Astra Microwave Products Q1 FY27 earnings call

Astra Microwave Products Limited reported Q1 FY27 revenue of INR182 crores. The quarter's performance was moderate due to temporary delays in customer approvals and last-stage technical issues, which management expects to normalize in coming quarters. Despite this, the company booked new orders worth INR185 crores in Q1, aligning with its performance guidance. The company is targeting a top-line growth of 15-20% for FY27, aiming for approximately INR1,350 crores in revenue, and INR1,600 crores for FY28.

In a landmark achievement, Astra Microwave secured a significant order worth INR2,205 crores from Hindustan Aeronautics Limited (HAL) for the Uttam Radar in July 2026. This win has effectively doubled the company's order book, bringing the total to a record-breaking INR4,300 crores as of August 2026. The current order book provides strong visibility, with 66% originating from the defense sector and the remaining 34% from space, metrology, and hydrology sectors. The Uttam Radar order is expected to be executed over 5 years, with the first phase of 12 units targeted for completion by September 2027.

The company has a robust order intake pipeline, targeting INR8,000-9,000 crores over the next 3-4 years, to be executed over 5-6 years. This includes potential orders from QRSAM (INR700-800 crores), Astra Rafael Comsys (INR500-750 crores), and projects related to Su-30, Virupaksha, and Angad (INR3,000 crores). Astra has also emerged as the lowest bidder (L1) for the AAAU program of AMCA, with a contract expected within a month. Additionally, the company secured a INR45 crores contract from Bharat Electronics for MMIC chipsets in Q1.

Astra Microwave successfully conducted technology demonstrations for two unique first-of-their-kind products: the electromagnetic wall and a vehicle-mounted anti-drone system. These solutions are considered 'all upside' and are not yet factored into current numbers. The company is also aggressively pursuing export orders for MMIC components and EW solutions, with expectations of securing sizable orders within the next one to two years, marking a shift towards exporting complete solutions rather than just deemed exports.

The company plans to spin off its Space and Weather divisions into a separate listed entity, replicating the current shareholding pattern, by April 1, 2027. This new entity is projected to achieve INR300+ crores in revenue in its first year with an 18-20% PBT margin. The goal is to create significant value for shareholders by focusing on indigenous design, advanced subsystems, and systems, including the launch of its own satellite within the first six months of listing, and aiming for global scale and data monetization.

The company experienced a substantial reduction in interest costs during Q1 FY27 due to a significant amount of positive cash available, leading to minimal utilization of overdraft facilities. While the working capital cycle looked favorable in Q1 and Q2, management anticipates potential pressure in Q3 and Q4 as production ramps up. However, they expect the overall working capital position for the full year to remain similar to the previous year, emphasizing that equity is a very expensive form of capital and they are comfortable with their current return on equity.