Buy Astra Microwave; target of Rs 140: Edelweiss

Edelweiss's research report on Astra Microwave

Astra Microwave’s (AMP) Q4FY18 EBITDA and PAT plummeted 19% and 24% YoY, respectively, and came significantly below our estimate. Key highlights: 1) revenue grew 6% post two quarters of decline; 2) EBITDA margin dipped due to adverse product mix (550bps impact) & higher staff cost (320bps impact). Management estimates FY19 margin to be lower than FY18 due to adverse product mix.

Outlook

We estimate AMP to post 15% EPS CAGR over FY18-20, as it bags major orders in defence and space segments by virtue of being the preferred vendor of PSUs. At CMP, the stock trades at 13x/11x FY19/20E EPS. We maintain ‘BUY/SP’ with revised target price of INR140.