Astra Microwave Uttam radar order strengthens defence electronics growth visibility

Investment View and Target Price

ICICI Securities maintains a BUY recommendation on Astra Microwave Products and revises its target price to Rs 1,980 from a current market price of Rs 1,711. The broker believes the company is entering a structural earnings upcycle, supported by its in-house design and manufacturing capabilities across defence electronics, radar, electronic warfare, space and strategic-electronics applications.

Astra Microwave Products is progressing from supplying individual subsystems towards offering complete radar, electronic-warfare and counter-UAV solutions, along with IP-led products and semiconductor capabilities. ICICI Securities believes this broadens the addressable market and can support higher-value products, lifecycle revenue and export opportunities.

Q1 FY27 Financial Performance

Q1 FY27 execution was weak because of lower execution. Management attributed the subdued quarter to temporary delays in customer approvals, inspections and technical clearances, as well as supply-chain issues.

Revenue declined 63.8% quarter-on-quarter, reflecting the lower execution. Management expects most delayed execution to be recovered in H2 FY27 and reiterated FY27 revenue-growth guidance of more than 15%, or about Rs 1,350 crore. EBITDA margin is expected to remain broadly in line with FY26, with potential improvement from AMC, upgrades and lifecycle revenues.

Order Book and Execution Visibility

As of June 2026, Astra Microwave Products had a standalone order book of Rs 2,156 crore and a consolidated order book of Rs 2,849 crore. Most existing orders are executable over the next two years.

The company subsequently received its largest-ever HAL order, worth about Rs 1,870 crore excluding GST, for critical Uttam radar subsystems. This increased the consolidated order book to about Rs 4,300 crore. The five-year Uttam order targets the first 12 units by September 2027 and 25 units annually thereafter. Management aims to complete the order faster, by FY30-31.

ICICI Securities estimates an order backlog of about Rs 5,000 crore, equivalent to 4.4 times trailing-twelve-month revenue, including the Rs 2,205 crore Uttam radar order. The backlog provides near-term visibility and signals the start of a larger production cycle.

Growth Pipeline and Revenue Outlook

Management expects FY27 order inflows of more than Rs 1,600 crore and FY28 revenue of about Rs 1,600 crore. It expects material acceleration from FY29E as Uttam and other major programmes ramp up.

Identified opportunities could generate Rs 8,000-9,000 crore of orders over the next three to four years. These include QRSAM, the ARC joint venture and the Su-30, Virupaksha and Angad programmes. Additional potential comes from Tejas Mk1A electronic warfare, LCH, AMCA active antenna arrays, semiconductor RF chipsets, BrahMos, counter-UAV systems and exports. These newer products and opportunities are not included in the current order-book or revenue guidance.

The ARC joint venture has an order book of about Rs 836 crore and a FY27 revenue target of about Rs 360 crore.

Space Business Demerger

The Space, Meteorology and Hydrology business is planned to be demerged into a separately listed entity from April 2027. Management expects this business to generate Rs 120-150 crore of FY27 revenue and targets more than Rs 300 crore of revenue, with an 18-20% profit-before-tax margin, in its first standalone year.

Valuation and Key Risks

ICICI Securities values the defence business at 65 times FY28E earnings, assuming it contributes about 85% of revenue and has consolidated-like margins. Other businesses, assumed to contribute about 15% of revenue, are valued at 10 times revenue.

• Dependence on government contracts
• High working-capital requirements
• Availability of key raw-material components