Small Cap Defence Stock Has Surged 160% In 1 Year, Brokerage See Further 27% Rally

After a strong bull run in 2023, shares of Astra Microwave have had a slow slow start in 2024. However, analysts at ICICI Securities see the stock gaining momentum back.

The Astra Microwave Analyst: The ICICI Securities analysts led by Amit Dixit maintained the “buy” rating for the stock with a target price of ₹800. The target indicates an around 27% upside from the stock’s last closing price of ₹627.85.

The Astra Microwave Thesis: ICICI Securities highlighted that Astra Microwave Products (AMP) has secured a significant order worth ₹386 crore from BEL (Bharat Electronics Limited) for the supply of sub-systems for Medium Power Radar (MPR). This order is one of the largest orders ever received by the company.

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The contract is scheduled to be executed over the next three years, with an anticipated revenue booking of approximately ₹130-140 crore each year. This translates to around 15-16% of the estimated revenue for FY24. Moreover, the margins are expected to be healthy, considering that this is a domestic defence order.

The brokerage foresees the likelihood of more such orders coming the company’s way in the near term, given the substantial order inflow experienced by BEL in FY24, totalling ₹32,000 crore. Analysts estimate that a significant portion of these orders, around 60-65%, could involve active participation from AMP.

Price Action: Astra Microwave’s share price was down 0.49% to trade at ₹624.80 in early trade on Tuesday.

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Posted In: Analyst ColorEquitiesPrice TargetReiterationMarketsAnalyst RatingsAstra MicrowaveICICI Securities