Maintain 12% PAT guidance for FY15: Astra Microwave

Below is the verbatim transcript of Gurunatha Reddy’s interview to CNBC-TV18’s Ekta Batra and Reema Tendulkar

Ekta: It has been a huge jump on all parameters for you all, what went right this quarter?

A: Yes we have a good product mix which enabled us to improve our profit margins and we have a pretty strong order book which has enabled us to deliver these numbers.

Reema: In Q1 also your margins improved. This quarter you managed to improve your EBITDA margins above the 20 percent mark. What resulted in the margin improvement and is it sustainable?

A: In this quarter we have executed one domestic order where the margins are pretty high compared to our normal business. That is the reason why there is an improvement in the overall margins for this quarter.

In terms of sustainability of these margins upto the end of the year we always give a guidance of about 12 percent PAT margins which we should be able to maintain.

Ekta: Is this good performance only limited to this quarter because of that domestic order which you said that you executed which resulted in high margins? What is the rest of the year looking like for you?

A: Rest of the year the normal level it is going to be about 12 percent PAT margins will be there that is the guidance given by us.

In terms of order execution upto now the mix is about 62 percent exports and 38 percent is domestic. In the next two quarters probably we will have an equal mix of both exports and domestic.

Ekta: What would the ratio stand at?

A: The ratio will be almost 50 percent each.

Reema: Where does the order book currently stand at and what was the intake of fresh orders in the quarter gone by?

A: The quarter gone by we had a very small intake about Rs 50 crore orders were booked mostly in the domestic space. Cumulatively at the end of the quarter we have close to about Rs 684 crore worth of orders in hand.

Ekta: What about export business?

A: Export business upto now we did close to about Rs 240 crore and the balance two quarters we should be doing another Rs 100 crore.

Reema: Can you breakup your revenue growth in the domestic business as well as in the export business in this quarter?

A: Export business this is the standard product which we are doing for the last 12-18 months. In terms of the domestic largely we have done in the defence space. Defence related market is one where we have delivered up till now. Otherwise we have business in the space segment also which is likely to come in the second half of the year.

Ekta: Since you do cater towards the defence space in India, are you seeing any incremental orders or bidding which is now taking place because of the new government? Where does that space stand for you especially in the second half because most of the analysts assume that the order pickup will be more prominent in the second half of the fiscal?

A: Yes that is right normally the defence orders flow in the second half of the year generally but otherwise with the new government coming in and couple of policy changes have been announced by the government, the overall position is looking very good and we expect to see large orders being booked in the next 6-12 months.

Reema: The cabinet cleared Rs 80,000 crore of defence contracts. Of this what would Astra Micro be looking to bid or what would be the opportunity for you from these contracts?

A: Out of the Rs 80000 crore close to about Rs 50000 crore are submarine related things where we don’t have any products to compete. We have direct opportunity available in radar segment.