Astra Microwave - Well Poised For Strong Growth Ahead: ICICI Direct

ICICI Direct Report

Key Investment Thesis:

Domain expertise in microwave and radio frequency systems and applications; Strong research and development and manufacturing capabilities:

With strong domain expertise in microwave and radio frequency applications, Astra Microwave Products Ltd. has moved up the value chain from manufacturing sub-systems to development and manufacturing a wide range of high-end, critical microwave and radio frequency application-based equipments. Pursuant to advanced manufacturing as well as research and development facilities, company has strong in-house capabilities to execute orders.

Healthy order-book position with buoyant prospects and pipeline presents strong growth visibility:

Company’s order book position stands healthy at Rs 1580 crore as of June 2023 end (1.9 times FY23 revenue). With govt’s focus on allocating significant capital outlay in defence and space sectors, reducing defence imports and increasing domestic procurements with indigenising usage of raw materials, components, sub-systems, the future orders inflows opportunity for Astra is huge in both domestic and export markets.

Moreover, overall execution would improve as the risk of supply chain issues recedes with increase in domestic procurement of raw materials and sub-components.

Rating and target price

• We believe Astra is well placed to witness healthy growth led by strong sector tailwinds. Govt’s 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 15.5%, 26.3% and 46.7% compound annual growth rate respectively over FY23-25E.

• We recommend 'Buy' on Astra with target price of Rs 510 per share (based on 32 times FY25 earnings per share.)

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.