Antique initiates coverage on Astra Microwave with Buy; sees defence electronics upcycle driving growth

Antique Stock Broking has initiated coverage on Astra Microwave Products with a buy rating and a target price of Rs 2,000, implying a potential upside of around 20% from the company's market price of Rs 1,671 as of August 25, 2026.

Astra Microwave shares gained ground following the coverage initiation, rising as much as 3.7% intraday to a high of Rs 1,726.90 on the NSE. As of 10:42 am, the stock was trading 2.16% higher at Rs 1,700.90 against the previous close of Rs 1,664.90.

The brokerage believes Astra Microwave is well placed to benefit from rising demand for air-defence and electronic warfare systems as India steps up defence modernisation and indigenisation.

Large addressable market, strong order book

Antique estimates Astra Microwave's addressable opportunity across key defence programmes at around Rs 25,000 crore until FY29. The company's management is targeting order wins worth Rs 8,000–10,000 crore over the next five years.

The brokerage also highlighted Astra Microwave's order book of approximately Rs 4,350 crore, which has grown 130% year-on-year following a major order for Active Antenna Array Units and interface frames for the Uttam radar programme. More than 90% of the order book comprises build-to-specification orders, which involve greater design and development responsibility and typically offer better margins.

The order book provides revenue visibility of around three years, according to Antique. The brokerage also pointed to potential opportunities from programmes such as the Quick Reaction Surface-to-Air Missile system, the Su-30 Virupaksha upgrade and Doppler radar systems for Mission Mausam.

Shift towards complete systems

A key part of Astra Microwave's growth strategy is its planned shift from supplying individual components and subsystems to developing complete systems.

Antique noted that complete systems currently account for around 15% of the company's revenue. Astra Microwave aims to increase this contribution to 50% over the next three to five years.

The brokerage believes this shift could improve the company's revenue mix, support margin stability and enhance return on capital as Astra takes on a larger role in the design, development and delivery of defence systems.

R&D capabilities strengthen technology moat

Astra Microwave's more than three decades of experience in defence electronics, along with a workforce of over 635 R&D personnel and six facilities, gives it a strong technology base, Antique said.

The company has capabilities in RF and microwave systems, digital electronics, GaN and GaAs MMICs, AESA radar units and electronic warfare systems. Its ability to develop specialised technologies, including MMICs operating at frequencies of up to 40 GHz, creates entry barriers and strengthens its position in next-generation defence programmes.

Proposed demerger could unlock value

The proposed demerger of Astra Microwave's Defence and Aerospace business from its Space, Meteorology and Hydrology businesses could provide another potential value-unlocking catalyst.

According to Antique, the restructuring could give the two businesses sharper strategic focus, improve capital allocation and make it easier for investors to assess the growth prospects of each segment.

The brokerage expects Astra Microwave to report a 35% compound annual growth rate in profit after tax between FY26 and FY29, supported by strong order inflows and execution. It said the company's technology capabilities, order visibility, rising contribution from complete systems and favourable defence-sector trends support its positive view on the stock.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)