Astra Micro has target of Rs 100: Ranganathan

S Ranganathan, Head-Research of LKP Shares is of the view that Astra Microwave Products has target of Rs 100. This year is going to be a year of consolidation and from next year expect the company to post about 40% growth in its topline.
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Dec 11, 2008, 03.37 PM | Source: CNBC-TV18

Astra Micro has target of Rs 100: Ranganathan

S Ranganathan, Head-Research of LKP Shares is of the view that Astra Microwave Products has target of Rs 100. This year is going to be a year of consolidation and from next year expect the company to post about 40% growth in its topline.

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Astra Micro has target of Rs 100: Ranganathan

S Ranganathan, Head-Research of LKP Shares is of the view that Astra Microwave Products has target of Rs 100. This year is going to be a year of consolidation and from next year expect the company to post about 40% growth in its topline.

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S Ranganathan, Head-Research , LKP Shares
S Ranganathan , Head-Research of LKP Shares is of the view that Astra Microwave Products has target of Rs 100.

Ranganathan told CNBC-TV18, "Basically in the kind of challenging environment that Indian industry is facing right now, Astra Micro is a company which used to face extremely challenging times a couple of years back. Partly due to the reasons one is that India as a country was pretty late in opening up the defense segment with the private sector; secondly the offset policy of the defense ministry wherein the defense manufacturers can actually outsource a certain percentage of the jobs from Indian vendors that also came in late and lastly despite being a technology driven company like Astra, it takes a few years before you can really attend the kind of critical mask to really leverage on this market."

He further added, "Having said this today we find that in challenging times that we are in Astra Micro in our opinion is well placed from next year onwards. This year is going to be a year of consolidation and from next year we expect the company to post about 40% growth in its topline predominantly from the defense segment because it is this segment wherein their presence in areas like radar manufacturing, missile and also electronic warfare would take them forward as far as the defense segment is concerned."

"Apart from defense, they also derive a third of its revenues from the space segment. So if you take the entire big picture into account, Astra Micro is a company which essentially has four good manufacturing facilities from where they operate in the area of defense and space and most importantly what we believe is that the EBITDA margins of 33% is a very sustainable margin going forward. Because the ‘Offset Policy’ allows 30% outsourcing to be done from Indian vendors over 300 crore what it really does is that it throws open a good opportunity for companies like Astra Micro to enable them to get a good slice of these orders. So we do remain extremely bullish on the longer-term prospects for the stock because the stock is trading at nine times one year forward and we have a price target of Rs 100 for the next eighteen months."

Disclosure: Analyst actively covers the above stock so his clients would be having a beneficial interest in this stock.

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Astra Micro has target of Rs 100: Ranganathan
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Price when posted: BSE: Rs108.90 ( -0.77 % ), NSE: Rs. 109.00 ( -0.73 % )

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