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Buy Astra Microwave Products; target of Rs 124: Geojit

Subhash Helgaokar
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Geojit's research report on Astra Microwave Products

Astra-microwave products Ltd (AMPL) is leading designer and manufacturer of wide array of radio frequency systems, microwave chips, microwave based components and subsystems for Defence, Telecom and Space. FY18 PAT grew by 7% YoY. EBITDA margins improved by 510bps due to execution of higher margin domestic orders. Current order book is at Rs503cr, whereas order intake guidance of Rs600cr for FY19E is encouraging. Given execution of better margin domestic orders, we factor EBITDA margin in the range of 28% vs. 22% (last 5 year average) over FY18-FY20E. To benefit from improvement in demand for radars and subsystems due to ongoing indigenous missiles programmes. Further, company’s focus in new projects will drive future growth. However, we lower our earnings estimates for FY19E by 12% to factor in delay in certain orders during FY18. Considering the earnings downgrade, we lower our valuation to P/E 13x (16x earlier) as we roll forward to FY20E.

Outlook

We maintain our Buy rating with a revised target price of Rs124.

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