Buy Astra Microwave Products; target of Rs 425: ICICI Securities

ICICI Securities research report on Astra Microwave Products

Astra Microwave Products’ (AMW) has reported subdued Q1FY24 earnings as performance was mainly impacted by higher proportion of export sales and low margin domestic sales. Key points: 1) Export sales was 60% (vs 40% in Q1FY23) of overall; 2) EBITDA declined 86.7% YoY to INR 31mn as normalised cost could not be mitigated by low margin execution; 3) management expects order inflow of INR 10bn in FY24 and orderbook as on Jun’23 end was INR 15.8bn (export - ~19% and domestic - ~81%). The management has retained its revenue guidance of INR 9bn and PBT guidance of INR 1.4-1.5bn for FY24.

Outlook

As high margin domestic orders are likely to be executed from Q3FY24, we believe the prospects remain bright. We maintain BUY on the stock with an unchanged TP of INR 425 (DCF methodology).