Buy Astra Microwave Products; target of Rs 1190: ICICI Securities

ICICI Securities's research report on Astra Microwave Products

Astra Microwave Products (AMP) reported a good set of numbers. Consol. EBITDA registered impressive growth of 71% YoY to INR 410mn driven by 29% YoY growth in revenues to INR 2bn, which in-turn was propelled by 71% YoY surge in defence revenues. The mix improvement in defence to 86.4% vs. 65.2% YoY helped gross margin expand 300bps to 43.8%. This, coupled with operating leverage, pushed EBITDA margin to 20.5% vs. 15.5% in the previous year. Management continues to guide for 20% revenues growth with PBT margins to be similar to FY25 levels. Opportunity size for AMP is expected to be INR 240–250bn over FY28, which should drive earnings for years to come. We reinitiate coverage on the stock with a BUY rating and target price of INR 1,190 (based on 40x FY28E EV/EBITDA).

Outlook

We are building 21% revenue CAGR over FY25- 28E with PBT CAGR of 24% (keeping some cushion). We re-initiate the coverage with Buy rating and target price of INR 1,190 (based on 40x FY28E EPS).