Astra Microwave Eyes ₹7,000 Cr Pipeline, Guides 20% Growth

Introduction

Astra Microwave Products, a key player in India's defence electronics sector, has secured a robust execution pipeline valued between ₹6,000 crore and ₹7,000 crore, set to be realised over the next three to four years. This development provides significant long-term revenue visibility, positioning the company for sustained growth despite recent short-term financial volatility. Atim Kabra, Director of Business Development and Strategy, confirmed that this pipeline is largely de-risked, as it comprises projects where the company has already been selected as the lowest bidder (L1), thereby minimising uncertainties related to pricing and timelines.

A De-Risked Growth Trajectory

The substantial execution pipeline is built upon several high-profile national defence programmes. Key projects include the Quick Reaction Surface-to-Air Missiles (QR-SAMs), the Uttam AESA Radar for fighter jets, the Angad electronic warfare programme for Su-30 upgrades, and the Virupaksha radar system. By securing L1 status in these initiatives, Astra Microwave has effectively locked in its role, allowing it to focus on execution and delivery. This strong visibility is crucial, especially following a muted performance in the second quarter of FY26, as it shifts investor focus towards the company's long-term potential rather than quarterly fluctuations.

Strategic Partnership with Bharat Electronics

A cornerstone of Astra Microwave's strategy is its deep-rooted partnership with Bharat Electronics Ltd (BEL). Kabra described BEL as a strong and growing customer with a formidable order book of its own. This relationship ensures a steady and predictable offtake of Astra's components and subsystems, which are integral to the larger systems assembled by BEL. The collaboration not only supports the execution of major defence contracts but also helps mitigate customer concentration risk as various platforms transition into the production phase. The synergy extends beyond current projects, with both companies exploring opportunities in the burgeoning space sector.

Recent Order Inflows Bolster Momentum

Adding to its long-term pipeline, Astra Microwave has recently secured significant new orders that reinforce its near-term business momentum. The company announced a ₹124 crore order for the supply of modules, cable assemblies, and antennas for Software Defined Radios (SDR) from its joint venture, Astra Rafael Comsys. This followed another major contract worth ₹171.38 crore for six S-band Polarimetric Doppler Weather Radars. These two orders alone, totaling over ₹295 crore, provide a substantial boost to the company's current consolidated order book, which stands at approximately ₹2,350 crore.

Financial Performance: A Mixed Picture

Astra Microwave's financial results for the second quarter of FY26 presented a mixed picture. While consolidated revenue saw a year-on-year decline to ₹215 crore, the company demonstrated improved operational efficiency. EBITDA margins remained healthy at 22.3%, and gross profit margins improved significantly. For the first half of FY26, consolidated revenue grew 7.7% year-on-year to ₹414 crore, while Profit After Tax (PAT) increased by a strong 23.3% to ₹40 crore. This indicates that despite revenue lumpiness, which is common in the defence sector, the company is successfully managing costs and improving profitability on its executed projects.

Navigating Working Capital Headwinds

While the top-line and order book figures are promising, the company faces challenges related to its working capital management. For the second consecutive year, Astra Microwave reported negative cash flow from operations in FY25, primarily due to a significant increase in working capital requirements. This situation is typical for defence contractors dealing with long payment cycles from government clients. The company's interest costs have also risen, reflecting increased borrowing to fund its operational needs. However, leverage levels remain manageable, and management has indicated that efforts to realize long-pending receivables are showing results, which should improve cash flows in the future.

Management's Ambitious Outlook

The management team has laid out a clear and ambitious growth plan. They are guiding for revenues of ₹1,400–₹1,500 crore in FY27, rising to ₹1,700 crore and eventually approaching ₹2,000 crore in the subsequent years. This aligns with their stated goal of achieving 15–20% annual growth. Over the longer term, the company aims to double its turnover in the next three to four years, targeting ₹2,250–₹2,500 crores by FY30. This growth is expected to be driven by the execution of its large-scale projects and a strategic shift from supplying components to delivering more complex, integrated systems.

Expanding Horizons: Space and Exports

Beyond its core defence business, Astra Microwave is actively pursuing growth in exports and the space sector. Its joint venture, ARC, is expected to build an order book of at least $100 million by the end of the current year, which will add valuable dollar-denominated revenue. Furthermore, the company is leveraging its partnership with BEL to explore synergies in the space domain. With plans for its own revenue-generating satellite, Astra SAT-1, the company is positioning itself to capitalize on India's expanding ambitions in the global space economy.

Conclusion

Astra Microwave Products stands at a pivotal point. Its ₹6,000-₹7,000 crore execution pipeline offers a clear path to significant growth over the next few years, supported by a strong order book and strategic partnerships. While the company must navigate near-term challenges related to revenue volatility and working capital management, its focus on higher-margin integrated systems, coupled with opportunities in exports and space, provides a compelling long-term outlook. Investors will be closely watching the company's ability to convert its impressive pipeline into consistent financial performance.