Astra Microwave Products Ltd. share price target

Dismal Performance from Astra Micro: Astra Microwave Products (Astra Micro) revenue declined by 19% to Rs. 444 mn and posted net loss of Rs. 46 mn in Q2FY19. Revenue declined due to deferment of 2 orders in the defence segment that were facing technical difficulties in execution.

Revenue Mix Impacts Profitability in Q1FY19: Astra Microwave Products (Astra) revenue for Q1FY19 grew by 15% as the company maintains execution phase of the existing order book. However, profitability was severely impacted as the revenue mix was unfavourable for margin expansion.

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...

Q4FY18 Margins in-line with Guidance: Astra Microwave Product (Astra) revenue grew by 6% in Q4FY18 to Rs. 1692 mn and earnings dropped by 24% to Rs. 297 mn largely on account of product mix.

Guidance Revised Partially for FY18E: Astra management maintained FY18E full year guidance for Order book and Revenue at ~ Rs.6,000mn and ~ Rs.4,500mn respectively. However, PAT guidance has been substantially revised to Rs.450-540mn from earlier Rs.600-650mn.

Astra Delivers on Guidance; Revises FY18E Guidance: Astras revenue (net) and PAT for FY17 reached to Rs.4,243mn and Rs.566mn which are in-line with guided revenue and PAT of Rs.4,200mn and Rs.570mnrespectively, these are higher than our estimates by 2.0% on revenue front and 130bps on PAT margin for FY17.

Revenues Lower During 9MFY17; Order Book Build-up Cushions VisibilityManagement revises full year guidance: Astra Microwave Products (Astra) management has revised the full year revenue and PAT guidance for FY17E to Rs.4,006mn and Rs.570-600mn respectively and the same for FY18E has beenrevised to Rs.4,800mn and Rs.700mn respectively. At the beginning of Q3FY17 revenue and PAT guidance for FY17E were at Rs.4,500mn and Rs.650mn and for FY18E the same were at Rs.5,500mn and Rs.800mn respectively.

Astras 2QFY17 results were above our estimates as it reported strong EBITDA margins of 31.9% ( 310 bps YoY). Higher contribution of domestic orders and clearance of deferred deliveries (of 1QFY17) led to the strong margins in the quarter.

H2FY17E likely to be robust: Astra Microwave Products (ASTM) management continues to maintain its full year guidance with a negative bias for the targeted revenue and PAT of Rs.4,500mn and Rs.650mn respectively. For the half-year ending, revenue, EBITDA and PAT reach to Rs.1,472mn, Rs.314mn and Rs.137mn which are lower by 28.3%, 27.9% and 40.7% respectively on YoY basis. During Q2FY17, revenue, EBITDA and PAT reach to Rs.906mn, Rs.289mn and Rs.161mn which are again lower by 14.6%, 4.8% and 11.0% on YoY basis.

Arguably, Astras 1QFY17 was disappointing. While revenues at Rs 566mn fell to a 12-quarter low, profitability took a hit owing to a combination of higher fixed costs (employee and other operating expenses) and a sharp decline in sales. As a result, AMP reported a net loss of Rs 23mn.