growing segments of India’s defence sector. It is expected that the defence electronics content to increase from 36% in 2024 to 40% of total defence manufacturing by 2027. Also, the Ministry of Defence has issued indigenisation lists (in 2023) banning import of various defense items over phased timelines. These lists include high-tech systems like radars, anti-drone systems, EW equipment and many subsystems, that must now be procured from Indian sources. Components and subsystems are on the no-import list, which should result in strong demand for the company’s products
OUTLOOK & VALUATION
We expect the company’s topline to grow at a CAGR of ~17% to Rs. 1,464 cr in FY24-27E. EBITDA margin is likely to remain at healthy level, 24%, on account of high domestic sales, where margins are strong. Hence, with an expected PAT margin of 14.0% in FY27E, we expect the PAT and EPS to be at Rs. 206 Cr and Rs. 21.7 respectively. We have assigned a P/E multiple of 58x to arrive at a price target of Rs. 1,256 which provides an upside of ~21% within 12 to 18 months from the current market price of Rs.1,038.
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