Buy Astra Microwave Products Ltd For Target Rs. 976 By Geojit Financial Services Ltd
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Order book improving...margin to improve
Astra Microwave Products Ltd. (AMPL) is a leading designer and manufacturer of a wide array of radio frequency systems, microwave chips, and microwave-based components and subsystems for defence, telecom, and space.
* In Q2FY25, AMPL reported a 21% increase in revenue, driven by healthy order execution, which was in line with estimates.
* EBITDA grew by 18% YoY, while margins were stable at 21.4%. Reported PAT declined by 15% YoY due to higher interest cost.
* Order inflow was healthy at Rs.234cr, with ~65% of these orders being from domestic defence. • The current order backlog is at Rs.2,100cr, which is ~2x FY25E projected sales, providing visibility for the next 2 years.
* Order pipeline improving, with cumulative opportunities of Rs.8,000cr within AMPL's Rs.39,000cr of total addressable market until 2030
* With a shift in order execution mix towards domestic orders (~86% mix), we anticipate EBITDA margin in the range of ~22.2% for the next 2- 3 years.
Outlook & Valuation
Indian defence manufacturing's long-term outlook is improving, led by the government's push for self-reliance and ongoing defence modernization. A notable upswing in the order inflow pipeline in defence electronics is evident. AMPL's higher domestic order execution bodes well for margin expansion and earnings. Therefore, we value AMPL at P/E 45x FY26E, at a significant premium to its long term, and upgrade to Buy Rating from Accumulate with a target price of Rs.976.
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SEBI Registration Number: INH20000034
