Astra Microwave Products Limited: Charting a Course for Growth and Innovation in Defence and Space

Astra Microwave Products Limited, a prominent player in India's defence and space electronics sector, has reported a robust performance for the second quarter and first half of the financial year 2026. The company's latest investor presentation and earnings call reveal a strategic pivot towards higher-value offerings and an ambitious growth trajectory, underpinned by a strong order book and technological advancements.

For Q2 FY26, Astra Microwave reported a consolidated revenue from operations of INR215 crores. The company maintained healthy profitability with an EBITDA margin of 22.3% and a PAT margin of 11.1%. On a half-yearly basis (H1 FY26), consolidated revenue grew by 7.7% year-on-year to INR414 crores, while Profit After Tax (PAT) saw a significant increase of 23.3% year-on-year, reaching INR40 crores. This growth was primarily driven by a favorable revenue mix, indicating the success of their strategic shift towards more complex and integrated solutions.

Financial Highlights (Consolidated)

The segmental revenue breakdown for Q2 FY26 highlights the company's core strengths. Defence contributed the lion's share at 77.4% (INR166.41 crores), followed by Exports including Deemed Exports at 14.2% (INR30.53 crores). Space accounted for 2.0% (INR4.3 crores), Meteorological for 5.8% (INR12.47 crores), and Others for 0.6% (INR1.29 crores). This diversified revenue base, with a strong emphasis on the defence sector, provides stability and growth opportunities.

Strategic Vision and Growth Initiatives

Management outlined a clear strategic vision, emphasizing a transition from being a component and subsystem supplier to a provider of complete systems and integrated solutions. This strategic shift is expected to enhance revenue growth, margins, and capital efficiency. The company is targeting a 15-20% revenue growth, with a higher proportion of revenues from complex system fabrication within the next three to five years.

Astra Microwave's order book remains robust, providing strong visibility for future quarters. As of September 30, 2025, the standalone order book stood at INR1,916 crores, while the consolidated order book reached INR2,209 crores. The company anticipates booking over INR400 crores in Q3 and more than INR600 crores in Q4, further bolstering its pipeline.

Key initiatives include the development of Astra-branded radars like AESA Virupaksha and Uttam, which are nearing market readiness. The company has also successfully ventured into new product lines such as electro-optic products and advanced communication systems, securing a significant INR286 crore order from the Ministry of Defense for the Indian Air Force Special Forces. A particularly ambitious project is the launch of Astra SAT-1, the company's own revenue-accretive satellite, expected to be in space within 24 months.

Market Outlook and Future Prospects

The company is well-positioned to capitalize on the burgeoning Indian defence and space markets. The Indian Radar Market is projected to grow to USD 1.4 billion by 2033, while the Electronic Warfare market is expected to reach USD 1,084.4 million by 2033. India's share in the global space economy is targeted to reach USD 8 billion by 2033. Government initiatives like 'Make in India' and increased defence procurement proposals, such as the recently approved INR79,000 crores, further support Astra Microwave's growth prospects.

Management has set an ambitious target to double its turnover (2x plus) over the next three to four years, aiming for INR1,400-1,500 crores in FY27, INR1,650 crores in FY28, and INR2,250-2,500 crores in FY30. They expect gross margins to remain strong at 45-50% for FY27 and FY28, with potential for slight positive increases.

Challenges and Mitigation

While the outlook is largely positive, management transparently addressed certain challenges. These include delays in completing a couple of space projects and the initial cost-competitiveness issues with their counter-drone product, which led to lost bids. The company is actively optimizing this technology to offer more competitive solutions across different market segments. Additionally, other expenses saw an increase due to the finalization of a long-term equipment maintenance contract and a substantial CSR expenditure of INR2.65 crores in the quarter.

Despite these hurdles, Astra Microwave's management demonstrates a balanced and confident approach. They are proactively adapting to market realities, as evidenced by their decision to delay Astra SAT-1's launch to ensure revenue accretion and profitability. The improved operating cash flows, driven by the realization of long-pending receivables, further underscore their disciplined execution.

Conclusion

Astra Microwave Products Limited is on a clear growth trajectory, driven by strategic shifts, technological innovation, and a robust order book. The company's focus on transitioning to complete systems, developing branded products, and expanding into high-growth sectors like space electronics positions it well to leverage India's defence and space ambitions. With transparent communication and proactive problem-solving, Astra Microwave aims to deliver sustained value to its stakeholders in the coming years.