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Result Update 29 t h April, 2011 Defense/ Electronics   Astra Microwave Products Ltd  

Result Update

Result Update 29 t h April, 2011 Defense/ Electronics   Astra Microwave Products Ltd   BUY

29 th April, 2011

Result Update 29 t h April, 2011 Defense/ Electronics   Astra Microwave Products Ltd   BUY

Defense/ Electronics

 

Astra Microwave Products Ltd

 

BUY

CMP

Rs 39

Astra Microwave Products Ltd (AMPL) reported below expected Q4FY11 results at EBITDA and PAT level. During the quarter the net sales declined by 6.5% to Rs 454 mn followed by 29.5% decline in EBITDA & 59.4% decline in PAT. EBITDA and PAT declined on higher employee expenses, material cost and interest expenses. The management has guided for Rs 2 bn of revenue with 1820% of PAT margin in FY12E. The current order book of the company is at Rs 2.97 bn which is expected to strengthen further in near terms on new order inflows. The management expects order inflows of Rs 1 bn for Askash missiles and Central Acquisition Radars in June 2011 quarter.

Target Price

Rs 50

Key Data

Face Value (Rs)

2.00

Market Cap (Rs Mn)

3191

Total O/s Shares (Mn)

81.8

Free Float (%)

81.1

52 week H/L (Rs)

52/35

Key Highlights Q4 Revenue inline, Guides for decent FY12 results: Net sales during

Avg Monthly Volume (BSE)

56284

Avg Monthly Volume (NSE)

97373

BSE Code

532493

Q4FY11 declined by 6.5% yoy to Rs 454 mn which was inline with our expectation. This quarter revenue was on a higher base of last year. For the full year AMPL reported Rs 1.61 bn of revenue with yoy growth of 50.9%. For FY12 the management has guided for Rs 22.1 bn of revenue with 18 20% PAT margins. The management expects Q4FY12 to be better than first three quarters. Further the management guided to maintain 20% growth in FY13.

NSE Code

ASTRAMICRO

Bloomberg code

ASTM IN

Beta

1.1

Date of Incorporation

Sept 1991

Last Dividend Declared (FY11)

25%

Six month returns

-6.72%

Indices

BSE 500

FCCB's Outstanding

NA

EBITDA and PAT margins were below expected: AMPL reported 29.5%

Warrants outstanding

NA

decline in EBITDA led by 1) little higher material content in execution (to the tune of Rs 30 40 mn) in the quarter, 2) increase in employee expenses and 3) other expenses. As a result the EBITDA margin for the quarter declined by 771 bps to 23.6%. The interest cost for the quarter grew by

131.1% yoy to Rs 19.6 mn led by higher short term borrowings which was

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further repaid towards the end of the year. This results into PAT

declining by 57.3% yoy to Rs 37.5 mn.

 

Decent order book of Rs 2.97 bn: The Company has a current order

backlog of Rs 2.97 bn which is nearly 1.8x FY11 net revenue. Further the

management expects to add Rs 1 bn of new order in Q1FY12. In Q4FY11 it witnessed order inflow of approx Rs 500 mn. The management expects fresh order inflows of Rs 1 bn for Askash missiles and Central Acquisition Radars. Besides this it is also expecting USD 3.5 mn of offset orders from Elta by December 2011.

 

Source: Capitaline

Share Holding Pattern (31.03.2011)

 

Public & Others

31.3% Non Promoters (Body Corporate) 21.5% FII's Banks/MF's/Instituti 20.0% Promoters ons/Ins 19.0% 8.2%
31.3%
Non Promoters
(Body Corporate)
21.5%
FII's
Banks/MF's/Instituti
20.0%
Promoters
ons/Ins
19.0%
8.2%
 

Standalone Financial Snapshot

 

Rs in mn

Particulars

FY09

FY10

FY11P

FY12E

FY13E

Net Revenue

1,168

1,068

1,611

1,857

2,124

Growth%

-5.7

-8.6

50.9

15.3

14.3

 

EBITDA

307

246

418

530

594

 
 

Source: Company, KJMC Research

 

EBITDAM %

26.2

23.1

26.0

28.5

28.0

 

PAT

145

82

186

255

300

PAT Margin %

12.4

7.6

11.6

13.7

14.1

Pankaj Kumar

EPS

1.8

1.0

2.3

3.1

3.7

Sr. Research Analyst Phone - 022 4094 5500

 

P/E (x)

14.5

25.9

17.1

12.5

10.7

Ext. 227

EV/EBITDA (x)

7.6

9.5

8.0

6.2

5.5

Email : pankaj.kumar@kjmc.com

 

ROE %

11.0

5.9

13.1

16.1

16.7

Astra Microwave Products Ltd

 

Source: Company, KJMC Research

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Q4FY11 Result Table Rs in mn       YoY       YoY Particulars
Q4FY11 Result Table Rs in mn       YoY       YoY Particulars

Q4FY11 Result Table

Rs in mn

     

YoY

     

YoY

Particulars

Q4FY11

Q4FY10

Growth%

FY11

FY10

Growth%

Net Sales

454.1

485.9

-6.5

1611.4

1067.8

 

50.9

Expenditure

346.8

333.6

4.0

1193.1

825.8

 

44.5

Purchases of Raw Material

187.9

148.2

26.8

780.7

523.9

 

49.0

Stock Adjustments

21.0

69.8

-69.9

-31.1

-49.6

-37.3

Employee Cost

71.5

55.6

28.7

242.4

180.6

 

34.2

Selling & Admin. Expenses

14.9

18.6

-19.9

50.7

38.4

 

31.8

Other Expenditure

51.5

41.5

24.1

150.5

132.6

 

13.5

EBITDA

107.3

152.3

-29.5

418.3

241.9

 

72.9

EBITDAM%

23.6

31.3

-771.1 bps

26.0

22.7

330.0

bps

Other Income

2.9

5.0

-41.6

19.4

16.7

 

16.2

PBIDT

110.2

157.3

-29.9

437.7

258.6

 

69.2

Depreciation

32.6

31.6

3.2

124.2

112.0

 

10.9

Interest

19.6

8.5

131.3

69.2

36.4

 

90.0

PBT

58.0

117.2

-50.5

244.3

110.2

121.6

Tax

20.9

25.7

-18.7

57.8

28.6

101.8

PAT

37.1

91.5

-59.4

186.5

81.6

128.6

     

-1065.3

     

PATM%

8.2

18.8

bps

11.6

7.6

393.3

bps

Extraordinary

-0.4

-3.4

299.6

0.5

-10.2

 

Items/Exceptional items

 

-

PAT (after Extra- ordinary/Exceptional items)

37.5

88.0

-57.3

186.1

91.8

102.6

Equity Capital

163.7

108.3

51.1

163.7

108.3

 

51.1

EPS Rs

0.5

1.1

-58.3

2.3

0.9

158.0

Source: Company, KJMC Research

Outlook and Valuation

In terms of industry outlook, the company expects Rs 5bn of opportunity for

Akash Missiles in which AMPL is targeting 50% share. Further it is

expecting similar kind of opportunity in AWACS. These orders would flow

in the next three to four years.

Based on decent order book of Rs 2.97 bn executable in the next two years

and expectation on new order inflows, we expect 14.8% CAGR in net

revenue and 26.9% CAGR in PAT in FY1113E. We have marginally revised

our estimates for FY12E and introduced estimates for FY13E.

Revision in Estimates

(Rs Mn)

 

FY11E

FY11

FY12E

FY12E

 

Particulars

Estimated

Actual

Previous

Revised

% Change

Net Revenue

1,603

1,611

1,857

1857

0%

EBITDA

469

418

536

530

-1.2%

EBITDAM %

29.2%

26.0%

28.8%

28.5%

-30 bps

PAT

233

186

273

255

-6.6%

PAT Margin %

14.5%

11.6%

14.7%

13.7%

-100 bps

EPS

2.9

2.3

3.4

3.1

-9%

Source: KJMC Research

On the basis of FY12E and FY13E EPS of Rs 3.1 and Rs 3.7, the stock is trading at a P/E of 12.5x and 10.7x respectively. We maintain BUY on the stock with target price of Rs 50. At our target price the stock trades at FY12E P/E of 16x.

Astra Microwave Products Ltd

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Financial Summary Standalone Profit & Loss Statement Rs mn Particulars   FY10   FY11  

Financial Summary

Standalone Profit & Loss Statement

Rs mn

Particulars

 

FY10

 

FY11

 

FY12E

 

FY13E

Net Revenue

 

1,067.8

 

1,611.3

 

1,857.1

 

2,123.6

Growth %

 

-8.6%

 

50.9%

 

15.3%

 

14.3%

Total Expenses

 

821.4

 

1,193.1

 

1,327.4

 

1,529.4

Growth %

 

-4.7%

 

45.3%

 

11.3%

 

15.2%

EBITDA

 

246.4

 

418.2

 

529.8

 

594.1

Growth %

 

-19.6%

 

69.8%

 

26.7%

 

12.2%

EBITDAM %

 

23.1%

 

26.0%

 

28.5%

 

28.0%

Other Income

 

16.7

 

19.4

 

19.4

 

19.4

Interest

 

36.4

 

69.2

 

69.2

 

69.2

Depreciation

 

112.0

 

124.2

 

135.5

 

139.7

PBT

 

110.2

 

244.2

 

344.4

 

404.6

Tax

 

28.6

 

57.8

 

89.5

 

105.1

Reported PAT

 

81.6

 

186.5

 

255.0

 

299.5

Growth %

 

-43.7%

 

128.5%

 

36.7%

 

17.5%

Net Margin%

 

7.6%

 

11.6%

 

13.7%

 

14.1%

E/O Item

 

-10

 

0

 

0

 

0

Adjusted PAT

 

71.4

 

186.0

 

255.0

 

299.5

Growth %

 

-50.9%

 

160.6%

 

37.1%

 

17.5%

Standalone Cash Flow Statement

 

Rs mn

Particulars

FY10

FY11P

FY12E

FY13E

Pre-Tax Profit

110.2

244.2

344.4

404.6

Depreciation & Non Cash

112.0

124.2

135.5

139.7

Interest & others

36.4

69.2

69.2

69.2

Chg in Working Cap

258.6

437.6

549.2

613.5

Tax Paid

-28.6

-57.8

-89.5

-105.1

Operating Cash Flow

185.7

284.7

295.3

155.5

Capex

-149.6

-80.0

-100.0

0.0

Free Cash Flow

36.1

204.7

195.3

155.5

Investments

-146.7

-80.0

-100.0

0.0

Equity Capital

 

6.8

0.0

0.0

0.0

Loans

-71.5

-116.4

0.0

0.0

Dividend

-31.9

-48.2

-48.2

-48.2

Interest & Others

-36.4

-92.2

-69.2

-69.2

Net Change in Cash

-94.1

-52.1

77.9

38.0

Astra Microwave Products Ltd

-94.1 -52.1 77.9 38.0 Astra Microwave Products Ltd Standalone Balance Sheet Rs mn Particulars FY10  

Standalone Balance Sheet

Rs mn

Particulars

FY10

 

FY11P

FY12E

FY13E

Sources of Funds

Equity Share Capital

108.3

 

163.7

163.7

163.7

Reserves

1,172.3

 

1,284.0

1,461.5

1,712.8

Net worth

1,280.6

 

1,447.6

1,625.1

1,876.4

Preference Share Capital

0.0

 

0.0

0.0

0.0

Total Share Holders' Fund

1,291.2

 

1,447.6

1,625.1

1,876.4

Secured Loans

434.2

 

340.1

340.1

340.1

Unsecured Loans

22.3

 

0.0

0.0

0.0

Loan Funds

456.5

 

340.1

340.1

340.1

Total Liabilities

1,747.7

 

1,787.7

1,965.2

2,216.5

Application of Funds

Gross Block

1,492.0

 

1,572.0

1,672.0

1,672.0

Less: Accumulated Depreciation

544.7

 

668.8

804.3

944.0

Net Block

947.4

 

903.2

867.7

728.0

Capital Work In Progress

0.0

 

0.0

0.0

0.0

Investments

21.8

 

21.8

21.8

21.8

Current Assets

1,627.2

 

1,725.5

2,020.6

2,405.7

Inventories

460.3

 

530.4

551.1

623.1

Debtors

825.9

 

814.9

1,021.9

1,255.7

Cash & Bank

215.5

 

192.6

241.3

279.3

Loans & Advances

125.5

 

187.6

206.3

247.6

Current Liabilities & Prov

793.0

 

819.0

901.1

895.2

Net Current Assets

834.3

 

906.5

1,119.5

1,510.5

Net Deferred Tax

-55.6

 

-43.7

-43.7

-43.7

Total Assets

1,747.8

 

1,787.7

1,965.3

2,216.6

Ratios

Particulars

FY10

FY11P

FY12E

FY13E

Profitability/Returns %

 

EBITDA Mgn

23.1%

26.0%

28.5%

28.0%

PAT Mgn

7.6%

11.6%

13.7%

14.1%

ROCE

8.0%

16.6%

21.0%

21.7%

ROE

5.9%

13.1%

16.1%

16.7%

Per Share Data (Rs/share)

 

EPS

1.5

2.3

3.1

3.7

CEPS

3.6

3.8

4.8

5.4

BVPS

23.7

17.7

19.9

22.9

DVPS

0.5

0.5

0.5

0.5

Valuations (X)

 

PER

25.9

17.1

12.5

10.7

CPER

10.9

10.3

8.2

7.3

P/BV

1.6

2.2

2.0

1.7

EV/Sales

2.2

2.1

1.8

1.5

EV/EBITDA

9.5

8.0

6.2

5.5

Dividend Yield %

1.3%

1.3%

1.3%

1.3%

Turnover (X Days)

 

Debtor Days

246.3

185.8

200.8

215.8

Inventory Days

177.4

151.5

148.7

140.1

Current Liability Days

267.1

226.2

214.9

195.6

Net Working Cap Days

270.6

197.2

199.1

226.0

Gearing Ratio (X)

 

Net Debt/Equity

0.2

0.1

0.1

0.0

Total Debt/Equity

0.4

0.2

0.2

0.2

Source: Company, KJMC Research

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Mr. Girish Jain Executive Director jaingirish@kjmc.com 2288 5201 (B) Mr. Suresh Parmar A.V.P. ‐

Mr. Girish Jain

Executive Director

jaingirish@kjmc.com

2288 5201 (B)

Mr. Suresh Parmar A.V.P. Institutional Equities

suresh.parmar@kjmc.com

4094 5551 (D)

Mr. Vipul Sharma

A.V.P. Institutional Sales

vipul.sharma@kjmc.com

4094 5556 (D)

Recommendation Parameters

Expected returns in absolute terms over a one year period

Buy

appreciate more than 20% over a 12 month period

Accumulate

appreciate 10% to 20% over a 12 month period

Hold / Neutral

appreciate up to 10% over a 12 month period

Reduce

depreciate up to 10% over a 12 month period

Sell

depreciate more than 10% over a 12 month period

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Astra Microwave Products Ltd

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