ASTRAMICRONSEQ3 FY'2022February 25, 2022

Astra Microwave Products Limited

5,117words
69turns
12analyst exchanges
3executives
Management on call
S. Gurunatha Reddy
MANAGING DIRECTOR, ASTRA MICROWAVE PRODUCTS LIMITED
M. Venkateshwar Reddy
JOINT MANAGING DIRECTOR, ASTRA MICROWAVE PRODUCTS LIMITED
Gurunatha Reddy
Man
Key numbers — 40 extracted
rs,
a has been instrumental as a development partner in the various DRDO programs in the areas of radars, missiles and EWS, a feat very few can boast of in the Indian private defense sector. As a developm
Rs.3,000 crore
for a significant move up in our scale of operations and we are expecting orders upwards of about Rs.3,000 crores over the next three years with high degree of confidence as these programs are expected to move
50%
nce as these programs are expected to move to commercial segment. As against the current mix of 50% revenues from the domestic customers, we are expecting to increase the share to about 80%, result
80%
mix of 50% revenues from the domestic customers, we are expecting to increase the share to about 80%, resulting into a significant jump in the profitability. We are expecting to deliver these orders
Rs.199 crore
uirement arises. In Q3 of financial year 2022 on a standalone basis, the company reported another Rs.199 crores of sales, marking a growth of about 34% year-on-year basis. EBITDA about 26 crores with a margin
34%
standalone basis, the company reported another Rs.199 crores of sales, marking a growth of about 34% year-on-year basis. EBITDA about 26 crores with a margin of 13%. Our order book as
26 crore
ed another Rs.199 crores of sales, marking a growth of about 34% year-on-year basis. EBITDA about 26 crores with a margin of 13%. Our order book as of 31st March 2021 stood at Rs.1,702 crore
13%
sales, marking a growth of about 34% year-on-year basis. EBITDA about 26 crores with a margin of 13%. Our order book as of 31st March 2021 stood at Rs.1,702 crores which is executable in
Rs.1,702 crore
about 26 crores with a margin of 13%. Our order book as of 31st March 2021 stood at Rs.1,702 crores which is executable in the next 12 to 30 months period. Our current order book is three times ou
Rs.662 crore
few years in terms of revenue achievements. During the year, we have received orders worth about Rs.662 crores till the end of December 2021. Astra has been able to create a diversified and healthy order b
Rs.10 crore
questions right now. First is that our interest cost for the nine months have gone up from nearly Rs.10 crores to nearly more than Rs.15.5 crores. How are we going to control the interest cost? Second thing
Rs.15.5 crore
t our interest cost for the nine months have gone up from nearly Rs.10 crores to nearly more than Rs.15.5 crores. How are we going to control the interest cost? Second thing is there any plan for any vertical
Advertisement
Guidance — 20 items
S. Gurunatha Reddy
qa
“Therefore, there will be working capital related expenditures.”
S. Gurunatha Reddy
qa
“Going forward, yes, we are on a lookout for not only a strategic partner, but also in terms of right acquisition if it is available, that is always there in our radar.”
Subrata Sarkar
qa
“Just kindly if you elaborate on a more quantitative basis and some specific name that we have transformed from a sub-system player to a system player, so can you elaborate a little bit by naming which are the systems is ready to provide or will be provided?”
Subrata Sarkar
qa
“3,000 crores, if you make it a little bit specific in terms of Akash, how much we are planning, for each project?”
Subrata Sarkar
qa
“So, is it fair to assume, out of the Rs.3,000 crores order, like Rs.2,400 crores order will be like high margin business of India, that's a fair assumption?”
S. Gurunatha Reddy
qa
“But when you look at our sales breakup, maybe two years down the line, 80% will be around domestic and balance will be exports.”
Subrata Sarkar
qa
“One is on the anti-drone like DRDO design which has been approved, so, like we will be executing based on that, is it like build to print kind of environment for us or like we have some design also approved?”
Subrata Sarkar
qa
“Again, I repeat, the anti-drone system, the basic technology will be provided by DRDO.”
Subrata Sarkar
qa
“So that means that our margin will be higher than that typical build to print kind of environment sir?”
M. Venkateshwar Reddy
qa
“And individually each project, very difficult to give you the numbers and the figure.”
Risks & concerns — 2 flagged
We shall continue to reap benefits of sectoral headwind by doing extensive investments to strengthen our position as a systems vendor.
— S. Gurunatha Reddy
And individually each project, very difficult to give you the numbers and the figure.
— M. Venkateshwar Reddy
Advertisement
Q&A — 12 exchanges
Q
I have got only two questions right now. First is that our interest cost for the nine months have gone up from nearly Rs.10 crores to nearly more than Rs.15.5 crores. How are we going to control the interest cost? Second thing is there any plan for any vertical or horizontal take over envisaged since we have said that we would like to have the domestic market share up to 80% in two or three years, so will it help to get some vertical or horizontal takeovers in this?
S. Gurunatha Reddy
Regarding the finance cost, we are making our best possible efforts to minimize the outgoing interest. But as you know, we are operating in a very working capital-intensive industry. Therefore, there will be working capital related expenditures. But we'll see that to the extent possible, we will minimize the cost in the next left out period of about 45 days. Going forward, yes, we are on a lookout for not only a strategic partner, but also in terms of right acquisition if it is available, that is always there in our radar. But, as of today, the efforts are there, but we don't have much to shar
Q
I have two questions. Just kindly if you elaborate on a more quantitative basis and some specific name that we have transformed from a sub-system player to a system player, so can you elaborate a little bit by naming which are the systems is ready to provide or will be provided? Second, the pipeline which you are sharing of Rs. 3,000 crores, if you make it a little bit specific in terms of Akash, how much we are planning, for each project? M. Venkateshwar Reddy: First question is you are saying from sub-systems to systems. As we mentioned in our previous calls also and also in the opening rema
Subrata Sarkar
Just to clarify one thing, we are saying like we have anyway to reach 80% in India. So, is it fair to assume, out of the Rs.3,000 crores order, like Rs.2,400 crores order will be like high margin business of India, that's a fair assumption? This Rs.3,000 crores pertains to the potential domestic order booking available to us in the next three years. But when it comes to the sales performance, with existing exports whatever we have and a little bit of future orders that are likely to come in. But when you look at our sales breakup, maybe two years down the line, 80% will be around domestic and
Q
So of this 1,702-odd crores order book, what is for exports and for the domestic and what would be the average timeline for fulfilling this?
S. Gurunatha Reddy
We have already given you, it is about next 12 to 30 months is the timeline to execute this order book. In terms of the breakup, the public sector defense is about 49%, space is about 13%, meteorology and other sectors is about 3% and exports is about 35% That is a breakup for this Rs.1,702 crores hand.
Q
On last call, you said we have opportunities like anti-drone, SDRs, electro optics. You have told like there may be a requirement to raise funds for the same. So what kind of CAPEX will be required to capture these opportunities and how will these opportunities be funded?
S. Gurunatha Reddy
SDRs and electro optics, this is a business which will be carrying out through our joint venture company with RAFAEL. So, therefore, the SDR program already, the joint venture company is identified as one of the development partners under NCNC base by defense ministry and the company is working on that. Approximately, about Rs.30 crores we are spending as a share of our commitment for that program. Whereas electro-optics, we said the discussions are still going on. Even today the status remains the same. Probably when we meet you again at the end of the year, we should be able to share more in
Q
My question relates to our gallium nitride business which I believe is Aelius Semiconductors. So can you throw some light as to what is our vision with that subsidiary? And also just was interested in knowing, there were some recent reports that suggested that gallium nitride could be a significant improver in the electric vehicle ecosystem. So I'm wondering if we have any vision or foresight to be kind of headed in that direction at all? M. Venkateshwar Reddy: Actually, gallium nitride MMIC designs what we have in our company is really to cater to the defense and space applications, not for a
Hansal Thacker
A follow up question on that ideally, the purpose of this division is purely to cater to the existing business that we are doing and there's no bigger aspiration? M. Venkateshwar Reddy: Actually, we are focusing it only on strategic applications as on today. And also we are trying to venture into the other industrial applications, especially in the communications area, like microwave radios and all wherein some trials are going on, but it is in the premature stage, so I think probably in months to come, I think we should be in a position to inform you. But as on today, basically the focus is m
Q
My question is like in this budget, government has allocated around Rs. 1.5 lakh crores where 60% has been allocated to domestic companies. So, how do you foresee the opportunity size for the private companies and role of Astra Microwave in that? M. Venkateshwar Reddy: Many of these programs like whatever DRDO has planned and also for the other Make-II opportunities from MoD, there are a number of opportunities which are coming. Of course, we cannot participate in every program like which are not related to our domain, but yes, definitely, we could see a lot of opportunities coming out especia
Pravir Adhikari
My next question is in this budget only government has decided like 25% of defense R&D will go to the industry. Because you have an aspiration to be a subsystem to system player, how this will help you out? M. Venkateshwar Reddy: Definitely, there are various schemes under which in fact the government is funding to the private vendors, one is that like technology development fund where we already got one contract to develop the course correction fuze, and this is a good potential. So, similar to that, there will be many projects which probably we can take up with the government to develop this
Q
Sir, any revenue guidance you would like to give for Q4 and FY'23?
M. Venkateshwar Reddy
In Q4, we are expecting order book of Rs.200 crores, I just give you the breakup; it's about Rs.180 crores from the domestic and then 20 crores from the export. That again Rs. 100 crores which we will be getting orders from the radar segment and Rs. 58 crores from electronic warfare and from the telemetry and missiles segment is about Rs.20 crores. This is the breakup of order booking forecast of Q4. And even sales also, we are projecting sales of close to Rs. 200 crores for Q4. In FY'23, any sales guidance you can provide? M. Venkateshwar Reddy: As on date, we have planned like about close to
Q
Just a couple of questions. The first one like for Astra, what is the scope of the DCPP projects and margin expected from the same? And is there any competition there? And the second is if you can just throw some light on the new products in the pipeline of Astra?
S. Gurunatha Reddy
Development-cum-production partner like the margins are fairly good as compared to the other segment, but here as I said, many of these projects, in fact, we are also optimizing the designs, as we have a strong R&D team in-house. So, we are optimizing the design to reduce the cost of the material or cost of the overall BOM, that is actually we are trying to increase the margins. So, that's what actually the approach what we've followed in Astra. And the new products, yes, we are working in high frequency band in AU, AA band in some of the subsystems, we are working in the missile segment, and
Q
My first question is what is our total CAPEX plan for FY23?
S. Gurunatha Reddy
FY23 for the programs which are there, maybe we'll be spending about Rs.20 crores. Despite our revenue is going up actually continuously from FY19, but our bottom line is lumpy in nature QoQ and YoY. What steps we are taking to mitigate this problem? The lumpiness is directly related to the sales mix what we have. As we said in the opening remarks, as we move maybe about one year down the line, where the domestic business is going to constitute a major portion of the sales, you see a steady margin in the profits of the company. But otherwise, today, the lumpiness or lower margins are there onl
Q
Just I wanted to understand in the 10,000 crores opportunity which you have mentioned for radars and counter-drone, how much is for SPY-1 radars and coastal surveillance technology? M. Venkateshwar Reddy: SPY-1 radar is like a contract which we have already bagged from DRDO. We are expecting a similar class of radars going forward maybe down the line after a few years. Each radar is close to about 400 to 500 crores kind of a potential we have. And the other one, anti-drone like about potential of 3,000 crores to 5,000 crores around that, in that again, they have soft kill option and then hard
Bhavik Shah
After two, three years, we will have the opportunity of SPY-1 radars and the coastal surveillance technology, right? M. Venkateshwar Reddy: Yes, that's right.
Q
My first question is, what will be the product mix going forward between defense and non- defense? M. Venkateshwar Reddy: For FY'23, we have about 70% is from the domestic and 30% is from the exports.
Siddharth
And my second question will be, given that India is focusing more on radars and missiles, so, what will be the scope of Astra going forward? Yes, for the radar like as I mentioned in the previous answer, we are into the various programs, we have already developed many subsystems, all those radars are going for production, that is the one thing which we can bank on that. And apart from that, the radar systems, we have taken up this development of like CSR and then anti-drone radar and GSRs, we are already there, and of course, we are already developing the telemetry radars and multifunction gro
Q
Yes, thank you for your participation, ladies, and gentlemen, and we look forward to talk to you again at the year-end. M. Venkateshwar Reddy: Thank you.
Management
Speaking time
S. Gurunatha Reddy
19
Moderator
14
Bhavik Shah
9
Subrata Sarkar
7
Shantanu Chatterjee
4
M. Venkateshwar Reddy
3
Hansal Thacker
3
Anurag Patil
3
Pravir Adhikari
2
Siddharth
2
Advertisement
Opening remarks
S. Gurunatha Reddy
Thank you and good afternoon everybody. A warm welcome to all the participants to the post results earnings of our company. I with my colleague Mr. M.V. Reddy, Joint Managing Director and SGA, our investor relations advisors. The “Results” and “Investors Presentation” for the quarter ended December, 31 2022 are uploaded on our company website and stock exchange. I hope you had an opportunity to have a look at it. With over 30 years of experience in RF and Microwave Frequency applications, Astra has moved up the value chain from the subsystems to high value-added systems. The company's products find application in high end markets of defense, space, telecom, meteorology, and other civilian communications. Astra has a proven track record of making high value-added systems, RF and Microwave Subsystems and Super Components, which are becoming more relevant due to various government initiatives like IDDM, Make-II etc., The company has been able to create a diversified and healthy order book
Advertisement
← All transcriptsASTRAMICRO stock page →