Motilal Oswal has lifted its price target for Astra Microwave to Rs 1,900, citing a record Rs 43 billion order book despite a weak Q1 FY27 performance. While major contracts like the HAL order provide growth visibility, the company faces short-term pressure from execution delays and declining profits. Investors are tracking how quickly the company can turn this order book into actual revenue.
Motilal Oswal has maintained a 'Buy' rating on Astra Microwave Products and raised its target price to Rs 1,900, up from Rs 1,715. This update comes even after the company reported a softer-than-expected first quarter for the fiscal year 2027 (Q1 FY27). The brokerage’s outlook is heavily tied to the company's strengthening order book, which now stands at a record Rs 43 billion.
Order Book vs. Performance
The primary driver for the positive outlook is the significant order inflow, highlighted by a Rs 22 billion contract from Hindustan Aeronautics Limited (HAL) for the Uttam Radar. This single contract has effectively doubled the company’s total order book. However, the brokerage noted that these strong order inflows have not yet translated into better short-term financial performance. In the first quarter of fiscal year 2027, Astra Microwave saw its standalone revenue fall by 11% year-on-year to Rs 176 crore, while profit after tax (PAT) dropped by 24% to Rs 10 crore. The brokerage attributed these weaker numbers primarily to delays in project execution.
Strategic and Leadership Changes
Beyond the financials, the company is undergoing structural changes. The board has approved the demerger of its space, meteorology, and hydrology businesses into a separate entity, a process that is currently moving through regulatory approvals. Additionally, the company is preparing for a leadership transition, with M.V. Reddy set to take over as the Managing Director on October 1, 2026. These moves suggest a shift in the company’s organizational focus, which investors will likely monitor for potential efficiency gains.
Risks to Consider
While the order book provides a strong foundation for future revenue, investors should be aware of several risks. The most immediate concern is execution delay, which directly impacted the recent quarterly margins and profits. If supply chain issues, technical inspection requirements, or customer approval processes continue to stall project timelines, revenue recognition may remain lumpy. Additionally, the stock has experienced a significant rally year-to-date, and investors may want to monitor whether current valuations accurately reflect the timeline of when these massive orders will actually be executed and generate cash. The success of the upcoming demerger and the smooth transition of leadership are also key areas that will influence long-term stability.