Astra Microwave : Key points from Q1FY25 confcall and AGM

Copied key contents from confcall and AGM

Disclosure : I am holding it from very low levels, Not added/not sold recently

Keeping in mind the seasonality pattern inherent to our business wherein Q1 is the weakest quarter and the major chunk of revenues are captured in the subsequent part of the financial year. We want to highlight that we have also improved our gross margin significantly, which were primarily driven by continuous improvement in the product mix where the domestic defense business contributed to 65% of the topline, followed by exports whose contribution is around 21% and the space with 11.5% with rest of the business coming in from meterology and other sectors

Employee expenses have slightly gone up because of the increase in the number of skilled and professional employees. This is mainly due to our employee addition at our Bangalore facility. At the end of the quarter, the employees count is close to about 1537, up from 1468 at the end of the financial year.

We have created that Bangalore facility for our systems integration and testing, especially in the radar and electronic warfare domain and we have built up NFTR facility also and also assembly hangers to handle and address the radar systems. And also we have created space division in Bangalore facility. We have incorporated 100% subsidiary unit, Astra Space Technologies Limited and that group is basically going to address all future satellite requirements and they are also working in the same facility.

Objective is to get qualified for satelitte integration and launching business. Own satellite launch is the goal in next 2-3 years with synthetic aperture, radar payload ( ISRO collaboration)

Guidance :

And lastly, for the current financial year, we maintain our target which was given previously for an order book in the range of about Rs. 1,200-Rs. 1,300 crores and the topline in the range of Rs. 1,000-Rs. 1,100 crore with the PBT margin to the tune of about 16%-18% on standalone basis.

Import Substitution + Winning Contracts

We made a breakthrough in replacing imported critical wideband receiver for EW project which DPSU has been using for product of foreign make and the DPSU has the production order. Also, we have bagged precision approach radar and repeat order of Doppler weather radars in this quarter. Our anti drone radar is ready for the
deployment in the field and we have been responding RFP’s from various agencies.

we define ourselves to be in the IP business. We are in the business of creating IP, enhancing our IP and that can be done both through our own internal efforts as well as collaborations. But eventually we are in the business of monetizing intellectual property. We have embarked on an exercise now aimed at selling out the IP which has been created within the Company and shared to a large extent which we can now either monetize on a standalone basis or combine it with the other IPs which may be available within the Company or externally available to create value. We found that we had multiple products and technologies which had been created and then not acted upon any further post order completion and had just been filed away as the teams got busy in fulfilling other orders. So, taken out of cold storage and updated with the current tech standards, we can productize these technologies on their own, or combine them with other technologies and that is a low hanging route for us. The incremental efforts at making this tech viable and commercial in minimal and offer us easy way to monetize our efforts

Glad to share that two definitive binding term sheets have been signed this past quarter alone, one in the area of chip design services and another in the radar space while discussions have been initiated with multiple companies, both listed space as well as in the smaller unlisted space for enhanced collaboration with the platform, which Astra provides to further enhance our joint intellectual property and create products which are well suited for the future. We are also in a hurry to monetize things at the fastest possible pace and collaborations

Capacity expansion and ability to handle more orders

we enhanced our facility. Recently, we have added auto bonding facility by virtue of which in fact our subsystems that is the tier module of those radars we can produce manifold in the sense about 20 times than what we made it with semi-automatic facility. So, that way we have enhanced our infrastructure, we scaled up our capacity. We are geared up to manufacture as many as numbers as we want.

Order Book

We have crossed the milestone of Rs. 2,000 crores mark this time where the standalone order book as of June 2024 stood at Rs. 2,099 crores and our order wins continues to be healthy. On a consolidated basis, our order book stood at Rs. 2,365 crores as of June 2024. Overall, our order book comprises of 88% of the domestic orders, which are largely BTS, which enjoys good margins and 12% of export, which is a mix of BTP and BTS business. Our consolidated order book consists of Rs. 120 crores worth of service orders, which are typically margin accretive. Our focus remains on getting more orders, which consists of high proportion of complex system projects

Q. top 5 programs that would be critical for our order book accretion and revenue growth in the next 2 years?
Management: There are many projects we have been addressing radar and electronic warfare domain especially if you take in the radar, we have been addressing airborne radar and also the ground radars, shipborne radars in all three segments.

Like airborne radars, we have been working for AWC Mk1, Mk1A and also we are waiting for the RFPs for Mk2. . Similarly there is Su-30 opportunities also will come.

Similarly like in the ground segment, there are many radars like we are talking about Tushar like Akash-NG, Akash Prime, WLR repeat orders, these are all which customers DPSS are likely to get. So, we will be getting subsystems from those particular segments.

And shipborne Navy, as I said we are likely to get some repeat orders from Navy.

And in electronic warfare, we have been working for pod jammer for LCA Mk1 as well as we have been working on the ongoing production programs of BEL like Nayan Shakti, Himshakti and all these programs, we are there. And also we are there in the EW programs of like DR118, R118. So, all these programs, we have some orders on hand, and we are likely to get more orders, repeat orders from these customers

Uttam Radar –75% of Radar cost is Antenna –We are supplying exclusively Active Antenna Array units for same. we are expecting around close to Rs. 1,100-1,200 crores worth of business from the Uttam radar in the next 3-4 year’s timeframe