CRISIL said that the ratings continue to reflect the established market position of AMPL, its strong customer relationships, healthy order pipeline, and comfortable financial risk profile. These strengths are partially offset by the large working capital requirement and exposure to risks inherent in the tender-based business.

Despite the impact of the second wave of Covid-19 in the first quarter of fiscal 2022, revenue and operating margin of the AMPL group improved to Rs 511 crore and 12.4%, respectively, over the nine months through December 2021 from Rs 390 crore and 7.4%, respectively, in the corresponding period of the previous fiscal.

The improvement in margin was led by increased execution of domestic orders which fetch better margins compared with export orders. The operating margin is expected to improve further over the medium term with a greater focus on domestic orders.

However, while the healthy order pipeline provides revenue visibility over the medium term, volatility in the operating margin (13.4% in fiscal 2021 vis-à-vis 31.5% in fiscal 2018) due to changing revenue mix remains a key credit aspect. Improvement in the profitability due to execution of high-margin domestic orders and its sustenance remains key monitorable.

Astra Microwave Products designs, develops, and manufactures customized sub-systems and components for microwave communication systems used in the defense, space, and telecommunication sectors.

In the nine months ended 31 December 2021, the company generated revenue of Rs 511 crore and an operating margin of 12.4% as compared to Rs 390 crore and 7.4% respectively in the corresponding period in the last fiscal.

The scrip fell 1.26% to currently trade at Rs 216.35 on the BSE.