Astra Microwave set for growth; Motilal Oswal initiates coverage with 'Buy'

Motilal Oswal Financial Services (MOFSL) has initiated coverage on aerospace and defence sector player Astra Microwave Products (AMPL), assigning a ‘Buy’ rating on the scrip with a target price of ₹1,110 per share. The brokerage views the company as a long-term investment in defense electronics, expecting its revenue growth to accelerate between FY27 and FY30 as larger orders are awarded by the Ministry of Defence (MoD) and other defence public sector undertakings (PSUs).

 

At the current market price of ₹888, AMPL trades at 37.4x/29.3x P/E on FY27E/FY28E financials. The target price is based on a 38x multiple on December 2027 estimates, which MOFLS  says reflects a 15 per cent discount to the target multiple of larger PSUs, given AMPL’s smaller scale. "We view Astra Microwave as a long-term play in defence electronics, with its revenue growth profile set to improve significantly over FY27-30 as larger orders get awarded from MoD," said the brokerage.

 

Precision in motion: From subsystems to systems

Astra Microwave Products designs and manufactures high-quality radio frequency and microwave modules, subsystems, and systems in India. The company is transitioning from a subsystem-level player to a complete system solutions provider. It is targeting opportunities in Active Electronically Scanned Array (AESA) radar, Uttam radar, meteorological orders, repeat orders from the Navy, and counter-drone systems in the coming years.

 

The company’s order book stood at ₹2,200 crore as of September 30, 2025. AMPL reported a 13 per cent revenue CAGR over FY21-25. Driven by a changing business mix, the company improved its Ebitda margin to 25.6 per cent in FY25 from 12.3 per cent in FY21. MOFSL expects revenue to grow at an 18 per cent CAGR over FY25-28, with margins improving by 40 basis points to approximately 26 per cent by FY28. This would translate into a PAT CAGR of 23 per cent over the same period.  CATCH STOCK MARKET LIVE UPDATES TODAY

Upcoming opportunities and long-term prospects

MOFSL expects AMPL to benefit from orders related to QRSAM, the Uttam radar for Tejas Mk1A, the EW suite and Virupaksha AESA radar for the Su-30 MKI upgrade, weapon locating radars, and other defence projects over the next 1-2 years. Emerging opportunities in space, meteorology, exports, and other areas could support medium to long-term growth, the brokerage noted.

 

AMPL plans to capitalise on growth in the defence sector by moving up the value chain from subsystems to complete systems through collaborations and JVs for complex projects, offering end-to-end solutions, diversifying its revenue mix, increasing the share of higher-margin domestic orders, and maintaining a strong balance sheet.

 

MOFSL also flagged key risks, including potential delays in awarding larger platforms, lower-than-expected government spending on defence, and supply-chain disruptions. 

(Disclaimer: The views and investment tips expressed by the brokerage in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.)