Neutral Astra microwave Products Ltd. For Target Rs.644 By Choice Broking
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AMPL reported decent top-line and robust bottom line growth. Revenue for the quarter grew by ~5% YoY to Rs.2310mn vs Rs.2203mn in Q3FY23 led by execution of some large orders. Gross Profit came at Rs.1092mn (+20.5% YoY / +34.8% QoQ) and gross margin stood at 47.3% (+615bps YoY / +466bps QoQ). Due to low raw material cost. EBIDTA came at Rs.661mn (up ~30% YoY), vs Rs.509mn in Q3FY23. Margin came at 28.6% (expanded 552bps YoY/+673bps QoQ) due to lower staff cost and cost control measures. APAT came at Rs.434mn (+56.7% YoY) vs Rs.277mn last year same period and margins expanded by 621bps YoY, led by robust margins growth. The company's current order book stood at Rs.22332.6mn including JV (~2.74x of FY23 revenue) as at December 31, 2023. During the quarter company order intake was Rs.257cr.
Defence electronics manufacturing, a multi billion opportunity: In defence electronics the total addressable market size is around 240-250bn till FY28. out of which the radar program contributes the most ~42% and followed by Trunkey projects 22% and rest others. The company has participated in various programs, expects potential business from Defence & Aerospace Rs.40bn, Space Rs.5bn, Trunkey projects, Metrology & Systems Rs.15bn, Exports is Rs.10bn.
Tapping new potential through Anti-Drone System: The company has successfully tested the new product (anti-drone system) which will be launched next quarter. Very few players in India have developed this system. It gives deterrence to strategic assets. The company is in talks with a couple of clients which includes foreign countries. Contracts will be finalised in the short term. By FY26 this system will start to generate revenue.
View and valuation: We are positive about the growth story of ASTM due to its position as a long standing supplier of various systems and sub-systems, ongoing innovation in diverse products. We have a positive outlook on ASTM, supported by 1) Huge addressable market (i.e-Rs.240-250bn), 2) Military modernization across all segment (Naval, Army, Air Force), 3) Diversified business model, 4) The company’s healthy order book(~2.8x of FY23 revenue), would support the growth story of the company. We ascribe “NEUTRAL” rating from the Outperform rating on the stock with a TP of Rs.644, valuating it on 40x of FY26E EPS increasing the multiple given the expectation of new order in coming quarters like radar for MK1, Sukhoi-30MKI up-gradation.
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SEBI Registration no.: INZ 000160131
