Astra Microwave Products

Astra Microwave Products, established in 1991, is a Hyderabad-based company that designs,

develops, and manufactures a wide range of radio frequency (RF) systems, microwave chips,
microwave-based components, and sub-systems. The company makes digital electronics to be used
in radars, telemetry equipment, ground-based surveillance systems, satellite communications and
other equipment used in the defense sector (like missiles, light combat aircraft), and equipment
used for meteorology.

AMP has four production units based in Telangana (two each in Medak and Ranga Reddy districts).
AMP also has R&D units at Hyderabad (customer defines scope of R&D works and AMP develops the
sub-systems) and Bengaluru (AMP designs the systems on its own).

AMP also has a (50-50) JV with Israel based Rafael Advanced Defence Systems, it is engaged in the
fields of Tactical Radio Communication Systems, Electronic Warfare Systems and Signal Intelligence
Systems.

Product Range
Defence Space
a) Radars a) Flight Model Application
b) Electronic Warfare b) Ground Based Application
c) Strategic Electronics c) INSAT MSS Terminals
d) Telemetry
e) Avionics

Hydro/Meteorology Others
a) Water Level Measurement (Bubbler/Radar a) Antennas
Sensor) b) MMIC
b) Automatic Weather Stations (AWS) c) Homeland Security
c) Agromet Meteorological Stations (AMS) d) Contract Manufacturing
d) Automatic Rain Gauge (ARG)
e) Doppler Weather Radar

Business Model

  Orders from DRDO Orders from DPSUs Export orders

DRDO initiates tenders while
developing the product. After
technical and commercial bids,
companies are selected. DRDO
Requirement
lab gives specifications based on
which components and sub-
systems are designed and
developed by AMP.
Execution 2–5 years
Order size Small value orders
DPSUs award systems/sub-
systems for commercial
Majorly an offset requirement
production (once it reaches bulk
production phase).
2–3 years 1–3 years
Large orders Large orders

High gross margins owing to High gross margins owing to

high-value additions in the form
Profitability
of design and development of
product/sub-system
Low margins owing to limited
high-value additions in the form
value addition (all specifications
of design and development of
provided by customers)
product/sub-system

Working 5–10% advance; payment in 0% advance; payment in 120– 30–35% advance; payment in
capital ~180 days 180 days 30 days
Key Drivers

 The Indian defense sector is likely to benefit from the government thrust on: (1)
modernization of the armed forces and (2) procurement of locally made equipment. These
factors should lead to the expansion of the overall pie for domestic companies. Industry
experts predict the Indian defense electronics market opportunity to be Rs3,500–4,800bn
over the next 10–15 years.

 AMP has built strong relationships with DRDO and DPSUs while working with them on the
supply of key sub-systems for various radar (AEWACS, Uttam, Doppler, Muzzle Velocity) and
missile (Akash, QRSAM, Astra) programs from the initial conception stage. AMP is likely to
benefit once bulk production for these programs begins.

 AMP has worked on a few development projects that will translate into large opportunities
in: (1) DRDO’s AESA Radar/ELTA ELM-2032 Multimode Airborne Fire Control Radars
(potential for repeat order to AMP) to be integrated with LCA Tejas; (2) Sub-systems for
QRSAM/ LRSAM; (3) Seekers (for Brahmos, Astra, BVRAM, QRSAM); (4) SDR through the
Rafael JV (huge opportunity ahead from Indian Armed Forces); and (5) large orders from Fire
Control Radars/Precision Approach Radar/ Muzzle Velocity Radars.

 Previously, AMP had been a component/sub-system supplier. Given the capabilities built
over years, AMP started working on new radar program (Doppler radars, pulse pace tracking
radars, muzzle velocity radars, precision approach radars) to strengthen its system-level
development works.

 Existing standalone order book of approx. 1550 crs heavily skewed towards domestic high
margin orders (~1000 crs domestic / ~550 crs export) – to be executed over a period of 12-
13 months.

 Order pipeline guidance provided by the management for current year:

a) Defence: Radar Segment 475 crs, EW Segment 125 crs, Communication & Telemetry
150 crs
b) Space: 5-10 crs
c) Meterology: 50 crs
d) Exports: 55 crs

Transaction

 Due to low promoter holding of 8.71% the company is ripe for an acquisition.
 Market capitalisation of the company is Rs. 1650 crs.
 Currently, substantial holding lies with Kolkata based group of investors. They are long term
investors and are not looking to make an exit.
 The company will require fresh capital for future growth and has the qualifications to enter
into other allied defence related streams.
 This makes it an attractive target for anybody looking to enter the Indian defence sector.
 Further controlling stake can be acquired through infusion of primary capital.
Summary Financials

Profit & Loss

Mar-18 Mar-19 Mar-20 Mar-21 Mar-22

Sales 356.88 286.16 461.58 589.15 734.96
Expenses 244.75 252.82 371.69 522.79 648.05
Operating Profit 112.13 33.34 89.89 66.36 86.91
Other Income 8.35 24.49 12.09 11.64 7.30
Depreciation 27.03 28.57 25.32 23.07 21.61
Interest 14.52 12.52 14.00 23.57 19.87
Profit before tax 78.93 16.74 62.66 31.36 52.73
Tax 18.25 4.21 15.32 7.43 12.45
Net profit 60.69 12.54 47.34 23.93 40.29

Balance Sheet

Mar-18 Mar-19 Mar-20 Mar-21 Mar-22

Equity Share Capital 17.32 17.32 17.32 17.32 17.32
Reserves 484.35 485.63 529.51 543.19 572.36
Borrowings 93.66 14.31 52.11 100.13 59.84
Other Liabilities 78.44 96.19 258.44 254.84 308.44
Total 673.77 613.45 857.38 915.48 957.96

Net Block 192.79 176.44 158.49 150.57 157.77

Capital Work in Progress 0.73 2.43 12.06 - 0.08
Investments 131.31 44.12 36.93 49.58 36.54
Other Assets 348.94 390.46 649.90 715.33 763.57
Total 673.77 613.45 857.38 915.48 957.96