Astra Microwave Update - Riding On Strong Sectoral Tailwinds: ICICI Direct

ICICI Direct Report

Astra Microwave Products Ltd. incorporated in 1991, is engaged in design, development and manufacture of sub-systems for radio frequency and microwave systems, primarily used in defence, space and meteorology.

Product range includes radars, missile electronics, electronic warfare, satellites, MMIC and communication systems.

In H1 FY24, ~45% of revenue was from defence, ~51% from exports (including deemed exports) and balance ~4% from space and others.

We believe Astra Microwave is well placed to witness healthy growth led by strong sector tailwinds. Governments focus on indigenisation, increasing usage of electronics in defence and space, strong order backlog, healthy orders pipeline and execution of high-margin domestic orders would drive earnings in coming period.

We estimate revenue, Ebitda and profit after tax to grow at ~17%, ~25% and ~36% compound annual growth rate respectively over FY23-26E.

Valuation at 33.1 times price / earning on FY26E basis looks attractive given strong growth ahead led by multiple sectoral tailwinds.

We recommend 'Buy' on Astra with target price of Rs 740 per share (based on 40 times FY26E earning per share).

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