295% stock surge and promising defense future

India’s defense sector is constantly evolving due to new technologies, politics and national objectives. The Prime Minister recently said at an Aero India event that India aspires to become the world’s largest defense equipment manufacturer. The government plans to generate $25 billion from defense by 2024-25 and export $5 billion to other countries.

They are allocating 25% of their research funds to Indian private companies and startups to develop new defense technologies. The interim budget for fiscal year 2024-25 was presented by Finance Minister Nirmala Sitharaman on February 1. The Ministry of Defense (MoD) received ₹6,21,541 crore (US$74.8 billion) out of the total budget of ₹47,65,768 crore (US$74.8 billion). approximately $574 billion).

The Ministry of Defense’s interim budget, which accounts for 13% of Central Government Expenditure (CGE), is 4.7% higher than the previous allocation and is the highest allocation among all ministries. India already sells defense products to about 75 countries, so there is ample room for expansion. Because of this, the stock prices of many defense companies soared.

Not many organizations can say that they have clients like Defense Research Development Organization (DRDO), Indian Space Research Organization (ISRO), Hindustan Aeronautics Limited (HAL) and Vikram Sarabhai Space Center. Astra Microwave Products Limited (AMPL) can.

Few people can boast that exports account for 40% of their sales. This company can do it. And few have more than doubled their profits in the past year. That did it. What are the characteristics of this defense technology provider? The company has returned 126.89% in just over a year. The stock price soared a whopping 295% in three years.

With India aiming for high defense capability and numerous countries looking for defense equipment, Astra Microwave equipment appears to have a promising future. So what is this company doing and what are its plans for the future? Let’s go into the article.

Astra Microwave – Company Overview

Astra Microwave Products (AMPL) was founded by a group of scientists with experience in RF/microwave/digital electronics and project management with advanced technical content who recognized the need for a stable, technically strong private company capable of designing, developing and carrying out the work. Established in 1991. We manufacture advanced RF and microwave subsystems and systems for strategic applications.

Over the past three decades, the company has grown from a small production plant called Unit I to a ₹800-crore revenue enterprise through continuous investments in infrastructure, captive testing facilities and other resources.

The company has three production units, two R&D units and one dedicated space certification facility. AMPL now has three automated assembly lines for PCBA assembly, five class 10,000 clean rooms, functional test infrastructure ranging from 30 MHz to 40 GHz, internal environmental test facilities including EMI/EMC facilities, and the first short-range antenna test and measurement in the Indian private industry. It’s a range.

Astra Microwave – Business Division

AMPL operates in the following business sectors: Defense, Space, Instrumentation/Civil Telecommunications/Others.

defense

The company is engaged in designing, developing and producing critical subsystems for customers to build a variety of air, naval and land-based systems. The company produces equipment for radar electronics, equipment warfare, strategic electronics and telemetry.

This segment remains the most revenue-generating segment, accounting for 55% of total revenue in fiscal 2023.

space

Since 2004, AMPL has worked extensively with the Indian Space Research Organization (ISRO) to design, develop and manufacture space-grade subsystems and components for several Indian satellite programs and has been associated with all important satellite programs of India since 2007. .

The company has participated in both ISRO’s flight model and ground-based electronics. In fiscal 2023, this segment accounted for 1% of total revenue.

Instrumentation/Civil Communications/Others

The company creates technology to measure weather and environmental changes around us. In fiscal 2023, this segment accounted for 4% of total revenue.

Astra Microwave – Finance

In FY 2023, Astra Microwave Products saw a growth in revenue reaching ₹815.52 crores, up 8.6% compared to ₹750.46 crore in FY 2022. After analyzing four years from 2020 to 2023, the company recorded a solid Compound Annual Growth Rate (CAGR) of 20.4%.

At the same time, there was a notable increase in net profit, which increased by 84.4% from ₹37.87 crore in fiscal 2022 to ₹69.83 crore in fiscal 2023. Cumulative net profit over the four years from fiscal 2020 to fiscal 2023 recorded a CAGR of 16.6%.

In FY23, Astra Microwave Products maintained favorable financial metrics with return on equity (ROE) of 11.37% and return on equity (ROCE) of 15.84%.

Astra Microwave – Future Plans

healthy order book

As of December 2023, the company’s order book stands at ₹1813 crore, which is double its FY23 revenue. With significant tailwinds from the defense and space sectors in terms of indigenization of key systems/sub-systems, AMPL has huge order inflow opportunities in both domestic and export markets.

AMPL is expected to receive orders worth around ₹8000 crore by 2028, especially in the defense and space electronics sector. Increased domestic purchasing of raw materials and subcomponents reduces the risk of supply chain issues and improves overall execution.

Strong R&D and manufacturing capabilities

Astra Microwave Oven With our extensive domain experience and focus on R&D, we are well positioned to capture a larger share of the expanding Indian defense market. The company has designed, developed and manufactured critical subsystems/systems for a variety of air, naval and ground-based platforms, including radar, missile electronics, electronic warfare (EW), satellite, MMIC and communications.

With strong domain expertise in microwave and radio frequency applications, AMPL has moved up the value chain from subsystem/component manufacturing to developing and producing equipment based on a wide range of advanced, high value critical microwave and radio frequency applications such as: Yes. Gallium nitride (GaN) transmit/receive modules (TRM), Navigation with Indian Constellations (NavIC) chips and other major radar and EW systems, etc.

conclusion

With a robust order book, strong R&D capabilities, and the Indian government’s push for localization, Astra Microwave Products appears well-positioned to capitalize on growing opportunities in the defense and space sectors. The company’s expertise in developing critical subsystems and components for a variety of platforms could help it secure significant orders in the coming years.

However, execution risks and supply chain issues remain potential obstacles. What do you think about the future prospects of Astra Microwave Products? Share your thoughts in the comments below!

Written by Nalin Surya

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