Astra Microwave Q2 FY27 Earnings Call: Bags Rs. 1,844 Cr Uttam Order, Guides 26-28% EBITDA Margin (ASTRAMICRO)

Record Half-Yearly EBITDA and PAT on Favorable Mix

• H1 FY27 revenue of Rs.437 crore — with EBITDA of Rs.120 crore (27.4% margin) and PAT of Rs.57 crore (13% margin); per MD M.V. Reddy, the highest-ever half-yearly EBITDA and PAT in absolute terms and margins, driven by favorable product mix from domestic defense production orders and better opex control.
• Standalone order book of Rs.3,937 crore and consolidated order book of Rs.4,708 crore as of 30 September 2026, including Rs.251 crore of service orders, which management described as typically more accretive to margins.
• Q2 FY27 order inflows of Rs.2,036 crore — Rs.1,967 crore from radars, Rs.36 crore from electronic warfare, Rs.17 crore from telemetry, and Rs.16 crore from space; the key win was a Rs.1,844 crore Uttam AAU order from HAL, plus RF subsystem and antenna orders from DPSUs such as BEL and from ISRO.
• Counter-drone radar delivered to DRDO for final integration and trials during the quarter; several surveillance radars, next-generation RF seekers, wideband jammers, and enhanced DWR programs are expected to move to field trials from Q4 FY 2026-2027 onwards.
• M.V. Reddy took charge as MD on 1 October 2026 — the space business is being demerged into Astra Space Technologies Limited, leaving Astra Microwave focused on defense and aerospace (radar, electronic warfare, telemetry, internal security).

Uttam Anchor Order, QRSAM Visibility, JV Momentum

• Rs.1,200 crore of additional orders visible in FY 2026-2027 — of which Rs.600 crore is already concluded and expected to be announced in December 2026.
• Consolidated order book expected at ~Rs.5,500–5,600 crore in FY 2027-2028 per management; Atim Kabra separately cited close to Rs.5,500 crore+ with a possibility of crossing Rs.6,000 crore, excluding the main QRSAM order.
• Uttam AAU timeline revised — previously 12 units by "September 27", now 12 units by "March 28" (FY 2027-2028), attributed by MD M.V. Reddy to a delay in contract signing and order placement, with the revised schedule worked out with the customer; initial supply volume of ~25 units in FY 29, thereafter 33 to 34 units (period unspecified).
• HAL wanted ~4 units by March 2027 — management committed to 2 units by March 2027 and is trying to deliver 4; the contract's first milestone is 12 units by "March 28". Management does not think HAL's own delivery delays will push the milestone and affirmed it is ramping supply chain and inventory.
• QRSAM main contract timing — MD M.V. Reddy said BEL is hopeful of the contract between December 2026 and March 2027, with Astra expecting its own contract within 3-4 months after that; QRSAM execution is "in all probability" to start in FY 2027-2028 or FY 2028-2029. Small FOPM-version QRSAM orders from BEL are in execution in Q3 FY 2026-2027 and Q4 FY 2026-2027.
• JV AARC Limited (50% owned, with Rafael of Israel) — H1 FY27 orders of Rs.413 crore and sales of Rs.334 crore, order book of Rs.913 crore, and over Rs.500 crore of pipeline expected in the next two quarters; management is confident of meeting the Rs.600 crore-plus FY 2026-2027 revenue guidance given at the start of the year. Reddy separately said JV execution is expected at ~Rs.600 crore in FY 2026-2027 with a target of ~Rs.1,000 crore in FY 2027-2028, and another Rs.1,200–1,500 crore of orders expected in the next 6-8 months.
• Sukhoi-30 AAU program — first prototype radar hardware delivered to DRDO, with firmware and software integration ongoing; DRDO expected to commission the radar by FY 2027-2028, and Atim Kabra said orders should be looked for by calendar year 2029.

Counter-Drone, Bird Detection and Low-Level Radars

• Bird detection radar is ready and under demonstration — first RFP bid submitted; MD M.V. Reddy sees this radar alone at roughly Rs.200–300 crore over the next 2 to 3 years (FY 2027-2028 onward).
• Low-level lightweight radar developed against an Indian Army requirement — Reddy cited visibility of at least close to Rs.1,000 crore over the next 5 years (FY 2027-2028 onward), with applications across Indian defense.
• Counter-drone market projection of Rs.3,000–5,000 crore over the next 5 years (FY 2027-2028 onward) per Reddy; the company hopes to win at least 30% of the market that opens up through competitive bids. The offering is currently soft-kill only (jammer); hard-kill capability is planned "in years to come" and technology is changing quickly.
• DRDO TOT for the counter-drone radar was given to 7 companies apart from Bell — Astra is currently the only company, apart from Bell, making the product under that TOT and has started deliveries.
• Government of India reports indicate counter-drone procurement potential of Rs.30,000–50,000 crore — per Atim Kabra, "dependent on when funds are available and what is procured"; timing not tied to a specific FY. Kabra described counter-drone demand as a global opportunity driven by drone warfare, spanning civilian and military segments, and declined to put a firm number on the total market.
• Airborne SDR market of close to Rs.5,000 crore minimum and ground segment close to Rs.3,000 crore over the next 3 years — per MD M.V. Reddy, both moving into the IDDM category; these are industry market estimates, not company guidance. The manpack VHF-band SDR missed the first procurement phase after software bugs in the last trial; it has been re-demonstrated to the user and discussions for the second phase have begun. Army first-phase procurement went to Alpha Technologies Private Limited; the company's airborne SDR orders are already won.

26–28% EBITDA Band; Cash Conversion Still a Work-in-Progress

• 26–28% EBITDA margin guided — Atim Kabra said this is comfortable to deliver over the next 2-3 years without "upsetting the apple cart"; management is "comfortable guiding" to this band with any better outcome described as upside, and said the fixed cost base will not rise dramatically so a large share of incremental business should flow to the bottom line.
• Free cash flow of "in excess of Rs.300 crores" generated in FY 2025-2026 — per Atim Kabra; FY 2026-2027 exit free cash flow guided to a range of Rs.250–350 crore, though he declined to give an exact number, saying it "cannot" be given at this point.
• Receivables at about 200 days — CFO D. Srinivasa Rao said the company is working to collect early and expects an operational surplus of Rs.150 to 300 crore in FY 2026-2027, partly used for capex and high-interest costs; the company is targeting zero cash credit and working capital limits by the end of FY 2026-2027.
• Cash conversion cycle reported at 374 days — Reddy targets 360 to 370 days and aims to bring it down to around 350 days by the end of FY 2026-2027; Rao is targeting 350 days (period unspecified) but noted geopolitical or other issues could affect progress over the next six months. Kabra said the target is for receivables and inventory to be broadly in line with sales within the next 18 months.
• Inventory buildup explained by component stockpiling — Reddy attributed higher inventory to geopolitical situation-driven lead-time increases for some components, stockpiled to protect deliveries in Q1 FY 2027-2028; Kabra said the next two quarters of FY 2026-2027 will carry heavy deliveries and described cash realization as "very nice".
• No slow-moving orders — per M.V. Reddy, some contracts such as Uttam have a 4-year execution cycle and others 2 to 3 years, with timelines set by customers; the company is not behind schedule.

ASTL Spin-Off and a Rs.3,000 Crore Ambition

• One ASTL share for each Astra Microwave share — per Strategy Director Atim Kabra, the demerger of Astra Space Technologies Limited will be at no cost, so holdings mirror across both companies.
• Space order book clarification — the Rs.3,937 crore current order book includes space orders of Rs.220 crore as on date, not Rs.900 crore; the Rs.900 crore figure is the expected year-end carry-forward space and weather order book at the end of FY 2026-2027 (March 2027).
• Space content — the company estimates it supplies 30-40% of ISRO remote sensing payload hardware and 25-35% of communication payload hardware.
• Weather business — order book of about Rs.900 crore and inquiry pipeline of about Rs.2,000 crore; plan of Rs.2,250–2,500 crore cumulative revenue over the next four years, with annual revenue reaching Rs.800–900 crore by FY31, excluding global supply chain opportunities.
• Revenue path guided at about Rs.2,000 crore in FY29 (plus or minus Rs.100 crore) and Rs.3,000 crore "in a few years thereafter"; FY27 guidance is top-line growth of about 15%, targeting Rs.1,300–1,350 crore revenue. Steady-state EBITDA margin guided at 26-28% (period unspecified). Defense order base expected to build to Rs.8,000–10,000 crore over the coming years (period unspecified).
• On scaling to Rs.10,000 crore of sustainable recurring revenue — Kabra said there is "no clear answer", describing the outcome as a function of the company's ambition and abilities; he cited an estimate derived from Claude (an AI tool) putting current demand for the company's product lines at "in excess of 750 million dollars annually" (current, FY 2026-2027), and said competing with global players such as Elbit and Hensoldt will take time, calling it "an attitudinal shift" and a "multi-decadal opportunity".
• International and partnership traction is early-stage — good leads and prototype design and development discussions with a few international customers, and interest in the MMIC portfolio from the US and Europe, which may translate into business in the next couple of years; management noted customer qualification and order conversion can take time. Global partnership talks are underway with no specific agreements disclosed.

Government Tailwinds Cited by Management

• Government's draft Defense Acquisition Procedure and updated Defense Procurement Manual — introduce up to 60% local content mandates and earmark 75% of capital acquisition budgets for domestic industry.
• Government's national targets — Rs.3 lakh crore in annual defense production and Rs.50,000 crore in defense exports by 2029.
• Government aims to grow the Indian space economy from $8 billion to $44 billion by 2033 — per Atim Kabra; the global space economy was cited at $650–700 billion today, with a McKinsey report projecting $1.8 trillion by 2035.
• Atmanirbhar Bharat indigenization creates ample opportunity for Indian companies — per MD M.V. Reddy, who said building global products and going to international markets is "a matter of year or two" away (from Q2 FY 2026-2027).
• Air Marshal Bhadoriya's remarks cited by Kabra — the AMCA program began in 2006-07 with a first prototype targeted for 2035; Kabra noted technology gaps in India's defense framework that need to be filled on accelerated timelines.