Astra Microwave Products Ltd Q1 FY27 Earnings Call Summary

Event Participants

Executives

3 S Gurunatha Reddy (Managing Director), Maram Venkateshwar Reddy (Joint Managing Director), Atim Kabra (Director - Strategy & Business Development)

Analysts

9 Abhijeet Singh (Systematix Group), Akash Singh (ICICI Securities), Amit Ashok Thawani (Clear Blue Capital Advisors), Amit Dixit (Goldman Sachs), Ansh Kapoor (Jefferies), Bhavya Gandhi (Bajaj Alternate Investment Management), Dipen Vakil (PhillipCapital), Mithun Aswath (Kivah Advisors), Prerit Jain (Motilal Oswal Financial Services)

Financials & KPIs

Geographic & Segment Commentary

Defence (66% of order book): Landmark ₹2,205 crore HAL order for Uttam Radar subsystems (critical for Tejas Mk1A) executing over ~5 years; first 112 units due by September 2027 with ~25+ units/year thereafter, possible early completion by FY30-31. Emerged as L1 bidder for AMCA AAA-U development program. EW positioning strengthened across Tejas Mk1A (AATRU subsystem qualified, ~₹500-600 crores potential), SU30 Angad (DCPP), LCH subsystems. Brahmos: supplying critical RF component for RF seekers, telemetry products; new-generation NG seeker in development (few months to qualification).

Space, Meteorology & Hydrology (34% of order book): ~₹120-150 crores revenue planned from space in FY27; ~₹100 crores DRDO orders executing next quarter. Doppler weather radars: 45+ supplied to IMD across all frequency bands; Mission Mausam visibility for next 4-5 years, with new products (avalanche radar, complete weather platforms) in development. Space & weather business to be spun off as separate listed entity replicating same shareholding pattern, operating independently from April 1, 2027, with first-year guidance of ₹300+ crores and 18-20% PBT margin.

Company-Specific & Strategic Commentary

Uttam Radar Order (Landmark Milestone): Single largest order in company history (~₹2,205 crores ex-GST ~₹1,870 crores) from HAL, doubling order book to ~₹4,300 crores; execution over 5 years with 112 units by Sep 2027, ~25 units/year thereafter.

Multi-Platform Positioning: Active across all major airborne platforms - Tejas (Uttam radar), Avax Mark 2, Mach 1 supply chain (~25%+ content), SU30 upgrades (radar Tier-1, EW Tier-2), AMCA (VRL L1/L2 for 4 prototype units), and naval programs (Chatrugat/Samagut worth ~₹100-120 crores expected).

New Product Innovations: DEMOed EM Wall and vehicle-mounted anti-drone system in Jalandhar (July); modular design allowing client-mounted hard-kill/directed energy solutions, with interceptor drone capability being built in-house. By Diwali, two complete own radars and one drone-mounted intelligence product expected.

Organizational Restructuring: Dr. Radhakrishna inducted as new CTO; new heads for HR, quality, purchase, sales/marketing, and R&D domain heads added in last 18 months. SAP HANA migration completed successfully. SGR announced this as his last interaction as MD, passing baton to MV Reddy and Atim Kabra.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Growth Target Discrepancy (Press Release vs Presentation)

• Question: Press release says 10-15% growth target but presentation says 15-20%; which is correct? (Amit Thawani, Clear Blue Capital)
• Answer: 15-20% is the correct guidance; over 15% growth targeting ₹1,350 crores (S Gurunatha Reddy)

Uttam Order Execution Timeline & Margins

• Question: What is the execution timeline and revenue booking over next 2-3 years? (Bhavya Gandhi, Bajaj Alt)
• Answer: Total execution 5 years; first phase of 112 units by September 2027 (14 months), then ~25+ units/year, possibly completing overall by FY30-31. Margins: Management expects to maintain current trajectory and views profitability across product life cycle ("long tail" from AMCs and upgrade cycles), possibly trading initial margin for order size (MV Reddy, Atim Kabra)

EW Systems & Incremental Platform Opportunities

• Question: Any play in EW systems for SU30 and LCH program? (Amit Dixit, Goldman Sachs)
• Answer: Yes - AATRU subsystem qualified for Tejas Mk1A EW suite (final qualification phase ongoing); SU30 EW Suite "Angad" - DCPP consortium partner; LCH subsystems being delivered. Tejas Mk1A alone could add ₹500-600 crores to order book projections (MV Reddy)

Order Book Visibility & 17,000 Crore Cumulative Question

• Question: Given revenue guidance, cumulative execution over 5-6 years would be ~₹17-18,000 crores vs stated ₹8-10,000 crore order intake; any bigger orders expected? (Akash Singh, ICICI Securities)
• Answer: Management disputed the ₹17,000 crore arithmetic; clarified ₹8-10,000 crores is order intake to be executed over next 5-6 years; annual recurring business from existing customers not factored into projections - stated numbers are meant to be conservative, positive surprises to follow (Atim Kabra, MV Reddy)

Space & Meteorology Business Update

• Question: Updates on satellite building and Mission Mausam / Doppler weather radar opportunity? (Prerit Jain, Motilal Oswal)
• Answer: Own satellite to launch within first 6 months of new space entity listing; part of a constellation. 45+ Doppler weather radars supplied to IMD across all frequency bands in last 4 years; Mission Mausam orders expected in current fiscal providing 4-5 year production visibility (Atim Kabra, MV Reddy)

Counter-UAV / EM Wall Scope

• Question: What is built in-house with the anti-drone system? (Prerit Jain, Motilal Oswal)
• Answer: Client mounts their own guns/directed energy weapons; Astra provides radars, detectors, targeting direction and alignment; interceptor drone capability being built in-house. Modular "lean-and-learn" strategy (Atim Kabra)

Working Capital Cycle

• Question: Can working capital moderate further given FOPM-heavy execution? (Prerit Jain, Motilal Oswal)
• Answer: Q1/Q2 working capital typically looks stronger due to prior year execution; Q3/Q4 pressure builds; expect similar position to previous year with clarity by end of Q3. No dilution for working capital - equity is expensive capital; ROE has moved up substantially and will further (S Gurunatha Reddy, Atim Kabra)

AMCA Program Opportunity

• Question: What is the quantum of opportunity in AMCA? (Dipen Vakil, PhillipCapital)
• Answer: Development program for active antenna array (AAA-U) where Astra and BEL emerged as L1/L2; production numbers depend on AMCA RFP outcome (3 consortium partners shortlisted); Astra will be part of supply chain of radar designated production agency (MV Reddy)

Space Demerger & Margin Guidance

• Question: What is the space revenue in FY27 guidance and margin outlook? (Mithun Aswath, Kivah Advisors)
• Answer: ₹120-150 crores of the ₹1,350 crores FY27 target; EBITDA margins to be similar to last year with a positive delta; space entity first-year guidance ₹300+ crores with 18-20% PBT margins, profitable from day one (S Gurunatha Reddy, Atim Kabra)

Brahmos Program Participation

• Question: What are Astra's offerings in the Brahmos missile program? (Abhijeet Singh, Systematix)
• Answer: Critical RF component for the OEM's gimbal-based RF seekers, telemetry products; proactive development of seeker for Brahmos NG (new generation) taking a few months to complete qualification. New programs not factored into order book projections - potential upside (MV Reddy)

Revenue Decline in Q1

• Question: Are there deferred revenues / finished goods inventory due to shipping issues? (Abhijeet Singh, Systematix)
• Answer: A few programs planned for Q1 sales missed because of inspection issues, development cycle problems, and supply chain delays; all material received for Q3/Q4, full year guidance reaffirmed. Management emphasized this is not a quarterly-driven business; yearly targets are the commitment (MV Reddy, Atim Kabra)

Space & Meteorology Sustainability

• Question: Will government capex on meteorology sustain beyond FY28? Any space opportunities beyond government programs? (Ansh Kapoor, Jefferies)
• Answer: Climate change driving sustained meteorological budgets; AVA developed new products - avalanche radar and complete weather platform solutions; demand visibility of 8-10 years. Space: own satellite for data monetization (industrial-grade data), international supply chain participation; detailed plans shared in 2 quarters (Atim Kabra, MV Reddy)

Key Takeaway

Astra Microwave reported a modest Q1 (₹182 crores revenue) with temporary customer approval and technical issue delays, but delivered a landmark strategic win - a ₹2,205 crore HAL order for Uttam Radar subsystems (5-year execution, 112 units by Sep 2027) that doubled the order book to a record ~₹4,300 crores and repositioned the company at the center of India's airborne defence ecosystem. Management reaffirmed FY27 revenue guidance of ₹1,350 crores (15-20% growth) and FY28 target of ₹1,600 crores, with a "different trajectory" expected from FY29 as Uttam and QRSAM production scale. Order intake visibility increased to ₹8,000-9,000 crores over next 3-4 years, driven by QRSAM, ARC JV, and SU30/Viru Paksha/Angad programs, plus ~₹500-600 crores incremental from Tejas Mk1A EW. Strategic focus areas include new IP products (EM Wall, anti-drone systems) demonstrated in July, AMCA AAA-U L1 positioning, and a space-weather demerger (April 2027) targeting ₹300+ crores with 18-20% PBT margins in year one. Supply chain stretch and execution scale-up (6-7x revenue target over 5 years) remain key watch points, alongside export upside (still 1-2 years away) that is deliberately excluded from all projections; margin guidance is for maintenance with positive delta, with management framing growth as multi-year and committed to yearly (not quarterly) delivery.