ICICI Securities says ‘buy’ Astra Microwave, stock zooms 9%

The government’s focus on indigenisation, increasing usage of electronics in defence and space, strong order backlog, healthy orders pipeline and execution of high-margin domestic orders would drive earnings of Astra Microwave Products in the coming period, according to ICICI Securities.

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Astra Microwave Products is well-placed to witness healthy growth led by strong sector tailwinds, according to ICICI Securities.

At 12:24 pm, shares of the defence company were trading 6.8 percent higher at Rs 424.65 on the BSE. Intraday, the stock zoomed 9 percent. The scrip is up 48 percent YTD. In the past three years, it has given a return of more than 230 percent.

The government’s focus on indigenisation, increasing usage of electronics in defence and space, strong order backlog, healthy orders pipeline and execution of high-margin domestic orders would drive earnings of the company in the coming period, according to the brokerage firm.

ICICI Securities has estimated revenue, EBITDA (Earnings Before Interest Tax Depreciation and Amortisation) and PAT (Profit After Tax) to grow compounded annually at 15.5 percent, 26.3 percent and 46.7 percent respectively over FY23-25.

The brokerage firm has recommended ‘buying’ shares of the defence player with a target price of Rs 510 per share based on 32 times FY25 Earnings Per Share (EPS).

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Strong order outlook

The company’s order book position stands healthy at Rs 1,580 crore as of June 2023 end which is 1.9 times its FY23 revenue, highlighted ICICI Securities.

Due to the government’s commitment to invest heavily in the defence and space industries, decrease reliance on foreign imports, and boost local production by using homegrown materials and components, there is a substantial potential for a significant increase in future orders for the defence company, both within the country and for international exports, the brokerage firm pointed out.

Additionally, it said that the overall execution would improve as the risk of supply chain issues recedes with increase in domestic procurement of raw materials and sub-components.

With expertise in microwave and radio frequency tech, AMPL now manufactures a wide range of advanced equipment and has strong in-house capabilities for order execution.

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