Astra Microwave Products Ltd. share price target

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.

BUY Astra Microwave Products Ltd Between CMP at Rs. 123 - 115 for the target of Rs. 140 , 150.

Astra Microwave Products Lim.. - ASTRAMICRO has carved a niche for itself in the sunrise sector of defence manufacturing. Still, the stock was range-bound for the past couple of years as order backlog (and inflows) declined sharply over FY13-15. A structural shift is now playing out supported by robust order prospects, in turn driven by GoI’s thrust to kickstart the much-delayed defence procurement cycle. HDFC Securities initiate coverage with a BUY, TP of Rs 154 is based on 17x FY18E EPS.

Trendlyne has 1 report on ASTRAMICRO updated in the last year from 1 broker with an average target of Rs 154.

Astra Microwave Products Ltd (ASTM) FY15 Net Sales, EBITDA and PAT grew by 19%, 27% and 19% on y-o-y basis. For Q4FY15 the same declined by 27%, 44% & 56% respectively on a q-o-q basis and 42%, 44% & 49% respectively on a y-o-y basis, the volatility in earning is caused by execution mix.

Astra Micro 9MFY15 Net sales and PAT reach to Rs.5,229mn and Rs.522 mn respectively and for Q3FY15 Net sales and PAT reach to Rs.1,459mn and Rs.127mn respectively. Book-to-Bill ratio stood at 0.8x by Q3FY15. The Company has guided for Net sales and PAT of Rs.6000-6500mn and Rs.700-750mn respectively by FY15E and order inflow duirng Q4FY15 to the tune of Rs.2,000mn-2,500mn.

Karvy initiates coverage of Astra Micro Wave Products with a Buy Rating. Integration of Akash weapons systems into armed forces and execution of exports opportunity arising out of offset contracts from Elta and Dassault Aviation to improve Bill-to-Book ratio to 2.7x by FY16E leading to higher profitability, earnings and return ratios.