Stock to Buy: Defence stock that can deliver returns of 61%; Recommended by Goldman Sachs

Synopsis: Goldman Sachs has recommended a “Buy” rating on Astra Microwave Products Limited with a target price of ₹1,455, suggesting an upside potential of 61.18 percent. 

This Defence Stock, engaged in designing, developing, manufacturing, and supplying RF/microwave components, sub-systems, and systems for defence, space, and telecom applications, is in focus after Goldman Sachs gave a target of Rs. 1,455, which has an upside potential of 61.18 percent.

With a market capitalization of Rs. 8,610.56 crore, the shares of Astra Microwave Products Limited were currently trading at Rs. 906.90 per equity share, down nearly 0.47 percent from its previous day’s close price of Rs. 902.70. 

What is the News?

Goldman Sachs, a prominent brokerage firm, has recommended a “Buy” call on Astra Microwave Products Limited with a target price of Rs. 1,455 per share, indicating an upside potential of 61.18 percent from its previous day’s close price of Rs. 902.70. 

Goldman Sachs has given a positive view on Astra Microwave Products Limited, citing its strong capabilities in radar electronics, electronic warfare, and communication systems. The brokerage expects profitability to improve with the rise in domestic defence orders. It also expects free cash flow to turn positive by FY27, supporting the positive outlook and target price.

Management Guidance

Astra Microwave Products Limited’s management has guided that the company expects full-year FY26 revenue in the range of Rs. 1,150-1,200 crore. They also stated that margins will be maintained at least at current levels. Over the medium term, the company aims to achieve healthy gross margins of around 45-50 percent.

Order Book

Astra Microwave Products Limited reported a strong order book of Rs. 1,916 crore as of 30 September 2025. The largest share comes from the Defence sector, which makes up about 70 percent of the total orders. Space contributes around 12 percent, meteorological projects account for 11 percent, and exports form the remaining 7 percent. This shows the company’s heavy focus on defence-related work.

During the period from June to September 2025, the company started with Rs. 1,891 crore, received new orders worth Rs. 238 crore, and executed orders worth Rs. 213 crore. After these movements, the total order book increased slightly to Rs. 1,916 crore.

Revenue Segments in Q2 FY25

The revenue break-up for Q2 FY26 shows that Astra Microwave Products Limited is heavily dependent on the defence segment, which contributes 77.4 percent of total revenue. Exports, including deemed exports, form 14.2 percent. Meteorological accounts for 5.8 percent, Space contributes 2.0 percent, while Others make up a small 0.6 percent of revenue.

Client Base and Defence Programs

Astra Microwave Products Limited has a strong and diversified client base led by India’s defence and space ecosystem. Its key customers include the Ministry of Defence, DRDO, ISRO, HAL, Bharat Electronics, and leading private players like Larsen & Toubro, Adani Defence, and Tata group companies. 

The company plays a major role in upcoming defence programmes such as the Light Combat Aircraft (LCA), AAAU for Uttam AESA Radar, AEW&CS, AATRU for ASPJ, and LRMFR. It also contributes to long-range radar systems, airborne surveillance platforms, and advanced radar modules, strengthening its position in high-end defence electronics.

Company Overview

Astra Microwave Products Limited was founded in 1991 in Hyderabad, Telangana, by a team of scientists specializing in RF and microwave technologies, and focuses on self-reliance in defence electronics. The company designs, develops, manufactures, and supplies RF/microwave components, sub-systems, and systems for defence, space, telecom, and meteorology.

The company engages primarily in defence applications like radars, electronic warfare (EW), missiles, and telemetry, alongside space, telecom, meteorology, and civil communications. It provides end-to-end solutions from concept to production, using in-house engineering for high-value items such as transmit/receive modules, filters, amplifiers, and antennas.

Astra Microwave Products Limited’s products also cover radar electronics, satcom terminals, GNSS receivers, signal processing units, and MMICs (monolithic microwave integrated circuits) for applications in VHF, UHF, and microwave bands.

Recent quarter results

Coming into financial highlights, Astra Microwave Products Limited’s revenue has decreased from Rs. 230 crore in Q2 FY25 to Rs. 215 crore in Q2 FY26, which is a drop of 6.52 percent. The net profit has also decreased by 4 percent from Rs. 25 crore in Q2 FY25 to Rs. 24 crore in Q2 FY26.

Astra Microwave Products Limited’s revenue and net profit have grown at a CAGR of 17.61 percent and 28.47 percent, respectively, over the last five years. In terms of return ratios, the company’s ROCE and ROE stand at 18.7 percent and 14.4 percent, respectively. Astra Microwave Products Limited has an earnings per share (EPS) of Rs. 17, and its debt-to-equity ratio is 0.24x.

Written By – Nikhil Naik

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