Astra Microwave Products Limited (NSE: ASTRAMICRO) Q3 2025 Earnings Call dated Feb. 08, 2025
Corporate Participants:
S Gurunatha Reddy — Managing Director
Maram Venkateshwar Reddy — Joint Managing Director
Analysts:
Amit Dixit — Analyst
Yug Modi — Analyst
Raj Mehta — Analyst
Jyoti Gupta — Analyst
Unidentified Participant
Prisha Rathi — Analyst
Karthi Keyan VK — Analyst
Santanu Chatterjee — Analyst
Presentation:
Operator
Thank you ladies and gentlemen, good day and welcome to the Astra Microwave Products Limited Q3 FY ’25 Earnings Conference Call. As a reminder, all participants’ lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and zero on your touchstone phone. Please note that this conference is being recorded. Please note this conference call may contain forward-looking statements about the company, which are based on the belief, opinions and expectations of the company as on-date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict.
Now, I would like to hand over the conference to Mr Reddy, MD from Microwave Products Limited. Thank you, and over to you, sir.
S Gurunatha Reddy — Managing Director
Thank you and good morning, everyone. A warm welcome to all the participants to the first results earnings call of our company. I’m with my colleague, Mr Mvi Reddy, Joint Managing Director; and SGA, our Investor Relations Advisors. The results and investors presentation for Q3 FY ’25 are uploaded on our company website and stock exchanges. I hope you had a chance to look at it. To start with the Q3 results, I am delighted to share with you that has delivered a healthy performance with 12% year-on-year growth in the top-line, which stood at INR257 crores on a standalone basis. This performance is in-line with our expectations.
On the profitability front, we continue to maintain our EBITDA margins at a sustainable level of 29.1%, indicating stability in our margin profile of current order book and a better mix of products sold during the quarter. We saw healthy order execution during the quarter, wherein domestic defense orders contributed to 85% of our revenue, followed by export business at 8.4%, space 3.4%, metrology 2.7% and balance coming from other businesses. Our consolidated order book as of December 24 stood at INR2,332.6 crores. The standalone order book as of December stood at INR1,960.2 crores with new orders of INR141 crores received during the quarter. For nine months, we booked about INR674 crores of new orders, gradually moving towards our annual order booking target. These new orders comprise of INR20 crores from radar, INR60 crores from the UW segment, INR5 crores from telemetry, INR22 crores from space, INR14 crores from exports and the rest from metallic and hydrogenic sectors. In terms of product-specific, major orders being for plant unit and Shekpti subsystems. Overall, our standalone order book comprise of 88% of domestic orders, which are largely BTS and 12% of export orders, which are a mix of BTP and BTS business. Our consolidated order book consists of INR135 crores worth of service orders, which are typically margin-accretive.
In terms of major developments during the quarter, happy to share with you that the company has participated in the technical trials of radar for Indian Army and the technical trial successfully. Waiting for final results of financial fees submitted by the company. This drone will be further enhanced with RF detector and with the scarable options in terms of both frequency and range. Company was also able to come out with a handheld ground penetration radar during the year and has participated in a competitive tender and is in the valuation stage. This radar will be made scalable and also made drone base down the line. Some more developments will be shared by my colleagues.
Our joint-venture company has done well during the year and has already surpassed the year-end target. Handsome share of profit of INR7.5 crores is received from it during the quarter. Our subsidiaries have done well though largely it is for the capital consumption. In general, defense industry is advancing steadily towards self-reliance driven by government policies, DRDO innovations and global collaborations. The country is witnessing a rapid import substitution, increase in domestic production and growing exports.
This push towards indigenation is expected to boost the earnings of both public and private defense companies as many defense PUCs are witnessing good order inflows with higher indigenous percentages. Also, the union budget FY ’25 has allocated handsome money for the defense budget. Against this backdrop, is strategically positioned to leverage emerging opportunities in this expanding market. Before I hand it over to my colleague, I would like to inform you that we are on the way to achieve our year target both in terms of top-line and bottom-line and aiming for about 15% to 20% top-line growth for the coming year, which may translate to about INR1,200 crores to INR1,300 crores of sales.
With this, I request Mr am very to take it over.
Maram Venkateshwar Reddy — Joint Managing Director
Thank you,. Good morning, ladies and gentlemen. We had quite satisfactory 3rd-quarter and we are almost on-track towards reaching out in FY ’25 target of both in terms of orders inflow and sales. We have order book of INR1960 crore as on Q3, including inflow of INR140 crores, which are booked in Q3. We have concluded negotiations of INR150 crore more worth of orders of which we have been expecting in this current month. And also in addition to that, INR200 crores more worth of orders are in pipeline and majority of them are expected to receive in the current quarter itself. In the last quarter, majority of orders which we have booked are production in nature from domestic market in radar and EW domain carrying decent margins and 30% of them are in development contracts.
We have bagged a few important strategic projects including development of critical technology projects for futuristic radar and also onboard digital signal processing system for the satellite payloads, which will help us to move-up in the value chain and also will enable us to build the satellite payloads in near-future. With regard to sales, exhibition momentum has picked-up as compared to the previous quarter and further ramping-up in Q4. We are confident of meeting the projected numbers and we’ll achieve four-digit mark revenue for the first time in the current financial year itself. I’m happy to share a few other key achievements of the last quarter, which includes successful completion of site acceptance test of multifunction pulse compression radder for rope and pulse phase touching radar for, Doppler weather Rader for IMG. All of them have been accepted by the customers and hand it over to them.
Our JVC, as Mr has mentioned, are outperforming in FY ’25 and backed a decent and strategically important contract worth of INR255 crores in last quarter to deliver software and defined radio for Indian Airports. With the order book of INR475 crores, ARC is expected to surpass initial guidance numbers of the revenue of the current year and expected to book sales of INR275 crores in this year. Arc is actively pursuing more opportunities in the domain of tactical communication and electroptics and expect it to grow in a rapid pace with the initiatives being taken to strengthen it in all aspects. Before I conclude, I’m pleased to inform you that we are unveiling new products and systems at, which is going to be held next week-in Bangalore. We are demonstrating the drone penetrating radar and also the complete weather solution in this particular show. That’s all from my side.
Other colleague, Mr actually is from an emerging situation, you could not attend this call. Just wanted inform and we would be happy to answer your questions.
Questions and Answers:
Operator
Thank you. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press R&1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press R&2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We’ll take our first question from the line of Amit Dixit from ICICI Securities. Please go-ahead.
Amit Dixit
Yeah, hi. Good morning, everyone, and thanks for taking my questions. First of all, congratulations for a good performance in this quarter. I had couple of questions. The first one is essentially on EBITDA margin. So if I look at in this quarter, the EBITDA margin is touching almost 30%. As you indicated in your prepared remarks that the orders inflow that we are seeing in the current order book is primarily oriented towards defense and there are service orders as well. So is it fair to assume that now going-forward, somewhere upwards of 25% EBITDA margin would be a norm for extra?
S Gurunatha Reddy
Yeah, yes. We can — we can.
Amit Dixit
Okay, sir. That’s very helpful. These second question is on interest cost. If I see that has increased sharply both on Q-o-Q as well as Y-o-Y basis. So was there — is there — was there a working capital buildup that we expect to be unlocked during Q4 and what was the nature? Why was this interest cost very-high?
S Gurunatha Reddy
Yeah. I think it needs to be clarified to the — in general also this question is keep coming up very regularly. No doubt the working capital borrowings have slightly gone up. But I would say to a large extent, the increase in interest cost is pertaining to one adjustment of pertaining to the Indian accounting standards on the advances received from the customers. It is not an actual outgo but accounting standard needs us to provide interest on the outstanding advance amounts irrespective of the terms of the contract we have to provide, the share of such provision is close to about 40% of whatever the amount we are showing in the financial statements. So we have to discount that 40% to arrive at the actual finance cost incurred by the company.
Amit Dixit
Okay, sir.
S Gurunatha Reddy
And the provision is getting adjusted as and when we gradually execute the contracts indirectly that is how it happens.
Amit Dixit
Okay. And this change in accounting policy has happened from this quarter only?
S Gurunatha Reddy
No, it is there for the last two years.
Amit Dixit
Okay. Okay. Okay, because the cost have gone up, even if it was there in last two years, then even if I compare it with last year, it has gone up.
S Gurunatha Reddy
I understand. I understand that during the quarter or I would say in the last six months period, the actual working capital borrowings have gone up correspond compared to the corresponding period of previous year. So because of that, even there is an increase in the actual finance cost also. But my answer is more in terms of the overall finance cost that is happening in the books of accounts.
Amit Dixit
Sure. One last question, if I may. You also spoke on the NP grown radar in your prepared remarks. So can you just highlight the kind of what potential do we see in this? How is it different from our peers who are in this space?
S Gurunatha Reddy
Probably will take that yeah.
Maram Venkateshwar Reddy
Amit, so this is — as we mentioned in our previous calls also, this TV we got it from DRDO, but we optimize the design and today we are competing with couple of companies in this particular domain. So we initially we developed the total radar solution and then we demonstrated. And as Mr J has mentioned in the opening remarks, we are now integrating with the Radar Jamer and other sensors to provide the overall soft and as well as kid options.
Amit Dixit
Okay, sir. Got it. That’s it from my side. Thank you and all the best.
Maram Venkateshwar Reddy
Thank you.
Operator
Thank you. Before we take the next question, we’d like to remind participants to press R&1 to ask a question. Next question is from the line of Yuk Modi from AP Capital. Please go-ahead.
Yug Modi
Thank you for this opportunity. Sir, I just had one question. Sir, for the nine months, our revenue stands at INR640 crores, so sir, do you see any potential challenge for achieving our full-year target of INR1,000 crores or if you could throw some light on that?
S Gurunatha Reddy
Yeah, challenges are there, but as of today, we are confident to reach the milestone. Okay. Yeah.
Operator
Does that answer your question?
Yug Modi
That’s. Thanks.
Operator
Thank you. Participants may please press RN1 to ask a question. Next question is from the line of Raj Mehta from Mehta Advisory Firm. MR. Raj Mehtat…
Raj Mehta
Yeah, can you hear me?
Operator
This is a background noise.
Raj Mehta
Okay, that is one set. Yes, am I audible?
Operator
Yeah, please go-ahead.
Raj Mehta
Thank you for allowing me to ask the question and thank you and also congratulations on a good set of numbers for this quarter. My question is, what is the current debt-to-equity level and what is the comfortable range that you.
S Gurunatha Reddy
Both the long-term and short-term. Short-term debt as of today is about INR400 crores. So both long-term and short-term is close to about INR430 crores as of today.
Raj Mehta
Okay. What was the revenue achieved by a company — JV company Rappel and what is the potential that we see here?
S Gurunatha Reddy
The revenues achieved by the company is close to INR200 plus crores for nine months period. Probably it may achieve another anywhere between INR50 crore to INR70 crores. It will be in the balance three months of this financial year then order book and all we already shared with you.
Maram Venkateshwar Reddy
We have 425 crores order book as on 30th December.
Raj Mehta
Okay, that answers my question. Thank you so much. Thank you. Next question is from the line of Joti Gupta from Nirmal Bank. Please go-ahead.
Jyoti Gupta
Good morning, sir. A decent set of numbers. My first question is on the order book. Nine months ’25, we are at INR1960. What we’ve received is only INR141 crores a quarter. And we closed at INR960, which is lower than 20197 months as September 2024, what’s the visibility for the next two years in terms of order book? And the other thing is, I can see that there is this potential for export potential in terms of order book. There is INR7,000 crores of total potential — business potential till 2028. So what’s the kind of, you know, how much are we going to — do we expect us to be benefited from this business potential. One, second is, what is our estimates for ’26 and ’27 revenue growth as well as I believe with the kind of platform that we’re doing, our margins are not going to be dipping or impacted. Either they will remain stable or they might be a slight blip, but I think the next two years the margin is going to be healthy only at the same level. So any guidance on that please so.
S Gurunatha Reddy
In terms of the margins, yes, as you said, probably there won’t be any downward trend going-forward. Either we should be able to maintain or we should be able to slightly improve from the existing margins. So sir, in terms of the order book and I’ll probably have asked too many questions about the order book, I’ll ask Mr to.
Maram Venkateshwar Reddy
First of all, of the — whatever the guidance we have given for the current financial year-around INR1,100 crores to INR1,200 crores. We are almost there. And though we booked up to INR60 crores INR640 crores till September — December, and I think we are comfortable like as I mentioned in my opening remarks, we have a pipeline 350 crores more orders are likely to come in this current quarter. So this is the one. And going-forward, we have been seeing a good visibility. Nick, for the FY ’26, we have a clear visibility of INR1,300 crores to INR1,500 crores worth of business orders, which we are likely to book and which includes the domestic and as well as the export market. Then FY ’27 also, we have a clear visibility of at least 20% growth in the order book. Similarly, on the revenues front also, we have the clarity for the next year that is in FY ’26, a minimum of 15% to the 20% growth we can now comfortably achieve. This is our order book.
As far as export potential is concerned, yes, we have been addressing both build-to-spec as well as built to print, but our main focus is shifted towards build-to-spec. We are — we have slowed down the offset opportunities as the margins are very low. So we are going towards the build-to-spec where with our IP, we are turning out products. We have been discussing global OEMs, couple of products have been the developing based on the specifications given by them. It is too premature to inform you about the contract size and also the program center. Probably in next few months, I think we should be in a position to come out with the figures. But yes, we have been addressing globally and we are confident of achieving at least 10% to minimum 10% to 15% of our revenue should come from the exports, especially on the build spec. So this is what the figures probably we can achieve.
Jyoti Gupta
Okay. Sir, one more question with the, you know the war between Israel and Gaza coming to this thing and even Ukraine, Russia, you know somewhat mellowing down. How do you see things going-forward for you, except that, yeah, for some company supplies there is going to be a seamless supply and you know situations look better. But how, how are you placed in that case?
Maram Venkateshwar Reddy
Actually this ongoing you know the situation is not affected much except there was a few supply-chain issues what we have faced in the previous quarter. But otherwise the overall situation is okay with us and then there is no impact as such in our business as you know, in terms of order book, whatever we are getting and also in terms of sales, what we have been doing it for the Israel. So I don’t see any major challenge even going-forward also.
Jyoti Gupta
Okay. That be great.
Operator
Thank you. Before we take the next question, we’d like to remind participants to press RN1 to ask a question. Next question is from the line of Sakshi from Pratap Securities. Please go-ahead.
Unidentified Participant
Hello. Thank you so much for the opportunity, sir. I had questions on the order book, which you already answered. So thanks for that. Just a follow-up on that. So for our upcoming orders, if you could provide a breakup in terms of what we are targeting defense space, export, et-cetera, can we consider it to be the same as our current order book in-hand or can we expect some variation?
Maram Venkateshwar Reddy
Yeah. The current quarter, which the Q4, which I mentioned around INR350 crores we are likely to book that majority of orders we are trying to get again from the radar area about INR66 6 crores and then EW around INR45 crores missile and telemetry around 50 crores then there are also few upgradation programs again in the radar domain which is about INR120 crores. Then in space is about INR15 crores and exports around INR50 crores. So all put together, it’s around INR350 crores we are likely to book in this current quarter.
And for the next year, whatever we mentioned around INR1,300 crores to INR1,500 crores is the margin which we are likely to book in the next year. In that majority of radar orders are likely to come from the radar segment is around INR900 crore to INR1,000 crores. EW is around INR100 crores to INR150 crores. Missile telemetry around INR100 crores to INR120 crores. Space remain in INR70 crores to INR80 crores. Around INR100 crores to INR150 crores, exports around INR100 crores to INR120 crores. So these are the broad breakup of the next year FY ’26 order book.
Unidentified Participant
Understood. Thank you so much. And congrats on the sir.
Operator
Thank you. Ladies and gentlemen, to ask a question, please press RN1 on your phone. Next question is from the line of Prisha Rathi from NM Securities. Please go-ahead.
Prisha Rathi
Hello.
Maram Venkateshwar Reddy
Yeah.
Operator
Please go-ahead.
Prisha Rathi
Thank you for the opportunity, sir. I have couple of questions. As we see a good jump-in our share of profit from JV, is this contributed by our new JV with Manjira. And can you give me some update on this new JV in terms in terms of what the kind of order you have and how it is expected to ramp-up. There is a lot — there is a lot of talk about high-quality export orders received by OEMs. Do we accept significant business for us as well?
S Gurunatha Reddy
Yeah. In terms of JV, what we have with the Rafal yeah, the other one is what we have with just been incorporated okay you know very well that we and Manjeera are working on developing a chip for applications. So idea is that once this chippy is in-place, we would like to take the further development and the marketing of that particular product through the joint-venture company. With that idea, just the JV got incorporated. I would say there is still long way to really talk about the business potential, what kind of numbers it can achieve. Probably as the things progress, we should be able to share with you. But as of today, this is the status of the JV.
Prisha Rathi
Okay, okay. Thank you and all the very. Thank you.
Operator
Thank you. We’ll take our next question from the line of Joti Gupta from Nirmal Bank. Please go-ahead.
Jyoti Gupta
So sir, one, what is our arrangement with Cemetro in Italia? What are we doing for them? If you could share the other is US URSC, which is we saying these are clients. And with Thailus and Raytheon, these four companies, are we still in the fledgering stage of you know, working out some arrangement or are we already currently — we have orders for them and we are working on delivering some orders. And what kind of orders would that be?
S Gurunatha Reddy
No, most of the entities, what you have shared with us we have only just working level MOUs with them. We don’t have any significant in fact, we have not started any business activity as such with these industries. But Cemetron, I think you have mentioned the name Cemetron, right?
Jyoti Gupta
Yeah.
S Gurunatha Reddy
Yeah, with Cemetron, there are some supplies of RF modules, etc., supplied to them. It is more like a BTS contract it is a one-off kind of business what we anticipated with them.
Jyoti Gupta
Okay.
S Gurunatha Reddy
And we do have some contracts for the MMIC components and also we have some agreement with them to supply once our products gets qualified as far as the and is concerned. So not very clear.
Jyoti Gupta
What did you say? What kind of contract?
S Gurunatha Reddy
For the MMIC supplies, we have few agreements in-place. Once our product gets qualified, then we’ll go for production for their systems.
Jyoti Gupta
Okay. Okay, sir.
Operator
Thank you, sir. Ladies and gentlemen, to ask a question, please press RN1 on your phone now. The next question is from the line of Amit Dixit from ICICI Securities. Please go-ahead.
Amit Dixit
Yes, sir. Thanks for taking my question again. A couple of questions again. The first one is on essentially we indicated that we expect around INR900 crores to INR1,000 crores of orders from in FY ’26. Now in the — in its con-call, BEL indicated that they might get QRSAM order also in FY ’26. So does this include some portion of QRSM that you’re expecting or QRSM, if any would be apart from this order.
Maram Venkateshwar Reddy
Okay. Yes, Amit, actually we have taken only first of production module — model. Actually, the BL is what we — with the discussions what we had, I think they are planning to initiate a proto unit for the first of production model. So for that the subsystems, whatever we are going to supply, that value only been considered in the order book. We have not taken-up the total — the order size.
Amit Dixit
So the total order size as mentioned by BL is INR25,000 crore. Hypothetically, if it is INR25,000 crores, then how much could be our opportunity?
Maram Venkateshwar Reddy
Our opportunity will be around INR1,700 crore to INR1,900 crores.
Amit Dixit
Okay, got it, sir. And for these naval platforms that are coming up NGC and P75, etc. What kind of roughly opportunity we can see over there?
S Gurunatha Reddy
In that actually we have few modules being separate to them to OEMs, but the value and are probably in the next couple of months I think in the position to inform you.
Amit Dixit
But we’ll be participating in all these three programs, P75, P75i and NGC.
S Gurunatha Reddy
I think in only one program we participate.
Amit Dixit
Okay. Okay, sir. Got it. Thank you so much. That’s it from my side and all the best.
S Gurunatha Reddy
Thank you.
Operator
Thank you. Next question is from the line of Karthi from Suyash Advisors. Please go-ahead.
Karthi Keyan VK
Sir, good morning. Just wanted to confirm the margin guidance for next year. I’m slightly confused. Are you saying you will maintain the 29% 30% range for the whole of next year-on a standalone basis?
Maram Venkateshwar Reddy
Yeah, that is what I said.
Karthi Keyan VK
Yes, sure, sure. And you said roughly INR120 revenue base, right, sir?
S Gurunatha Reddy
Yeah, that is a guidance. Yes.
Karthi Keyan VK
Sure, sure. Thank you. Thank you for clarifying that.
Operator
Thank you. Before we take the next question, we’d like to remind participants to press R&1 on their phone to ask a question. Next question is from the line of Shantanu Chatterjee from Mount Intra Finance. Please go-ahead.
Santanu Chatterjee
Thank you. Thank you for this opportunity. My question is on Utta radar. Sir, from when we can expect that revenue — significant revenue contribution will happen from this segment as we have already experienced some delay in the Tejas program, is there any actually problem for this program or that I want to clarify? And another one is — second question is on your capex spend for FY ’26.
S Gurunatha Reddy
Yeah, first question, I’ll answer you. As far as for LCA Mark 1A is concerned, we have RFP on-hand. We have participated, submitted our bid. The — currently the technical evaluation is going on. But yes, there was a delay in the procurement of thisam. We could have got some order by March as we indicated previously, but now it’s getting shifted to the — mostly by first-quarter of the next year. So we get definitely some quantity by June ’25. And yes, as far as the revenue from that, probably we may be in a position to roll-out a couple of numbers by March ’26. And majority of them will go for FY ’27. The next question I think SGL answer. Yeah, there will be some capex. As of today, they are not really estimated. It is mostly for augmenting the existing activities for the company probably when we talk to you at the year end call we should be able to give a number to.
Santanu Chatterjee
Any ballpark figure, sir?
S Gurunatha Reddy
Generally it no, the minimum will be about 30 to INR35 crores.
Santanu Chatterjee
That is for maintenance capex, right?
S Gurunatha Reddy
Yeah.
Santanu Chatterjee
Okay. Okay, sir. Thanks a lot.
S Gurunatha Reddy
Thank you.
Operator
Thank you. Ladies and gentlemen, due to time constraints, we’ll take that as the last question for today. I now hand the conference over to management for their closing comments. Over to you, sir.
S Gurunatha Reddy
Thank you, and thank you everyone for attending this call and sharing your ideas questions. I hope you are happy with the answers given by the management and we’ll be happy to connect with you again for the year-end results. Thank you.
Maram Venkateshwar Reddy
Thank you all.
Operator
Thank you. On behalf of Astra Microwave Products Limited, that concludes this conference. Thank you for joining us. And you may now disconnect your lines.