Astra Microwave Products - Sound Fundamentals; Order Intake Crucial; Result Update Q3FY15 ::Edelweiss

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Astra Microwave Products’ (AMP) Q3FY15 result was tad better than our expectation, led by strong operating performance. Revenue dropped 19% due to higher export deliveries along with improvement in domestic execution. EBITDA margin, at 15.7%, jumped 670bps driven by better product mix. Strong operating performance helped the company report PAT growth of 16%. The performance was in line with the company’s guidance wherein it had estimated H1FY15 to be strong given the delivery schedule (mainly exports). Order book at INR5.7bn (down 16% QoQ) provides limited visibility, as intake remains elusive for the sector. Order intake during the quarter stood at INR0.5bn, with likelihood of uptick in ordering activity over next few quarters. It is imperative for AMP to report major intake in coming quarters to improve revenue visibility. We believe the company is well placed to tap the large defence opportunity.

Exports continue to drive execution; margin catapults 670bps

AMP’s execution was better than expected as revenue dropped 19% (against 25% decline expected) in Q3FY15. Exports made up 63% of revenue. EBITDA margin catapulted 670bps to 15.7% due to better product mix. PAT, at INR127mn, grew 16% due to strong operating performance despite decline in revenue during the quarter.

Order backlog at INR5.7bn; improvement in order intake crucial

With mere INR500mn intake during Q3FY15, AMP’s order book dipped 16% QoQ to INR5.7bn, providing limited visibility. The 9mFY15 intake stands at INR1.2bn (down 68% YoY). We expect uptick in ordering activity over next few quarters as management remains confident of uptick in Q4FY15, crucial to improve revenue visibility.

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https://www.edelweiss.in/research/Astra-Microwave-Products--Sound-Fundamentals;-Order-Intake-Crucial;-Result-Update-Q3FY15/28207.html