Astra Microwave sees margins holding with rivals not to be found

Astra Microwave, the electronic components maker for defence, is expecting to retain its operating margins at about 30% with no serious competition on the horizon.

The company expects the revenues to grow about 20-25% “for the next few years”.

“The PAT margins will continue to remain at about 17-20%,” B Malla Reddy, Astra Microwave’s managing director, told DNA.

Astra has been a significant player in the manufacture of critical electronic components catering to various sectors including defence, meteorology, telecommunications and space. The company has several key clients including DRDO, Isro, ECIL, Indian Meteorological Department, BEL, BDL and HAL.

Astra Microwave makes electronic components used in radars, electronic warfare systems, telemetry systems and missiles. It also makes antennas, filters, repeaters and amplifiers used in the telecom sector.

“It should take some more time for the list of clients to expand. Some of the private sector players, too, have been gaining ground in defence and related activities. But their component sourcing plans are still not clear,” he said.

The company, however, has already started seeing the benefits of the offset clause in defence procurements. It had procured orders worth Rs50 crore through the offset route. “We have executed orders worth Rs25 crore from that and another Rs25 crore orders are still to be delivered,” Reddy said.

Though it has no expansion or capital expenditure plans on hand, Astra is expecting to clock a turnover of Rs200 crore in the year ending March 2012.

“We should be able to close the current year with Rs150 crore,” he said. However, the topline growth is likely to remain at about 25% over the next four to five years.

In 2009-10, the company had revenue of about Rs106 crore and a profit of about `7.1 crore. According to Reddy, the company’s order book currently stands at about Rs300 crore, to be executed in the next two years.