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Astra Microwave Products, which has provided multibagger returns to shareholders in recent years, is expected to sustain strong performance in the coming years, according to projections by domestic brokerage firm Motilal Oswal.

The brokerage, in its latest note, has initiated coverage on the stock with a ‘Buy’ rating and set a target price of ₹1,100 apiece, indicating an upside potential of 25% from the stock’s latest closing price. This values the stock at around 38x its December 2027 estimates.

It considers Astra Microwave Products a long-term investment opportunity in defence electronics, and its valuation reflects a 15% discount to the target multiple of larger defence PSUs, owing to the company’s relatively smaller size.

The company, which is engaged in designing, developing, and manufacturing defence, aerospace, and space electronics systems, subsystems, and components, is likely to benefit from rising order inflows from the Ministry of Defence.

The brokerage highlighted that the company is transitioning from being a subsystem-level player to a complete system solutions provider and is eyeing opportunities from Active Electronically Scanned Array (AESA) radar, Uttam radar, meteorological orders, repeat orders from the Navy, and counter-drone systems over the next few years.

Motilal Oswal believes that the company could benefit from upcoming orders related to QRSAM, the Uttam radar for Tejas Mk1A, the EW suite and Virupaksha AESA radar for the Su-30 MK1 upgrade, weapon-locating radars, and other defence segment projects over the next 1–2 years.

Additionally, AMPL is expected to benefit from meteorology-related orders under Mission Mausam and the launch of a satellite, which could boost revenues from the meteorology and space segments. Export opportunities are anticipated to take 1–2 years before contributing meaningfully to revenues.

AMPL has a strong order book of ₹22 billion, providing revenue visibility for the next three years. With this, the brokerage expects revenues to clock a CAGR of 18% over FY25–FY28 and projects margins to improve by 40 basis points over the same period to reach around 26% by FY28. This would translate into a PAT CAGR of 23% over the same period.

The brokerage also underscored the company’s strong client base, which includes RCI, BrahMos, Gaetec, Bharat Electronics, Bharat Dynamics Limited, Electronics Corporation of India Limited, HAL, BSF, IITM, GUVNL, Adani Defence and Aerospace, and L&T.

The company’s shares in recent months have remained under pressure amid weak sentiment across the small-cap space, losing 18% of their value since May. Yet, the year-to-date returns remain strong at 16.6%.

If the stock closes 2025 higher, which appears likely, it will mark its seventh consecutive annual gain. Over the last three years, the stock has delivered a gain of 200%, and over five years, the return looks even more impressive, having rallied 616%.

Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.

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