Astra Microwave Products Set to Skyrocket: 18% Revenue Growth Expected by 2028 (Investor's Delight)

Imagine a company that's at the forefront of India's defense electronics sector, designing and manufacturing high-quality radio frequency and microwave modules, subsystems, and systems. Astra Microwave Products (AMPL) is that company, and it's poised for significant growth over the next few years.

Changing Business Mix and Growing Order Book

AMPL is transitioning from being a subsystem-level player to a complete system solutions provider, eyeing opportunities from Active Electronically Scanned Array (AESA) radar, Uttam radar, meteorological orders, repeat orders from the Navy, and counter-drone orders. The company's order book stood at INR22b as of September 30, 2025, and it has posted a 13% revenue CAGR over FY21-25.

Improved EBITDA Margin and Projected Growth

Driven by a changing business mix, AMPL improved its EBITDA margin to 25.6% in FY25 from 12.3% in FY21. We expect the company's revenue to post an 18% CAGR over FY25-28, with a projected margin improvement of 40bp to reach ~26% by FY28. This would lead to a PAT CAGR of 23% over the same period.

Investment Opportunity and Valuation

We initiate coverage on AMPL with a BUY rating and a target price of INR1,100, based on 38x Dec'27 estimates. This valuation reflects a 15% discount compared to the target multiple of larger defense PSUs, owing to its smaller size. Key highlights of our analysis include:

• 18% revenue CAGR expected over FY25-28
• Projected EBITDA margin improvement of 40bp
• PAT CAGR of 23% over FY25-28
• BUY rating with a target price of INR1,100

Remember, markets can be unpredictable, and this is just our perspective, not a prediction. It's essential to do your own research and consider multiple viewpoints before making any investment decisions.