Buy Astra Microwave Products; target of Rs 800: ICICI Direct

ICICI Direct's research report on Astra Microwave Products

Astra Microwave Products (AMP) has received an order worth INR 3.86bn from BEL for the supply of sub-systems for Medium Power Radar (MPR). The contract would be executed over the next three years. In our view, this order is significant, as this is one of the biggest orders the company has ever received. Besides, the execution is short-term, implying INR 1.3-1.4bn of revenue booking each year over the next three years, equivalent to 15-16% of FY24E revenue. Furthermore, margins are expected to be healthy, as this is a domestic defence order.

Outlook

We expect more of such orders to accrue in the near term, as the trickle-down effect from BEL’s massive order inflow of INR 320bn in FY24. Maintain BUY with an unchanged TP of INR 800 on a DCF-based methodology.

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