Three key reasons why Goldman Sachs projects a 45% upside on this defence stock

Brokerage firm Goldman Sachs has initiated coverage on Astra Microwave Ltd., one of the six defence stocks on which the brokerage has initiated with “buy” recommendations on Friday, October 3.Goldman Sachs has ascribed a 12-month price target of ₹1,455 on Astra Microwave, which implies a potential upside of 45% from Wednesday’s closing level.

The brokerage has highlighted three key points behind its bullish stance on the stock:

• First, the company’s participation in the defence electronics space is likely to shift its revenue mix to the high-margin domestic defence segment.
• Second, the company’s transition from being a component or sub-system provider to a solution provider by harnessing internal capabilities and pooling resources with external parties.
• and lastly, Astra Microwave is enhancing its footprint in the fast growing and attractive space and counter drone segments.

“Looking ahead, while the cash conversion cycle is expected to stay stretched, we expect margins to improve and steady revenue growth of 18-20% per annum over the medium term,” Goldman Sachs wrote in its note.
The brokerage also expects Astra Micro to fare better on the Return on Equity (RoE) front, in comparison to global defence electronics players and is also trading at a lower valuation.Delay in the award of orders, dependence on other companies and delays on the integrator front leading to delay in revenue streams, impact on margins if exports go up and a stretched cash conversion cycle are some of the key risks highlighted by Goldman Sachs in its note.

CNBC-TV18 had written about Astra Microwave in February about how the company’s order book has risen and margins are improving. The stock is up 60% from those levels.

All six analysts who have coverage on Astra Microwave, have a “buy” recommendation on the stock.

Shares of Astra Microwave are trading 4% higher on Friday after the report at ₹1,043.5. The stock has risen 35% so far in 2025.