Buy Astra Microwave; target of Rs 157: Geojit BNP Paribas

Geojit BNP Paribas's research report on Astra MicrowaveAstra-microwave products Ltd (AMPL) is one among few leading designers and manufacturer of wide array of radio frequency systems, microwave chips, microwave based components and subsystems for Defence, Telecom and Space. AMPL’s Q4FY16 PAT growth was strong which grew by 246% YoY. EBITDA grew by 119% YoY, while EBITDA margins expanded by 1100 bps YoY to 23.1% owing to higher mix of domestic business. Current order book is at Rs538cr and order inflow projected for FY17E amounts to Rs690cr. Owing to lower exports orders we revise downwards our revenue estimates for FY17E to Rs450cr from Rs689cr earlier. Positively, EBITDA margin is expected to expand by 170bps to 24.4% in FY17E from 22.7% in FY16. We roll our valuation from FY17E to FY18E with EPS of Rs9.8 and bring down target P/E estimate to 16x (17x earlier). We upgrade AMPL to Buy from Accumulate with a target price of Rs157. AMPL is currently trading at P/E of 17x & 12x on FY17E & FY18E, earnings repectively. Lower revenue expecation for FY17E & FY18E are largely related to lower exports orders. While due to higher domestic business in sales mix will help in expansion of EBITDA margins. We roll our valuation from FY17E to FY18E with EPS of Rs9.8 and bring down target P/E estimate to 16x (17x earlier). We have a BUY rating for the stock with a target price of Rs157. For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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