Motilal Oswal bull case projects nearly 60% upside in this 'long-term' defence opportunity

Shares of Astra Microwave Products Ltd. gained on Wednesday, December 17, after brokerage firm Motilal Oswal Financial Services initiated coverage on the stock, projecting a potential upside of 24% from its previous close.

Motilal Oswal initiated with a "buy" rating on Astra Microwave Products, with a price target of ₹1,100 apiece.

The price target values Astra Microwave at 38 times its estimated December 2027 earnings, which is a 15% discount compared to the target multiple of larger defence PSUs, due to its smaller size in comparison.

Motilal Oswal said it considers Astra Micro to be a long-term opportunity in defence electronics and anticipates its revenue growth to accelerate between financial year 2027 and financial year 2030, as larger orders are awarded by the defence ministry and defence PSUs.

Astra Micro designs and manufactures high-quality radio frequency and microwave modules, subsystems, and systems in India. The company is moving from being a subsystem-level player to a complete system solutions provider and is eyeing opportunities from active electronically scanned array (AESA) radar, Uttam radar, meteorological orders, repeat orders from the navy, and counter drone orders over the next few years, the brokerage said.

Astra Micro's order book was at ₹2,200 crore as of September 30, 2025. Its revenue grew at a Compounded Annual Growth Rate (CAGR) of 13% between financial year 2021-2025. Driven by a changing business mix, the company improved its Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) margin to 25.6% by financial year 2025, from 12.3% four years ago.

Motilal Oswal expects the company's revenue to grow at a 18% CAGR over financial year 2025-2028 and margins improving by 40 basis points to 26% over the same timeframe. Profit After Tax (PAT) during this period may grow at a 23% CAGR, the note said.

The key risks and concerns include delays in awarding of larger platforms, lower-than-expected spending from the government on the defence sector and supply chain issues, the brokerage said.

Motilal Oswal's bull case target for Astra Micro is at ₹1,430, which implies a potential upside of nearly 60% from current levels.

All seven analysts who have coverage on the stock have a "buy" rating.

Astra Micro shares were up 0.8% at ₹893.4 apiece around 11.10 am. The stock has gained 14.8% this year, so far.

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