Astra Microwave Products Limited (ASTRAMICRO) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Astra Microwave Products Limited Q1FY27 Ordnance Conference Call. As a reminder, all participant 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 this conference call, please signal an operator by pressing star than zero on your touch-tone phone. Please note that this conference has been recorded. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risk and uncertainties that are difficult to predict. I now hand the conference over to Mr. S.G. Reddy, Managing Director. Thank you, and over to you, sir.

Thank you, and good morning, everyone. A warm welcome to all the participants joining the post-results earning call of our company. I am joined by Mr. M. Reddy, Joint Managing Director, and Athim Kavra, Strategy and Development Director, and SGA. The results and the investor's presentation for Q1 have already been uploaded on company website and stock exchanges. I hope you had a chance to review them. In terms of the performance, the quarter performance is on the expected lines. The revenue and profitability We have a lot of difficulty or moderate, or modest, I should say, primarily due to temporary delays in customer approvals. and closing some of the last stage technical issues, which are expected to normalize in the coming quarters. Overall, India's defense industry is increasingly moving towards indigenous design development and manufacture of advanced subsystems and systems with total solutions. We believe companies with proven engineering capabilities and experience in these areas are well positioned to benefit from this transition. and AASTA being one such company. In terms of the opportunities, our standalone order book as of Quaterain stands at 2156 crores, providing strong visibility for the upcoming period. Around 66% of this order book is from defense, and the rest, that is 34%, is from space, metrology, and hydrology sectors. Our Consolidated Order Book stands at 2849 crores. It includes service orders of about 244 crores, which are typically more accretive to margins. Staying in the order book, would like to highlight that in the month of July, we secured a significant order worth about 2205 crores from Hindustan Aeronautics Limited for procurement of critical subsystems for Uttam radar. As you know, this is a landmark achievement for our company. And reflects the long-standing trust placed in our capabilities, technology, and execution track record in the defense sector. My colleague, Samvir Edy, will throw more insight into this order, its execution cycle, etc. Looking ahead, we continue to see healthy progress through our key programs and remain confident in our growth trajectory. We are targeting a top-line growth of more than 15% year-on-year. Resulting in about 1350 crores for this financial year, maintaining a healthy bottom line. With the addition of these significant new orders, we see substantial long-term opportunities ahead and remain focused on leveraging our capabilities, strengthening our execution, and delivering sustainable multi-year growth over the long term. I now hand over to Mr. M. V. Reddy and later on, Nathan Cabra. We will provide more insight into new product developments, the business outlook for the near and long term, and strategies adopted to take the company to the next level of growth cycle. I request MV to take it over.

Thank you, Mr. Zia. Good morning, everyone. Extend a warm welcome to all investors, analysts, and stakeholders. Joining is today's evening call. We are pleased to present key business updates. First, as Zia mentioned, we have achieved a remarkable and significant milestone at the end of July 26 with the receipt of long-awaited strategic order. As on date is the single largest order in the history of Astra, and it is a direct result of a decade of continuous efforts, the landmark of Uttam Radar, which I was talking about, which has effectively doubled our entire order book. So with this major win, our total order book sells to a record breaking of 4,300 crores as on date. I am also pleased to announce that we have emerged as the lowest bidder in AAAU of AMCA program. This is news of a few days back, and probably in a month's time we will be able to get this particular contract. Alongside this major milestone, the daily operations remaining strong. We booked new orders worth of 195 crores in Q1, matching our performance guidance exactly. Revenue for the quarter stood at 182 crores during the robust operational execution and studied demand for our advanced technology. Similarly, our joint venture, Astra-Raphael Comsis, performed well, both in terms of order book and also the execution is going in within the guided figure. As on date, ARC has an order book of 836 crores, and in the current year, we are planning to book sales of 360 crores. We continue to strengthen our positioning across the different space and semiconductor segments. During this quarter, we secured a good order from Bharat Electronics about 45 crores worth of contract for all MMIC chipsets. Proving our strong capabilities in radar core components. We also won significant contracts from key defense and space entities, including BDL and Space Application Center. Our production lines demonstrated timely execution and robust delivery capabilities. We successfully built and delivered wide profile of high technology systems like CAR, 5G, isolation, ruining modules, MPR modules, and also in the EW segment, we have delivered the Shakti, NIN, and other programs. During manufacturing, we are also making great steps in innovation. I am pleased to inform that. In the month of July, we conducted successful technology demonstrations in Jalanzar for two unique first-of-the-kind products, the electromagnetic wall and the vehicle-mounted anti-drone system, which we were discussing with you for a few months. These are all initial-based first-of-the-kind versions that can be fully customized in months to come to meet specific end-user requirements. To support this rapidly growing volume and complexity of work, we have invested steadily in automated process, engineering, workflows, and advanced infrastructure. Our production lines and our team are fully ready in all aspects for seamless large-scale execution. Feature is exceptionally bright and armed with 4,300 crores order book, as I mentioned, and also a healthy pipeline in coming quarters. Scaling technical capabilities, we are confident in our ability to deliver consistent growth and long-term value. Our core focus remains on executing our current order book efficiently and while aggressively pursuing new opportunities in both domestic defense and global export markets. Thank you, and now I want to hand over to Mr. Atim Khabra, who is our Director of Business Development and Strategy. Over to you, Atim.

Yeah, thanks, guys. Hi, everybody, and congratulations, SGA and MV, for a fantastic order. I think it cements our role in the overall aero-defense ecosystem, and we are very, very grateful to our DPSU partners like HAL and BEL for their trust and faith in our abilities, besides the fact that Astra has grown under the tutelage of various defense labs and DRDO. So, from a... Bottom of my heart, I think our hearts, a sincere, heartfelt thanks to everybody who has been our partner. But with these kind of orders comes a very heavy execution responsibility. And after attending one of our review meetings recently, I think it is not an understatement to define how proud we are of our colleagues who have worked. And are working relentlessly in a focused manner to further the cause of defense ecosystem in India. You know, we often talk of orders, strategy, vision, but fail to highlight that we are defined by our human resources. Infrastructure and capital can be sourced by many, but it is our human resources cultivated over decades that define us. And we are very fortunate to have created an ecosystem of colleagues who are now increasingly coming together and collaborating across their domains, sharing their knowledge towards creating systems. When I was playing the game of Zynga recently, and I realized that as we move up to greater heights, we are only as strong as our base. While everybody has a critical role to play in the ecosystem, we can build a tall pyramidical structure only if the base is strong enough and wide enough to support the growth. I think that's where the strength of Astra lies. Analogically speaking, the base has to be wide, multi-scaled, sustaining, and it has to be recurring. It has to have a steady, defensible margin. On top is what I call the next-gen solutions, wherein will lie the future as it unfolds. There we might have higher margins right now, but as more solutions emerge, what's at the top comes into the middle level and becomes more sustainable margin-wise and more mainstream. But all this is possible only if you have multi-talented, multi-faceted teams that are unified by a common vision. You know, as I was thinking about our conversation today, I look back and I realized that in the last 18 months or so, we have inducted many new leaders into our company to supplement the continuous influx at the middle levels. New resources, as well as replacements for folks who have moved on. Resource rejuvenation has become the order of the day. You know, just to elaborate, we've had a new CTO, a new head of HR and admin, a new quality head. We strengthened our purchase department with a new head. Besides, new domain heads who have joined our R&D team. And this is not to miss our new head of sales and marketing. And it is these veterans combined who bring into the company new, varied experiences and the knowledge that lays the foundation for higher sustainable growth. So we are very confident and comfortable with our order book. So the obvious focus shifts to execution. And that is what ought to be keeping us awake at night. Just to put things in perspective, in the next five years or so, we are expecting to do at least six to seven times our last year's annual turnover. Let me pause for a second to have that sink in. Every single year. We will do more than what Astra achieved in the last 33 odd years, and that's no mean order by any means. Thankfully, Astra has worked on this scale before during our offset business times, and we have the experience of driving significant business volumes through laser-focused execution. So we are beefing up our purchase departments and other departments as the risk, which I also want to highlight, is that stretch supply chains across the border, across every country, because everybody is restocking on their armaments inventory. So we've got to make sure that our supply chains remain intact and stuff comes in within the defined timelines. So, what makes us fairly confident about our future order book? I think MV alluded to it. Astra is emerging as a significant player in the aircraft, in the airborne segment. There are various airborne platforms which are in the works, and Astra happens to be a key part of many of these. Be it Tejas, where Uttam radar is astras, and the recent 2200 crore order. Actually, it's around 1870 without GST. So we have to keep that distinction in mind. Or the AVAX Mark II. Where we are part of the supply chain or the supply chain for Mark 1, where we will have, I think, at least 25%, if not more, of the designated supply chain or the SU-30 upgrades, be it on the radar side or be it on the EW side, where we are tier 1 and tier 2, respectively, or be it AMCA. You know, we are already, we and Bell, right, okay, we are L1, L2 for the four units of MCAR, we're prototyping, which is going to be done. And that's huge, guys. They are across every platform. So, what does it mean in terms of numbers? MVR confirms that we will see at least 1,600 crores being added this year. And we may improve that number, by the way, over the next few quarters. So the way we look at it, over the next few years' visibility. When we did our QIP, we made a commitment, and Astra is more or less delivers on its commitment. Again, that's another thing which we need to highlight. We had said that we are looking at somewhere between 8,000 to 10,000 crores worth of orders coming in over the next five years. Of this, and we just confirmed, 4,300 crores is already in the bag. 5,700 crores, if you are looking at the higher end of those order books, okay, or just 3,700 crores to be added to make up that commitment. But I am glad to say that we are upping our visibility for the next four to five years. Our order intake over the next three to four years, I think. Should be in the region of at least 8,000 to 9,000 crores to be executed over the next five to six years. How are we coming at these numbers? 4,300 crores is our current order book. Seven, this includes, by the way, a little bit from the QR SAM, which we are expecting will happen, will come to us partly before this year end. So that will leave at least 700, 800 crores worth of orders to be added for QR SAM, for the first three regiments only, at least for now. We are looking at at least 500 to 750 crores orders from our AS, SRFL GOMSIS, our joint venture. And at least 3,000 crores worth of business coming in from Suthati, Virupaksha, as well as Angad. This, if you add it up, is 8,000 to 9,000 crores worth of business alone coming in order intakes. So this does not include, by the way, chip sales, which may happen at a scale which is better than imagined. It does not include anything from counter UAV solutions, electronic wall, which we are building. It doesn't include more products like the area denial systems, which we are making. And it does not include anything from exports to other countries where we are already fielding a couple of inquiries, serious inquiries. So, guys, that is the kind of order prospects and business which we are looking at. I would seriously, you know, We insist that we look at our ability to deliver our year-end revenue targets to 1,350 crores for the current year, plus minus 25. Next year, we are looking at about 1,600 crores, plus minus 50. And it is expected thereafter. That we will be in a different trajectory as production orders will play out for both Uttam and QSM. Completely different trajectory from 29 onwards. I will wind up with a note on space and weather divisions being spun off as a separate listed company, replicating exactly the same shareholding pattern as Astra Microwave. You own 5%, you will get 5% in the new company. But the positive spin over there is that SGR, SGR-D, has graciously accepted the mandate to groom this new company and establish the same rigorous methodologies and standards as AMPL with almost utmost undivided attention. We will be discussing. And sharing with you the detailed plans and introducing the new leadership teams in the next few quarters as we go along. But the company shall operate as an independent entity from April 1, 2027 is our expectation. We hope that our shareholders will experience tremendous value growth in the new company also, like Aston Microwave products. We continue to work on unlocking further value for our esteemed shareholders. So with this, I'll open the session for question and answers, please.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use answers while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles.

Thank you.

The first question is from the line of Amit Ashok Bhavani from Clear Blue Capital Advisors. Please go ahead.

Thank you for taking my question. My first question is, the press release says that we are targeting a top-line growth of 10 to 15%, but the presentation says that our target is 15 to 20%. As a matter of fact, the same was the case even in the last quarter. Can you please explain which is the correct number?

Yeah, 15, in excess of 15%, that is 15 to 20%, the growth is the right one.

Okay. My second question is, what is the target year-end order book, both on standalone and consolidated?

See, apart from the Uttam, the order, we have guided to have an order book of about, a booking of order book of about 1,600 crores for the entire financial year. We stand by that.

Thank you. Thank you, sir.

Thank you. The next question is from the line of Amit Tikshad from Goldman Sachs. Please go ahead.

Yeah, hi. Good morning, everyone, and thanks for the opportunity. The first question is around the order and flow, and you mentioned in the great level of detail, platform-wise, where we are expecting order and flow. I just wanted to understand if we have some play in the EW systems, ASPJ pods for pages for 230, et cetera, and also if we have some participation in LCH program of HAL.

Yeah, Mr. Swamik, as far as the EW is concerned, for Tejas, we are there as a part of Podjammer. We have one of the major subsystem, AATRU, which has been already qualified for the Tejas LCA Mark 1A platform. As we are aware, that particular EW suite is under final phase of qualification, and once it gets qualified, then it will be inducted in the production program, so we will have the production orders also for that. Similarly, for Su-30, as Mr. Atim had mentioned, we are the DCPP for development of EW suite for Su-30, that is called Angad program, and we are one of the consortium partners which has taken it up, and it is going, you know, steadily, and we are expecting this program will be completed within the timelines. So, we are there both in Tejas and as well as the Virupaksha platforms in EW.

And LCH, sir?

LCH also we have been delivering some subsystems.

So if we take these three opportunities, these are probably not covered in the, you know, overall order and flow guidance that you gave. How much will be these opportunities? I mean, if I add all these three, let's just say.

Actually, whatever, you know, we have mentioned about next four years' order book projections, in that we did, we considered, like, you know, Angad for a few numbers. And also a few numbers of, you know, the subsystems from NCH and all. But of course, this Tejas Mark 1A is something which we have, recently we have taken it up. And then I think probably another, let's say, 500 to 600 crores may add up in the overall business, in the order book projections.

Great, sir. Thank you. The second question is essentially on, you mentioned two very interesting products, AMVOL and Veckel Mounted Counter Drone System. Congratulations for conducting the test on both of these. Just wanted to understand the opportunity size, and a very rough number will do. Also, in the last call, you mentioned that by Diwali, we will be having some five IP products with our own IP. Are these two part of that particular group?

Actually, let me take that. We had mentioned three products at least. EMVAL, if you break it up, is itself two products. You have the counter, you have the vehicle mounted, complete soft killing and soft kill and hard kill program. EMVAL itself is an extension with possible additional layers of interceptors, etc. being thrown in. We are very well on track for Diwali, somewhere around Diwali, actually, for at least two complete radars of our own and one drone-mounted intelligence, electronic intelligence product. So we should have them. These are the solutions? None of the, none of, not even a penny of these is, none of a penny from these is included in our numbers which we give you. That's all upside, you know. If it happens, when it happens. If it doesn't happen, it was not there in the numbers, you know. So that's all upside.

My guess is it will be more than pennies. It will be rather in pounds. But anyway, the question is, sir, BL has indicated few very interesting orders in their call, Shatrughar, Samaghar, orders for P75i. I'm sure we will have some play over there also. So very broadly speaking, if you could highlight the opportunity size for us in these three platforms.

Yeah, we do have some subsystems for Shatrugat and Samagat. We are there in the part of the development program, the DRDO, and we do expect production orders from BEL as and when they get orders. Approximately around 100 to 120 floors worth of orders we expect for these two programs put together.

Okay, so the last question, if I can squeeze, is in the interest cost, which we saw was down substantially in this quarter. So, is it due to the lower working capital commitment we have or something else?

Yeah, if you recall, at the end of last financial year, there is a significant amount of positive cash available in the books of accounts. So, because of that, the utilization of the overdraft during Q1 is very minimal. So, that is one of the significant reasons why the overall interest cost is down compared to the previous period.

Great, sir. Thank you so much, and all the best. Thank you. Thank you.

Thank you. The next question is from the line of Papya Gandhi from Bajaj Alternate Investment Management. Please go ahead.

Yeah, hi, sir. Thanks for taking my question. The first question is regarding the Uttam Radar order. What is the average execution timeline and what is the revenue booking that we can see over next two to three years?

Yeah, the overall execution period is about five years, as we have mentioned in the press release. Before 532, we must complete the total order, and the first phase one, the 12 numbers, which we are supposed to complete by September 27. We have about 14 months from the date of order, and thereafter, almost every year, on the average of 25 numbers plus, we should execute. As we ramp up the production, we are even thinking of executing the overall total quantity by FI31 itself.

I got it, got it. And so you alluded earlier on the margin front saying that margin is a key metric. So just wanted to understand what could be the margin range going forward because you'll be introducing a couple of new products as well. So on a longer term basis, if you can provide some guidance on the margin.

Let me take that. Solution, product pricing will be a function of the market. Okay. I think the feedback from global markets, which we have received, actually from not markets, one global market, is that we are fairly competitive, and that's at a very nice margin, okay? So that gives us the confidence that we should be able to maintain more or less our current margin trajectory. But we don't want to commit to you on the margins because there are a lot of factors which will come into play from incremental products. Number one. Number two. I think what we are pitching for, what we are looking at is, as we go into more and more systems and DCPPs, right, okay, you will actually have a long tail building in of business, okay, you will have AMCs, etc, which will kick in, upgrade cycles, which will kick in. So, we have to look at the profitability across the product life rather than the initial margin. So, you know, there might be a trade-off between the order size and initial margin, but overall, we expect it to be, you know, healthier, if not as healthy as our current business, at least. That's all we would like to address it.

Got it, sir. Thank you so much. That's it from me. Thank you. Thank you.

Thank you. The next question is from the line of Vikas Singh from ICICI Securities. Please go ahead.

Good morning, sir, and thank you for the opportunity. Sir, your five to six year guidance, if I just chalked out the revenue plan, then we would cumulatively would execute somewhere around 17,000 to 18,000 crore. While on the order booking perspective, we have given 8,000 to 9,000 crore kind of the roadmap visibility. So, could you give us any other bigger orders chunk which you are expecting to receive in FI 28, 29, which could get executed in 30, 31, if you could give us some idea about the thing?

Because I think there's some confusion there. I don't think we are executing 18,000, 18,000. The order book, which we are talking about, which we will take in over the next, or which builds up over the next three to four years, is... to be executed over the next five to six years. So around 9,000 to 10,000 crores, 8 to 10,000 crores, if we take a range, right, is what we are looking to execute, right? So the idea is that when we, let's say, don't hold me to the years, plus minus one, let's say if you're talking of FY31, right, and let's say we are doing a revenue of $350 million, $400 million, okay? At that point in time, we need to make sure that we have enough irons in the fire to do $600 million to a billion dollars, you know. That path has to be choked out by that time. We see, you know, we are fairly optimistic, honestly, guys, that given the kind of depth of engineering talent we have And the ability now to work with others. And create solutions building on our core capabilities. We should be in a position to kind of, you know, aim much higher. But in terms of, when we broke up the order visibility, we just gave you the current order book, okay? And obviously, we did not add in over there the annual incremental orders which we will get. Okay, from our regular business, and we added three more programs, QSIM, ARC, and SU-30s, to give you, to reach the number of 8,000 to 9,000, 10,000 crores.

Okay?

Obviously, we are expecting much more. The regular business which we do, that also should be taking in. But from an estimate point of view, ASSA would rather be conservative, right? As it unfolds, let it be a positive surprise, right, for you. But those are the kind of numbers we are comfortable sharing at this point in time.

Notice, my calculation is basically coming from that our guidance was 150 crore this year, then 1600, and reaching by F532, if we wanted to have even a 5x growth, would have been 5500 plus crore. So, cumulative execution, it's not about the single year, cumulative execution would have been to the tune of 18,000 crore, out of which 4 plus. Another 5-6,000 crore guidance we have. So, just to add back in this, what is the average annual repeat orders which you just said that you would continue to receive from the existing customer? Any numbers you can assign?

Envy, you want to take that?

I think there's some confusion.

Yeah, I'm not still getting the 17,000.

Probably what we can do is maybe I think we'll give you more clarity in one-to-one. I think I don't know how you arrived at that particular figure of cumulative 17,000. Even if we add all these things, we won't cross more than 10,000 crores. So anyway, I think probably we'll give you more clarity in one-to-one.

The second aspect to the exports, you just said that you have pointed out that you are fairly competitive versus global players. Our export segment had not been growing.

Yeah, we did not have any solutions to export. It is only now that we have built products which can stand in the market along, you know, neck to neck with others. So, as and when they play out, that's an incremental revenue stream and order stream which will add to our business, you know. What did we have as a complete solution? We did offset business, so-called exports, which was not really exports, it was deemed exports.

And, sir, execution of this call order will start from?

Yeah, sorry, MB, what are you saying?

Yeah, yeah, actually, let me just clarify about on the export front. As you know, like, you know, we started off our export only on the BTP front, fulfilling the offset obligation that over a period of last, you know, about a few years. And subsequently, like, you know, we, since offset guidelines have been changed, and also our business model, we have changed, and we came out of that BTP business. We focus more on the BTS. So we have a couple of orders on the BTS front from a couple of players, that which we have executed also and given some prototypes for qualification and all, which take time. Then, apart from that, on the MMICs, that is on the components front, yes, we have been pursuing it aggressively now, and we are getting good leads from, you know, U.S. and other European countries. Probably it may take at least another couple of years to get the sizable orders for our components, which we have been doing it. So, these are all some of the things which we have been focusing, and apart from that, as Arthema had mentioned, the solutions, what we worked out, the complete solutions, which we wanted to prove it in for the Indian defense first, and there, after that, we will start looking at the export. As in, when we approach many OEMs and also services in the foreign countries, they've been asking us to provide a comprehensive solution, which includes... Other sensors, apart from the radar, what we have been doing it. So that is the reason we have been focusing on the overall solution, so that we can go to the customer with the complete solution. So that may take about a year or two to reach that particular stage.

Not yet, sir. Not yet. That's all from my friend.

Thank you. Ladies and gentlemen, in order to ask a question, you may press star in one at this time. The next question is from the line of Prerich Jain from Motila Loswal. Please go ahead. Yes, I am audible.

Yes, please.

Yeah. So thank you for the opportunity, sir. So you have painted a very clear picture on the defense side, like what the opportunities are going ahead and what kind of execution you're expecting. Can you shed some moonlight on the basically a satellite business and also a metrology business? Because metrology, the Project Mawsem mission, Project Mawsem is going on and what kind of Doppler weather radars are we expecting there? And also on the satellite part, we were building our own satellite. So any updates on that part as well?

We will like to do this in a structured manner over the next few quarters, right, if you will allow us that luxury. But to suffice to say that we are building our own. Satellite, which should be launched within the first six months of the new entity being listed. It is focused not on optics, but on, you know, some other use cases we will be launching. It's a part of a constellation of satellites, which ASSA will be launching. There are multiple product lines which are being looked at, including being part of global supply chains for Leo satellites. But we would like to shed more light on it in a structured manner as we go along.

On the weather also. We'll combine it together. Anyway. Yeah, actually, let me throw some light on Doppler weather radar, which he was asking. So, as you know, we are the first Indian company to develop this Doppler weather radar in India to be supplied to IMD and having got it commissioned. And we have supplied more than, you know, 45 numbers of Doppler weather radars in various frequency bands. Almost we have covered in every frequency band in the last four years, and we have been supplying, we have orders on hand, which have to be executable for the next two financial years, and apart from that, under Mission Mausam, we expect more orders in the current financial year, which probably we may go for execution another two, three to four years. So we have a visibility to continue this particular production for next four to five years to make sure that we will maintain that in leadership we set up the good infrastructure and as well as the resources. And as Mishratim had mentioned, we have wanted to go for as a special focus in entity as such so that we will have more focus to develop new products in this particular segment. So our focus is on the metrology and as well as in the hydrology segment, and we are coming out with new products very soon.

Got it, sir. Thank you so much.

I have clarified you.

Yes, yes, yes. Very helpful, sir. And, sir, one more question on the UAV part that we are building up. What is the scope of work that will be built in-house by Astra? I know for the soft-kill, we have the in-built capabilities, but for the hard-kill, like the artillery or the laser system, will that be procured or supplied by the customer itself?

Yes, we are looking at two parts to it. One is the guns, right? We are not in the guns business, so we will leave it to the client to mount whatever guns they want onto the system, number one. Number two. Uh, there is a interceptor drone capability, which is being built in. Okay. Uh, it is, we are working on it actually as we speak. Uh, and, uh, so it will be a dual kind of a thing. Uh, but the whole structure is modular, which means primarily that my radars and detectors should be able to give you the direction, the speed of the incoming, the velocity, the lat long, and align the. Uh, the counter kill measure in the direction for the decision to be made to deploy it. Okay. So, be it a directed energy weapon, we are not making one, by the way. So, it's a lean, if you remember our LEAP strategy, lean and learn, right? So, we will be procuring a few countermeasures, right? If the client wants, you know, directed energy weapon, we take that and we put it out there, you know. But we will give the client the ability to mount whatever article solution they want on that.

Got it, sir. And it's one more question, if I can squeeze in. What are the key projects that we are expecting to execute in FY27?

Yeah, few contracts what we have in development contracts like in Rada segment, Haisal, and Suthati, you know, Virupak Shatubliayu. There are a few other subsystems. And also, some of the subsystems for Bell, especially the FOPM orders, whatever we have received in the last quarter, we are planning to execute before March for the QRSM. Apart from that, there are other subsystems like Atulia, and those are all will be executed. So most of them are in production in nature. We don't see any major challenges to execute this. In EW front also, we have few orders for the existing programs of Bell Hyderabad. All those orders also can be executed in this current financial year. And in space, we have a plan to execute around 100 crores, which we have orders from DRDO a few years back that will be executed in the next quarter. Similarly, meteorology, we have Doppler weather address on hand, as this order also, few numbers will be executed before March. So these are all few projects which we can complete before March 27.

What is that? Sorry, one last question. What can the working capital cycle be like? Like we saw it coming down sequentially in this quarter. So for the full year, since most of the orders which are being executed can be on the FOPM side, can we expect working capital to moderate even, like come down even a bit more than FI26?

No, I don't think so. I think normally, you know, the Q1 and part of Q2, generally the working capital cycle looks much better because of the comfort being derived from the execution made in the previous financial year. As we move forward in Q3 and Q4, again the pressure builds up on working capital. I am not expecting any significant change in the working capital position as compared with the previous year. More or less, we may be in the same position. But let us wait and see. Probably on the end of Q3, we should be able to give a more clear update on that.

I would like the opportunity to reiterate our fundamentals which are driving us, you know, a few things. Till we have accretive, non-organic opportunities, we will not dilute for working capital. We are fairly comfortable on that part. Which goes on to increase our return on equity, which already has moved up substantially, and as executions happen, will move up even better. And more importantly, the positive operating cash flow, which was our focus and has been achieved. As we scale up, you will see nice numbers ticking in on an operating cash flow basis. So I think this is sovereign debt. We don't believe that we should be diluting for any working capital requirements. It's answering a few questions which we have received from others also. So we believe equity is to be respected and is a very expensive form of capital.

Thank you. Thank you so much for the opportunity and all the very best for future. Thank you.

Thank you.

Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. The next question is from the line of Dipen Vakil from Phillip Capital. Please go ahead.

Thank you for the opportunity, sir, and congratulations on decent execution and margin. So my first question is on the lines of your current order book. So you mentioned that your current order book is close to around 2850 crores. So what would be the likely psychicity of the order book in terms of how much are the short cycle orders in it which are executable in the next one to two years and longer than that? And the follow-up to that would be that what would be the tune of short-cycle autodentals that you expect annually over next 1-2 years.

Yeah, see, we have given the guidance for the current year, as mentioned, about 1350 crores, and then We are expecting another 15% to 18% growth for the next year. So the orders, whatever we have in order book today, we think more or less, like, you know, it will be executable next two financial years, except the one which, in fact, we got that would come to be executed in four to five years. Otherwise, most of the orders, whatever we have, they are basically will come for execution in next two years.

Got it, sir. So any annually or short-term orders that you expect, say, something on a regular nature, maybe it is on the services side, something on annual quantum?

Generally, for us, the short-cycle orders are very limited. Quantify.

Got it. So, our second question is if you can give us a slightly elongated commentary on your L1 for AAAU for AMCA program as to what would be the quantum of it and what kind of opportunity can we expect in the AMCA program?

Yeah, this is basically a development program, as probably you are aware that ADA, you know, they have given this development of radar to. D-R-D-O-L-R-D. The first portion of that came out of tender, so we and the other company, both of us, emerged as L1 and L2. Like the way we got daughter. As far as the size is concerned, as you know, the numbers are already available in this site, whatever the number of AMCA quantity which the government is looking for. So that anyway, as a lead distributor, the DCPP, this RFP is already out. I think they have shortlisted three consortium partners. So, who will win the particular bid, and they will be taking this radar from the radar-designated production agency? So, we will be part of the supply chain.

We don't know the numbers, guys. We don't know the numbers. You know, that you have to ask ADA and AMCA, guys, you know.

Noted, sir. Thank you so much, and all the respect. Thank you.

Thank you. The next question is from the line of Mithun from Kiavia Advisors. Please go ahead.

I just wanted to understand any guidance on the full year EBITDA margins.

Expect to maintain what you did last fiscal. And also wanted to understand, secondly, on the space sort of the business, how did the 1350 crores, how much would come from that sector?

Actually, we didn't get you the first part of your question. The second part, I can answer. Out of 1,350 crores of project sales for this financial year, I would say close about... About 120 to 150 crores is going to be from the space sector.

Right. My question was more on the EBITDA margin guidance. Would your margins be similar to last year or is there any room for improvement?

Definitely, definitely the margins are going to be similar to last year. You can expect a delta increase in that, a positive increase in that margins. Got it.

And just wanted to understand, since the space business will be demerged,

what sort of plans do we see in that part of the business and opportunities which

will come up which maybe you did not have so far?

Space will detail it out in the next few quarters, over the next few quarters. In terms of what specific areas we'll be looking at, our intention is to create substantial value addition for our shareholders from space and weather division combined as a separate entity. So you'll be getting in at absolutely rock bottom, in my opinion, era. for a sector which is looking quite promising, okay? Suffice to say, we are not going to be banking on domestic business alone, but we will be looking at participating on a slightly larger scale, global scale. As and when they are finalized, we'll share it with you. Still, six to nine months ago.

So that business will have a run rate of 150 crores as we speak, right?

Possibly. More than that. Combined, more than that. So I think I'm on record, so no harm in repeating it. Our first year guidance for the space business should be in the range of 300, space entity as a standalone entity, space and weather, should be in the range of 300 plus crores with at least a 18 to 20% PBT margin. So it'll be a profitable entity right on day one with its own cash flows and everything. But we'll detail it out, please, in the next few quarters. A lot of things are being finalized as we speak. Our focus is right now on the personnel. And as I said, people are the most important assets in Nashville. And right now, I hope you understand and appreciate how difficult or how a difficult task it is with all of us here to kind of make sure that everything happens in a smoothest possible manner. The facilities are being demerged, standalone. The people have been identified, put across into, you know, different segments, different buckets. And accounting and Asia has ensured that accounting has been happening on a standalone basis right from the beginning of the year. So for us, it is extremely simple now. We've just completed migration to SAP HANA, and congratulations for that, and successfully. To do all these things without disruption to the existing business is a fairly dedicated task. So we focus on that, and then subsequently everything else will flow. But we hope that this business itself will be as value-creating for Astra shareholders as Astra has been.

So this last one, you said 1350...

Sorry to interrupt, Mr. Mithun. May we request you to turn to the question queue for a follow-up question? Thank you. The next question is from the line of Abhijit Singh from Systematics Group. Please go ahead. Hello, am I audible?

Yes, please.

The first question is, what is our capabilities and product offerings in the BrahMos program? There has been significant interest coming in from exports, you know, from different geographies in the Southeast. And I understand that we have been developing Seekers, the RF Seekers, from the BrahMos program. So apart from that, apart from Seekers, in totality, if you can answer in terms of both development and production, where are we in that? What all do we supply? And going forward, what is the plan on that program?

Yeah, the existing BrahMos missiles, we are there as a part of supply chain for the gimbal-based RF seekers. In that, we are supplying a critical RF component to the OEM. Apart from that, we also supply telemetry products to BrahMos missiles. And also we have taken up proactive development for BrahMos new generation, that NG missile, there I think that seeker, whatever we have taken it up, it is in the development stage, may take another few months for us to complete that and then go for testing and qualification. So this is what we have been focusing as far as the BrahMos missile is concerned.

Understood, sir. And sir, have you factored in the BrahMos whatever development we are doing in the order info that we have projected?

Only existing orders that whatever the development we have completed and which we have been producing, those numbers only we have factored. But otherwise, the new program which we are working out on the NCNC or maybe on the proactive development, those numbers we have not taken into account.

Right. So, sir, is there a possibility of, you know, upward surprise on this? Because that program promises to be, you know, significant. Possibly.

Yeah, yeah, there's a possibility.

Right. And lastly, revenue declined this quarter. I mean, logically, I would assume that there could be some kind of, you know, shipping issues at the end of the quarter, and we might be sitting on a larger finished good inventory. Is there a default revenue situation in Q1? And if it is, yes, how much is the quantum?

As we mentioned in the opening remarks, there are a few programs which we planned to book sales in the first quarter, but because of some inspection issues, and there was a delay from our side in the sense to prove the specifications, so there were a few issues in the development cycle, and also there were some supply chain issues. So there are, coupled with all this, we missed out. To execute these few programs in the first quarter, but we will be able to cover it up, I think, in coming quarters. Mostly, like in Q3 and Q4, we will have a good, you know, execution, as we have almost received all the material for those two quarters, and also the development projects are in the final stage of clearance. So I think next coming quarter should be promising. And overall, whatever the guidance we are given in the beginning of the year, that I think we are confident to meet that.

But gentlemen, I must add here that we don't, you know, our quarterly numbers are our internal numbers, which we are constantly fine tuning. And since we don't even break them out, and we only give you the yearly numbers, right? So whatever estimate you feel like, you know, please make the estimates, but we know what we have to achieve at the end of the year. And that's the guidance we are working on, you know, so we don't. You know, like other companies which have told everybody, you know, which have very clearly spelled out, this business is not a quarterly-driven business, right? There are so many things which lead into this particular program, right, which leads to revenue realization, that, you know, yearly targets are the ones which we focus on, okay? Okay, so... I don't know what is the basis, but, you know, at the end of the year, we will deliver what we say we are looking to deliver. That's our, that's what drives us.

Very helpful, sir. We'll get back in queue.

Thank you. The next question is from the line of Sherom Kapoor from Jefferies. Please go ahead.

Hi, sir. Thanks for the opportunity. My question is on some of the guidance that you've given for the next five years, talking about 6-7X revenues versus FY26. Apologies if I might have missed this earlier, but is this purely on the defense side? Are you guiding for this X of the space and meteorology business that's going to be spun off? I just want to understand the guidance that you're giving going ahead, even on all the orders, and, you know, a few quarters back, you had given some guidance on what the sales could be in FY29 and FY30 as well as 2,000, 2,200 crores. Is that all purely going to be in the defense company? Does that include your space business as well?

Actually, So, we broke it up into constituent parts of the same thing, right? So, barring the next two years, there's nothing from space. So, the space portion is only reflected in the existing 4,300 crores that we spoke about, okay, the current order book. And the recurring business which will come in, but which we did not take into account here in this calculation of 8,000 to 10,000, okay? So mostly, it is defense side that we are talking about. Space we'll address as and when we get long, separate it out, you know?

Right. So, that's 6 to 7x in the next five years. That will be 6 to 7x of your FY26 defensives. Is that understanding broadly correct?

See, guys, right now, when we talk of Astra, we are talking of Astra as a unified company, right? Okay. The separation has still not happened. So, till the time it happens, we are talking of a combined business. So when we talk about, let's say, 1,057, which was the revenue last year, okay, that is both, actually, is both the companies combined, right? So when we are talking of an order book to the tune of 8,000 to 10,000 crores order intake over three to four years, we are talking of multiples of the combined 1057 entity. And so similarly, execution is based on the historical number of 1057, which was, I guess, which took 33 years in the making, right? And now this is the growth phase which we are expecting.

Right, sir. That's clear. And just secondly, to ask about your space and meteorology business, so would it be fair to look at the business as a function of the kind of capital investments that the government is making in the space and meteorology, or are there any opportunities beyond government programs that we are looking at in this business? Just want to understand currently as well as from a future point of view.

Yeah, so our current business is focused. Solely on the Government of India programs. Going forward, we will be, we are, as I said, within the first six months of the space business coming on its own, we would be launching our own satellite, which will be a part of a consortium of satellites. Okay. So there is a data monetization business, which is substantial. If you think about that. When we talk of data being the new gold or all the so-called talk which used to happen, it has been so far confined to our personal databases, financial sector, etc., etc., right? It is now space where the inflection point has come, where space will be able to get industrial-grade, industrial-sized databases and ability to process that into tangible, defined outcomes. We hope to play on that. And thirdly, we want to be, we desire to be a part of the international supply chain. But we'll detail all these things out probably two quarters down the line, you know, as we finalize our numbers and are much more certain of what we are doing. We hope to come to you with something real tangible. You know, when we speak to you, we try and keep it, we try and keep our conversations. Two, what is actually in the bag and highly visible with limited scope for error. That's exactly what we want to do for space also. So all these multiple strategies shall tie in together, but there's going to be much beyond the government of India programs, hopefully.

Understood, sir. If I could just squeeze in on your meteorology business. So, of course, the last couple of years, we've seen a sharp scale up, even on the government end with, you know, Mission Mossom coming through. And there's been a ramp up in the budget as well for FY27 driven by Mission Mossom. How long do we expect this to continue? Are we going to sort of see FY28 onwards that kind of start to trend downwards again? Or is this a sustainable program where this level of capex by the government could sustain for the next few years?

You asked us about our opinion. And we actually were discussing amongst a few of our directors the other day. We, somebody, one of our directors drove down from Haridwar, okay? And the kind of situation which exists on the roads, right, okay, where, you know, people are cut off, right, okay, because of landslides, because of, you know, extreme weather and extreme rains, and climate change, you know, you have to be a believer in that if we are believers, right? So given all these things combined, I think, you know, there should be and there ought to be, and from indications out there will be. A sustained focus on meteorological budgets. So we hope to capitalize on that.

So, just to add to Vathim, what he had mentioned is, basically, apart from Doppel Weather Radar, we also are trying to develop new radars in this particular segment, like Avalanche Radar, and, you know, the weather forecasting applications we are trying to enhance has to provide a complete solution. So, our journey is on, and while addressing this requirement of IMD, we are trying to provide a complete solution on the weather platform, and that probably we will get ready by next year or two years. So, that way, the demand will be there for next, you know, eight to ten years.

Understood, sir. Thank you so much, and all the best.

Thank you.

Thank you. Ladies and gentlemen, due to time constraints, we take that as the last question of the day, and now I would like to hand over the conference to the management for closing comments.

Yes, thank you, and thank you all for being part of the discussions. I also would like to share with all of you, this is my last interaction with you as a managing director of the company. I am passing on the baton to Mr. M. Viridi. I'm sure that they will be able to deliver much more than what has happened in the last couple of years.

As you have created a legacy, you have created a legacy, right? And I think it's going to be, you leave us with a very strong footing, and we hope to live up to your expectation. And seriously, thank you for everything.

Thank you.

Thank you. On behalf of Asha Microwave Product Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.