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ICICI Securities Report
We see Astra Microwave Products Ltd. winning Rs 3.86 billion order from Bharat Electronics Ltd., as a significant step in its growth journey. While we see potential from trickle-down effect of the orders BEL has already received in FY24, we are more positive on Astra Microwave leveraging its internal competencies and research and development expertise in MMIC, anti-drone systems (with soft kill mechanism), meteorological radars and RF/microwave domains to create products and solutions around them.
As a result of its participation in different platforms, Astra Microwave sees a business opportunity of Rs 70 billion (almost Rs 40 billion in defence) through to FY28 of the total market opportunity of Rs 240-250 billion.
We expect this endeavour to not only lead to higher revenue by capturing opportunities in a comprehensive manner, but also result in higher margins of 24-25% in the medium term.
Maintain Buy with an unchanged target price of Rs 800 on our discounted cash flow-based methodology.
Key risks
Delay in ordering by DPSUs
Higher-than-expected share of deemed exports, leading to margin dilution
Delay in development of solutions
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