ASTRAMICRONSEQ4 FY22May 26, 2022

Astra Microwave Products Limited

5,603words
124turns
13analyst exchanges
2executives
Management on call
S.G. Reddy
MANAGING DIRECTOR, ASTRA MICROWAVE PRODUCTS PRIVATE LIMITED
M.V. Reddy
JOINT MANAGING DIRECTOR, ASTRA MICROWAVE PRODUCTS PRIVATE LIMITED
Key numbers — 40 extracted
rs,
e are in this business of supply of RF and Microwave components and subsystems for the last 32 years, serving market scenario for Defense, Space, Telecom, Meteorology, and civilian applications. Over
Rs. 1,546 crore
ystems to high value-added systems. The company was able to create a solid order book of close to Rs. 1,546 crores on backup over a deep domain expertise. With our proven track record, we are very well placed to
Rs.3,000 crore
way. I shared with you some numbers in the last conference call, we are confident to book about Rs.3,000 crores worth of orders by the year 2025 and out of a market potential of about Rs.14,500 crores up to y
Rs.14,500 crore
k about Rs.3,000 crores worth of orders by the year 2025 and out of a market potential of about Rs.14,500 crores up to year 2028. Our order book as of 31stMarch 2022 is at about Rs. 1,546 crores which is execu
Rs. 1,546 crore
ential of about Rs.14,500 crores up to year 2028. Our order book as of 31stMarch 2022 is at about Rs. 1,546 crores which is executable in the next 12 to 13 months. And during the year, the company has booked abo
Rs. 760 crore
hich is executable in the next 12 to 13 months. And during the year, the company has booked about Rs. 760 crore orders. It does Rs. 77 crore order coming in Q4. We see newer opportunities in the area of Anti-D
Rs. 77 crore
12 to 13 months. And during the year, the company has booked about Rs. 760 crore orders. It does Rs. 77 crore order coming in Q4. We see newer opportunities in the area of Anti-Drone, EW systems, Satellites,
Rs. 735 crore
s. Coming to the specific financial performance of the company for the year ended, we did about Rs. 735 crores of sales after adjusting the late delivery charges and other adjustments which are pertaining to
Rs. 589 crore
harges and other adjustments which are pertaining to the accounting standards. This is as against Rs. 589 crores of business what we did about in the year 2021 which shows a growth of about 25% year-on-year. E
25%
ainst Rs. 589 crores of business what we did about in the year 2021 which shows a growth of about 25% year-on-year. EBITDA for the year stood at Rs.87 crores as against. Rs.64 crores for the year, fo
Rs.87 crore
out in the year 2021 which shows a growth of about 25% year-on-year. EBITDA for the year stood at Rs.87 crores as against. Rs.64 crores for the year, for the previous year. The margins stands at abou
Rs.64 crore
h shows a growth of about 25% year-on-year. EBITDA for the year stood at Rs.87 crores as against. Rs.64 crores for the year, for the previous year. The margins stands at about 11.8% as against 10.9%
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Guidance — 20 items
S.G. Reddy
opening
“We believe that going forward; our revenue mix will be in favor of domestic market as compared to the previous years where it is skewed in favor of exports which is a high volume and a low margin business.”
S.G. Reddy
opening
“Therefore, we believe that going forward the profitability of the company is likely to improve in a significant way.”
S.G. Reddy
opening
“Going forward for the year 2023, we are confident that we will be able to achieve about Rs.”
S.G. Reddy
opening
“This year the composition is likely to be more in favor of domestic which is likely to contribute about 65% and the rest will be coming from exports.”
Ankit Agarwal
qa
“And so, as I understand going forward, they are going to be targeting higher sales from domestic, but do we see or going into more high value product, higher value products on the export side other than say like build to print orders.”
S.G. Reddy
qa
“Going forward, definitely the raw material cost will be much lower compared to the overall sales of the company simply because domestic sales are going to be higher compared to the export sales.”
Ketan Gandhi
qa
“Sir, if I am not wrong you have said next year guidance around Rs.”
Ketan Gandhi
qa
“And sir, any guidance on the order book can be received during this financial year.”
Abhijit Mitra
qa
“Just to understand the order book guidance that you see for the next three years, how much of that would be radars and what are the near-term execution orders that you see in radars and also within the defense capital acquisition budget of the country, how much would be dedicated towards radars, any broad idea?”
M.V.Reddy
qa
“With regard to the projects are concerned , we had informed investors that, we have been developing AAAU for AESA radars, which is in final stage of development and will be delivered within couple of weeks to DRDO.”
Risks & concerns — 3 flagged
We saw like Margins hit this quarter, so was it on account of the raw material pressure we are witnessing?
— Bhavik Shah
Are we facing some RM pressure in Q1 like?
— Bhavik Shah
Are we facing any challenge is in our execution of the order book?
— Bhavik Shah
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Q&A — 13 exchanges
Q
You all have an order book of about Rs. 2,100 odd crores. And can you get the breakup between domestic and exports?
S.G. Reddy
You mean the order book you are assorted to is consolidated one? Yes. Our standalone is only about Rs. 1,500 crores. And in that how much would be, so the remaining would be coming from the software-defined radio JV? Yes. So, within the Rs. 1,500 crores how would it be between domestic and exports ? Domestic is about Rs. 1,002 crores and the rest is our exports around Rs. 540 crores. So, the domestic and export both of them are on an average executable over 12 to 14 months or there would be, the time span would be different for both. Out of this Rs. 1,500 crores, we are trying to execute about
Q
My first question is regarding in the past, you have mentioned that for opportunities like on the Anti-Drone systems, Electro Optics, there may be requirement to raise funds. Where are we on this?
S.G. Reddy
No. This is still going on. Electro Optics what we mentioned earlier is that we are in advanced stage of discussions with our JV partner, and these announced the potential business opportunity for our JV company. That is what we have mentioned to you. The discussions are still going on but, as and when these things materialize and if there is a requirement to raise funds definitely, we will do that. My second question is, can you share some updates on Astra Rafael JV in terms of order book and its performance in the year? Coming to that. Arc revenues for the year are about Rs. 25 crores. We ha
Q
So, I have a couple of questions here. So first one is around the geographic mix, can you get some details with respect to margin from domestic and export sales?
S.G. Reddy
You mean for the current year? Yes, current year. That I have already mentioned, EBITDA margins for the exports is about 3% and the domestic is about 23%. And so, as I understand going forward, they are going to be targeting higher sales from domestic, but do we see or going into more high value product, higher value products on the export side other than say like build to print orders. Actually, we are also discussing with various OEMs in US and the other territories. In fact, one of the customers we are in a very active phase of discussions to develop subsystems for one of their air-borne ra
Q
Sir, if I am not wrong you have said next year guidance around Rs. 850 crore of turnovers and PBT of 85 crores . That is a growth of around 60%-65% in the PBT. Am I right?
S.G. Reddy
Yes. You are right. And sir, any guidance on the order book can be received during this financial year. Yes. Mr. M.V.Reddy will answer that. Order book last year that is FY22.You want to know the details of order book for the current year? Yes, order book guidance. For the current year we are targeting about Rs. 850 crores worth of orders inflow. From radar segment, we have a clear visibility to book orders worth of Rs. 475 crores, from EW segment app Rs. 125 crores and in communication and telemetry segments together around Rs. 150 crores. Overall defense biz is close to around Rs. 740 crores
Q
Just to understand the order book guidance that you see for the next three years, how much of that would be radars and what are the near-term execution orders that you see in radars and also within the defense capital acquisition budget of the country, how much would be dedicated towards radars, any broad idea? These are the three questions they have and also some of the competitors are also started talking up for potential orders in the radar segment especially coming from HAL. So, I am just trying to understand for this entire LCA platform barring Uttam AESA, any other electronic warfare, we
M.V.Reddy
We have potential to book orders around the Rs. 600 crores, out of that we are considering Rs.400 crores to Rs.475 crores from radars segment as I’ve mentioned earlier and from electronic warfare is about Rs. 125 crores. With regard to the projects are concerned , we had informed investors that, we have been developing AAAU for AESA radars, which is in final stage of development and will be delivered within couple of weeks to DRDO. And we are expecting the production orders of AAAU’s of AESA Uttam radar from FY24 onwards. Also, we have been working on a synthetic aperture radar, digital active
Q
I just wanted to know that regarding orders from DRDO what is the process exactly followed like designing or development or how much of it is done by us and how much of it is done by DRDO or outsourced and are these developments being done indigenously or how does it go?
M.V.Reddy
Are talking about subsystems or for a system? Both, systems, subsystems both. Basically, DRDO floats tenders with the specifications of the subsystems and of course we are competing in competition with the other players in this area. Based on technical competency companies will get short-listed and once we get qualified and if we are commercially competitive, contracts will be awarded to the L-1 bidder. This is the process what DRDO is following and even systems also in similar process being followed after evaluating companies and identifying potential companies to develop and execute projects
Q
We saw like Margins hit this quarter, so was it on account of the raw material pressure we are witnessing?
S.G.Reddy
In this quarter again, exports is a significant one where the value addition is very low and also couple of big contracts from Israeli customer got closed in the current quarter. So, there were some adjustments to be carried out in terms of the bill of materials because all these contracts carry a bill of material guarantee from either side. If there is an increase of bill of material, I will be compensated. If there is a saving in bill of materials, then I have to repay to my customer. So, because of that adjustment, the export revenue, export profitability got a hit in the quarter. So, that
Q
My question is, as we are trying to transform from a subsystem player to a system player? Want to know sir, how much order book we have bought from the whole system platform?
M.V.Reddy
The whole system platform as we have mentioned we booked some orders for the instrumentation radar which is close to approximately Rs. 150 crores. Out of Rs.1,500 crore. Yes. This is Rs. 150 crores from systems. And as you have already mentioned just a few minutes back when I am looking after this quarter result, your top-line is not moving up. Is there any execution issue as you have mentioned the semiconductor could be one of the reasons? Is there any other issue for which the execution is not up to the mark? I am talking about year-on-year basis. Actually, I have said few contracts which we
Q
I have a couple of questions. My first one is there is a significant increase in your other expense as compared to last year. Are there any one off in this or and what kind of a margin do you expect in the future?
S.G.Reddy
In the current year, order book as I mentioned most of them are from the domestic sector except Rs. 55 crores in Exports the rest are from the domestic sector which has a reasonably good contribution or margin. In this the breakup, I think I have already given, but anyhow I will repeat for this about Rs.475crores from the radar and Rs. 125 crores from the EW and about Rs. 150 crores from the communication. And out of this Rs. 1,500 crores of this order book, can you give, can you provide a breakup of this? From defense is about Rs. 754 crores in that radar is around Rs. 409 crores and electron
Q
I have two questions. Firstly, in the presentation the company has mentioned that the business potential till 2028 is Rs. 14,500 crores. So, just wanted to understand the basis of coming up to this quantum of business potential and the foresight for the next six years?
M.V.Reddy
Based on the opportunities what we have seen in our business domain especially in the radar and in the electronic warfare naval segment. There is ample of opportunities for companies like us to grow in this domain. Whatever development contracts we have executed in the past are going for production like Army Akash and then Astra program. And few Radars like fire control radar which is of course being executed by BEL and then Primary radar of AEW&C program which has been sanctioned. The EW segment we have production orders from BEL, most of them are from Navy and army EW projects. So, in that a
Q
Sir, I am looking at the presentation slide22 where you have mentioned about that by doing extensive investments to strengthen our position as a system vendor exploring the areas in the Anti Drone, EW satellites, STR then. So, I believe a company will be in requirement of the additional capital, any plan to raise the capital by way of equity issue or some other means in the near future?
S.G.Reddy
Yes. We have, we have talks on those lines but as of today I don't have any firm plans to share with you but going forward yes, we are aware that we are in need of some capital resources. Those ideas have to be implemented. So, can you please mention the time line? Say one year or two year or six months. Probably in one year's time we should be, we have to take a call on that, and we come out with some proposal.
Q
Sir, I want to know about the finance costs in consolidated profit and loss statement. Finance costs had reduced. What is the reason?
S.G.Reddy
Finance cost is reduced because the company was able to rotate the funds better and utilization of the overdraft facility for day-to-day operations has come down compared to the previous year. So, that is the reason why it has come down. One more thing government has declared that performance bank guarantee will not be quite more for Defense Company. What is your view on this? I think as of today, they have only reduced the percentage of the performance guarantee what was submitted earlier. Earlier they used to ask for about 10%, now that got reduced to around 3% or 5%. I don't think totally i
Q
Thank you everybody for joining the call. We wish to see you at the end of Q1. Thank you very much.
Management
Speaking time
M.V.Reddy
25
S.G. Reddy
16
Moderator
15
S.G.Reddy
15
Bhavik Shah
12
Akshay Kothari
9
Vivek Ganguly
6
Ketan Gandhi
5
Ankit Agarwal
4
Abhijit Mitra
4
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Opening remarks
S.G. Reddy
Thank you and good afternoon, everybody. A warm welcome to all of you for the post results earnings call of our company. I with my colleague Mr. M.V. Reddy - Joint Managing Director and SGA our investor related advisors. The Results and Investor Presentation for Q4 and year ended FY22 are uploaded on our company website and stock exchanges. I hope you had a chance to look at it. As you are aware we are in this business of supply of RF and Microwave components and subsystems for the last 32 years, serving market scenario for Defense, Space, Telecom, Meteorology, and civilian applications. Over the years, our company has moved from components and subsystems to high value-added systems. The company was able to create a solid order book of close to Rs. 1,546 crores on backup over a deep domain expertise. With our proven track record, we are very well placed to capture a bigger pie of the growing defense market which is growing at a very fast pace on back off various government’s initiative
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