Astra Microwave Products Share Price Target at Rs 976: Geojit Financial Services

Astra Microwave Products Share Price Target at Rs 976: Geojit Financial Services

Astra Microwave Products Ltd. (AMPL), a prominent name in radio frequency systems, microwave chips, and subsystems catering to defense, telecom, and space sectors, has received a "Buy" recommendation from Geojit Financial Services. With an upgraded target price of Rs 976, this recommendation reflects an optimistic outlook based on robust fundamentals, improving order execution, and promising growth in India's defense manufacturing sector.

Strong Financial Performance in Q2FY25

Impressive Revenue Growth

AMPL reported a 21% YoY increase in revenue for Q2FY25, driven by healthy order execution. Revenue for the quarter stood at Rs 230 crore, with a substantial 20.8% YoY growth.

Stable Margins Amid Growth

The EBITDA grew 18% YoY, maintaining a stable margin of 21.4%. However, PAT saw a 15% decline due to increased interest costs. Adjusted PAT for the quarter stood at Rs 25 crore.

Robust Order Book

AMPL's current order backlog is Rs 2,100 crore, which is nearly twice its FY25E projected sales. This ensures strong revenue visibility for the next two years, with a cumulative order pipeline of Rs 8,000 crore until 2030.

Strategic Shifts Towards Domestic Defense Orders

AMPL has significantly shifted its focus to domestic markets, with 86% of orders in the current mix being domestic. This is expected to support margin expansion, with EBITDA margins forecasted at 22.2% over the next 2-3 years. The emphasis on India's defense modernization and self-reliance is expected to be a key growth driver.

Valuation Metrics and Growth Projections

Revenue and Earnings Estimates

AMPL's revenue is projected to grow at a CAGR of 22.5% through FY26, reaching Rs 1,361 crore. Adjusted EPS is expected to rise from Rs 12.8 in FY24 to Rs 21.7 in FY26, representing a growth rate of 38%.

Premium Valuation

AMPL is valued at a P/E multiple of 45x FY26E earnings, reflecting a premium in light of its robust growth prospects and strong fundamentals.

Key Financial Metrics

Metric FY24 FY25E FY26E
Revenue (Rs Cr) 909 1,093 1,361
EBITDA (Rs Cr) 192 239 306
PAT (Rs Cr) 121 149 206
EBITDA Margin (%) 21.1 21.9 22.5
EPS (Rs) 12.8 15.7 21.7

Key Highlights from the Order Pipeline

AMPL anticipates Rs 550-600 crore in order inflows during H2FY25, with a focus on defense applications:

  • Radar Systems: Rs 350 crore
  • Electronic Warfare Systems: Rs 60 crore
  • Telemetry and Missile Communications: Rs 100-120 crore
  • Meteorological Equipment: Rs 50-60 crore

Additionally, AMPL has entered into strategic partnerships, including MoUs with Premier for joint product development and with Manjeera Digital Systems for NavIC chips.

Competitive Position in India's Defense Ecosystem

AMPL is well-positioned within India's defense manufacturing landscape, bolstered by government initiatives promoting self-reliance and defense modernization. The company’s focus on domestic orders provides an edge over competitors in the sector.

Technical Analysis and Stock Levels

Current Market Position

  • CMP: Rs 810
  • Target Price: Rs 976
  • Upside Potential: 20.5%

Fibonacci Levels

Using the 52-week high of Rs 1,060 and the low of Rs 511:

  • 23.6% Retracement: Rs 849
  • 38.2% Retracement: Rs 921
  • 61.8% Retracement: Rs 989

Support and Resistance

  • Immediate Support: Rs 785
  • Strong Resistance: Rs 850

Investment Rationale and Risks

AMPL’s promising growth trajectory is backed by its strong order book, improved domestic focus, and robust financial metrics. However, risks include potential delays in order execution and cost escalations due to geopolitical and macroeconomic factors.

Analyst Recommendation

Geojit Financial Services has issued a "Buy" recommendation with a target price of Rs 976. Investors are advised to capitalize on the stock's potential, considering its alignment with India's defense growth story and its improving financial health.

Disclaimer

This report is based on Geojit Financial Services' analysis and projections. Investors should conduct their due diligence and consult financial advisors before making investment decisions. The stock market carries inherent risks, and past performance is not indicative of future results.

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