Buy Astra Microwave Products; target of Rs 976: Geojit Financial Services

Geojit Financial Services is bullish on Astra Microwave Products has recommended buy rating on the stock with a target price of Rs 976 in its research report dated December 12, 2024.

Broker Research

December 12, 2024 / 13:50 IST

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Geojit Financial Services research report on Astra Microwave Products

Astra Microwave Products Ltd. (AMPL) is a leading designer and manufacturer of a wide array of radio frequency systems, microwave chips, and microwave-based components and subsystems for defence, telecom, and space. In Q2FY25, AMPL reported a 21% increase in revenue, driven by healthy order execution, which was in line with estimates. EBITDA grew by 18% YoY, while margins were stable at 21.4%. Reported PAT declined by 15% YoY due to higher interest cost. Order inflow was healthy at Rs.234cr, with ~65% of these orders being from domestic defence. The current order backlog is at Rs.2,100cr, which is ~2x FY25E projected sales, providing visibility for the next 2 years. Order pipeline improving, with cumulative opportunities of Rs.8,000cr within AMPL's Rs.39,000cr of total addressable market until 2030. With a shift in order execution mix towards domestic orders (~86% mix), we anticipate EBITDA margin in the range of ~22.2% for the next 2- 3 years.

Outlook

Therefore, we value AMPL at P/E 45x FY26E, at a significant premium to its long term, and upgrade to Buy Rating from Accumulate with a target price of Rs.976.

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