ewsba.se
Defence stocks to buy: India’s push to strengthen domestic defence manufacturing could create a fresh growth opportunity for defence electronics companies, with Systematix Research initiating coverage on Astra Microwave Products and Data Patterns with BUY ratings.
The brokerage has set a target price of ₹2,600 for Astra Microwave against its closing price of ₹1569.75, indicating an upside potential of almost 66%. Meanwhile, Data Patterns has a target of ₹5,100 against ₹4127.90, implying an upside of 23.5%.
Systematix Research said the two companies were positioned to benefit from rising demand for radar, electronic warfare, communications and space-related systems. It highlighted their indigenous design capabilities, research and development investments, and opportunities arising from new defence programmes.
The brokerage described Astra Microwave as a company undergoing a structural transformation, while identifying Data Patterns as a capability leader among private defence manufacturers. Both companies could see stronger order inflows and earnings growth as existing programmes move towards execution.
Astra Microwave has expanded beyond its traditional radio-frequency component business into a broader systems and development-cum-production partner for aerospace, defence and space platforms. Its order book tripled over three years to approximately ₹43 billion, providing visibility for future revenue.
“ASTM is at an inflection point of an unprecedented structural transformation. Over the past three decades, the company has evolved from a sub-tier radio frequency (RF) component supplier into a Tier-1 Systems and Development-cum-Production Partner (DcPP), with presence across India's critical aerospace, defence, and space platforms. Over the last three years, the company tripled its order book, while improving margins,” said the brokerage.
The company received an order worth around ₹22 billion in July 2026 for the AAAU unit of the Uttam radar for the Tejas Mk-1A aircraft. Its prospective programmes include airborne radars for Super Sukhoi and Tejas Mk-1A, missile systems such as QRSAM and Akash, and tactical software-defined radios.
Systematix Research noted that Astra Microwave was moving towards higher-value subsystems, integration and proprietary intellectual property rather than lower-margin build-to-print contracts. Its consolidated gross margin improved from approximately 30% in FY22 to 51% in FY26, while its EBITDA margin increased from around 12% to 29% over the same period.
The brokerage said the proposed separation of Astra Microwave’s space, meteorology and hydrology businesses could also unlock value as the company expands its satellite manufacturing capabilities. Limited competition in most of these projects should help sustain gross margins, with operating leverage expected to drive EBITDA margin, it added.
Data Patterns, meanwhile, is expected to benefit from its focus on indigenous design and its expanding presence in airborne, space and counter-drone platforms. Its capabilities span radar, electronic warfare and avionics, supported by a large private-sector research and development team.
The company had an order book of ₹26.4 billion, including negotiated orders, and management expected an additional ₹20 billion of orders in FY27. Systematix also highlighted opportunities in jammer pods for the Su-30 MKI upgrade and counter-drone systems as potential drivers of future order inflows.
Systematix Research highlighted Data Patterns’ “largest private sector R&D team” as a key competitive advantage. The brokerage believes its design capabilities and expanding product portfolio position it to benefit from the increasing demand for indigenous defence electronics.
Systematix expects Astra Microwave’s revenue to rise from ₹11.63 billion in FY26 to ₹23.92 billion in FY29, implying a compound annual growth rate (CAGR) of approximately 27%. Its EBITDA is projected to increase from ₹2.69 billion to ₹7.83 billion over the same period, while adjusted profit after tax (PAT) is estimated to grow from ₹1.93 billion to ₹5.22 billion.
The brokerage expects order inflows of approximately ₹90 billion for Astra Microwave over FY27-FY29, supported by radar, missile and communication programmes. It has assigned a BUY rating and a target price of ₹2,600, based on a sum-of-the-parts valuation.
For Data Patterns, Systematix projects revenue, EBITDA and PAT to grow at CAGRs of 29%, 32% and 32%, respectively, between FY26 and FY29. The anticipated increase in order inflows and a shift towards higher-volume production are expected to support growth from FY28.
Systematix Research said: “Revenue growth is expected to accelerate from FY28,” reflecting the anticipated transition towards higher-volume execution at Data Patterns.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
Pranati Deva is a seasoned financial journalist with over a decade of experience in high-pressure newsroom environments, currently working as a Senior Sub Editor at LiveMint. Over the years, she has developed a reputation for sharp editorial judgement, a strong grasp of market dynamics, and the ability to translate complex financial developments into clear, engaging stories for a wide audience. <br><br> Her core areas of coverage include stock markets, leading listed companies, currencies, and commodities, with a particular strength in fast-paced, real-time market reporting. She is known for handling breaking market news, earnings-driven stock movements, and macroeconomic developments with speed, accuracy, and context—qualities that are essential in financial journalism. <br><br> Pranati has built a diverse and credible professional track record across some of India’s most respected news organisations, including MintGenie, CNBC-TV18, Business Standard and EconomicTimes.com. During her stints at these platforms, she produced data-driven market stories, curated and steered live blogs during volatile trading sessions, and conducted interviews with market veterans, fund managers, economists, and industry experts. Her work often combines on-ground reporting with analytical depth, helping readers make sense of daily market fluctuations and longer-term trends. An alumnus of the Symbiosis Institute of Media and Communications and Hansraj College, University of Delhi, Pranati brings a strong academic foundation to her journalism. She specialises in real-time financial reporting, with a keen focus on precision, balance, and insight, aiming to decode market movements in a way that is both informative and accessible to readers across experience levels.
Catch all the Business News , Market News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.