Astra Microwave has a strong order book of Rs 22 billion, providing revenue visibility for three years. With this, the brokerage expect revenues to clock 18% CAGR over FY25-28.
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Motilal Oswal Report
Motilal Oswal initiates coverage on Astra Microwave Products Ltd. with a 'Buy' rating and a target price of Rs 1,100 implying an upside of 24% from current market price of Rs 888.
This valuation reflects a 15% discount compared to target multiple of larger defense PSUs owing to its smaller size.
The brokerage consider Astra Microwave a long-term investment opportunity in defense electronics, anticipating its revenue growth to accelerate between FY27 and FY30 as larger orders are awarded by the Ministry of Defence (MoD) and defense PSUs.
Strong order book, JVs, and alliances enhance revenue visibility
Astra Microwave has a strong order book of Rs 22 billion, providing revenue visibility for three years. With this, the brokerage expect revenues to clock 18% CAGR over FY25-28.
Along with this, the company has also formed JVs and alliances with various players to enter new areas such as explosives (with Premier Explosives to get hard-kill capabilities for anti-drones), navigation systems (with Manjeera Digital to manufacture navigation chips), tactical radio communication systems, and electronic warfare (EW) with M/s Rafael Advanced Defense Systems.
These JVs and alliances further enhance revenue visibility for the company via newer areas.
Key risks and concerns
Key risks include: delays in awarding of larger platforms, lower-than-expected spending from the government on the defense sector, and supply-chain issues.
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