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Astra Microwave Products Ltd
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Ladies and gentlemen, good day, and welcome to the Astra Microwave Products Limited Q3 FY '23 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note this conference is being recorded. I now hand the conference over to Mr. S. G. Reddy, Managing Director. Thank you, and over to you, sir.
Thank you, Vikram, and good afternoon to everyone. A warm welcome to all the participants to the fourth earnings call of our company. I am with my colleague, Mr. M.V. Reddy, Joint Managing Director; and Mr. Atim Kabra, Director, Strategy and Business Development; and SGA, our Investor Relations advisers.
The results and investor presentation for the quarter ended -- third quarter ended are uploaded on our website and stock exchanges. I hope you have an opportunity to look at it.
I'm happy to inform you that we have reported another quarter of stellar performance and recorded our highest ever quarterly profitability. We achieved a record EBITDA and the pie chart was INR 53 crores and INR 30 crores, respectively, for the quarter ended December.
For 9 months period, we have delivered INR 86 crores of PBT, which is our guidance for the entire year. This quarter is a good quarter, not only in terms of sales and profitability, but also in terms of products delivered by the company.
We have delivered following systems to our customers during the quarter. Radiation more test and evaluation facility, 7.3 meter antenna system for the IDR, ST Radar for Kolkata University and PATM 2 for IDR. We expect to deliver about INR 270 crores of sales during quarter 4 and reached an overall top line of about INR 825 crores. Bottom line at a PBT level will be about INR 110 crores. We expect to end the year with an open order book of about INR 1,750 crores. For the next financial year, we are confident to book about INR 900-plus crores and delivered a top line of about INR 950 crores. and the bottom line of [indiscernible] INR 135 crores.
Long-term view for the next 5 years ending 2028, we are confident to deliver accumulative topline of about INR 8,000 crores and carry over our book of INR 6,000 crores at the end of 2028. During these years, we are confident to deliver bottom line at PBT level of 15% to 18% of revenue. Before I open this discussion for question and answers, I introduce my new colleague, Mr. Atim Kabra, who joined our Board as a whole time director taking off in of the business and the strategy development from first January 2024. Atim, I warmly welcome you.
Thanks, S. G, and hello, everybody. As a fellow shareholder in my mind, I represent all shareholders. And I'm very excited by what I see in potential business at Astra.
My desire is that we delayed Astra with radars, that we know that our company is a key enabler in electronic warfare and a key enabler of missile subsystems. We know Astra as being a key player in the satellite space. And lastly, its products in meteorology and weather segments are important for the nation. We are looking at a significant growth phase for the company, which has delivered a very healthy return to its shareholders with a 5 -- and we are looking at a 5-year cumulative sales execution for cost of close to $1 billion in gross sales.
To put it in perspective, that's nearly 10x our current sales trajectory cumulatively. And we hope to grow our order book alongside to a very, very healthy number at the closing of year 5. Even better is that we expect this rear-ended sales growth to be with improving margins and rising return ratios. Kudos to our R&D team, which is developing multiple exciting products under the leadership of our Founder, Director, Mr. Chitrakar.
And as that continues to go up the value chain, we are right up there in systems and solutions already. We are proud to be a part of our Atma Nirbhar Bharat. While we continue to work with our valued partners from overseas and progress in our ARC JV with Rafael Israel is a proof of this besides our esteemed export partners. That's our vision. That's our very simple story, and we'll explain as we go along in the question-and-answer sessions. S.G., M.V.? .
Yes. Now the forum is open for question and answer.
Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] We have our first question from the line of Hitanshu Batia from Gandhi Securities.
Congratulations on a good -- great set of numbers, sir. I have 2 questions. One is on the 31st page of the investor presentation, you mentioned about NavIC and GPS receivers. So could you throw some more light on the prospects of it? And the second would be that we have bid for the tender alongside some private players like Alpha Design, Elena Geosystems and also Manjeera Digital Systems. So what was the outcome of that tender with regards to the NavIC and GPS I'm talking about? Has it been awarded to us? And I mean also, I believe we have a customer relationship with the company Manjeera Digital Systems. So could you also elaborate on our relationship with Manjeera as well? That's it from my side.
Yes. So this is regarding [indiscernible] systems. As we have mentioned in last investor call, we have invested in a startup company called Manjeera Systems with their professional in this [ VLSI ] design and all. So they are developing baseband chip and for NavIC products. And with using that chip, we are developing subsystems like receivers for various applications and also tracking units like vehicle tracking unit center, which are in development phase. .
So currently, the baseband chips are in the finance [ segment ], and we expect these particular chips to get qualified from ISRO the next 1-month timeframe. So probably by -- in 6 months to 8 months timeframe, we should be demonstrate these subsystems are for NavIC applications. This is what our -- we have a road map as far as NavIC is concerned.
So the potential in the NavIC and GPS receiver, if you could throw some more light on it?
Huge potential is there. In fact, with the kind of applications which we are targeting, next 5 years, we should have at least about INR 2,000 crores worth of business -- minimum business, what I'm talking about from the different sectors.
Okay, sir. And sir, the thing would be that -- yes. Sir, please go ahead. .
Yes, I will add to this, that to the best of our knowledge, there are only 2 companies in India, which are developing this chip. So around this chip, once it is approved, there will be not only us, but other guys also who would be developing the subsystems, which are in the receiver models, which M.V. is talking about.
We will initially compete probably with imported chips, and we are very well placed in terms of our costing and margins over there. So this could be a very huge business as the business as the story translates into real-life applications.
Okay. So the only doubt that I have is that if you have a customer relationship with Manjeera and you will be competing with them on the same tender, so how would that go out?
Basically, initially, we competed. But now we are working together.
Okay. So now there would be no conflict of interest with Manjeera and [indiscernible]?
Yes.
And with regards to the tender that...
If you look at that, we have a relationship with only for 1 particular product. Other products even within NavIC feature, we may compete.
Okay. And in regards to the tender that we had built, so have we won the NavIC tender with the Ministry of Electronics affairs? Or what's the outcome of that tender, sir, as the results come out here?
No. We price front, actually, we are not there. So -- but as I mentioned, like Manjeera won the first order, where we are invested in a particular product to get developed. But otherwise, the second tender where we have participated on the price front, we lost it. .
[Operator Instructions] Your next question from the line of Riya Verma from NR Securities.
I just had 2 questions. Firstly, on the gross margin side as well as an increase in our quarterly margin for two consecutive quarters now. I just wanted to understand the sustainability of these margins. So if you could please elaborate a bit on the reason for this margin improvement and how sustainable these factors are in the future.
The margins delivered by the company at the end of Q3 are sustainable for the future. In fact, you could see you can see the increment from now on. Your other question is how the change in margins has occurred? I didn't get your first question.
So I will see saying this margin improvement, what are the factors behind this? And is it sustainable?
Yes, it is sustainable that I already answered. In fact, it can improve. But the improvement is coming in because of the change in the sales mix of the company. As explained in the past many times, the domestic sales carry higher margin compared to the export sales. Up to now, the export sales are almost equivalent or more than the domestic sales going forward. The mix is skewed towards domestic. Therefore, the increase in margins is happening. Improvement in the margins is happening.
Okay. And 1 more question. What would be the long-term sustainable cash margin levels according to you?
So PBT levels, I already said, probably 15% to 18% is the 1 which is sustainable.
[Operator Instructions] The next question is from the line of Vignesh Iyer from Sequent Investments.
Congratulations, sir, on good set of numbers. Sir, you're saying like revenue of INR 950 crores is expected are you expecting around for FY '24? And you mentioned INR 135 crores , well said what number you mentioned INR 135 crores?
Yes, you heard it correctly. Yes.
INR 135 crores, and it is the PBT levels?
PBT levels.
Okay. Okay. All the commentary, your order book that you're expecting around INR 900 crores, can you explain to us what is the area you're targeting and you are expecting to get majority of the orders from? Like, say, if you could just say it's from the missiles or which area of the defense. Just a ballpark number will do.
Maram Reddy will take that curve.
Yes. For next year, close to INR 1,000 crores, we are targeting to book. Out of INR 1,000 crores, INR 930 crores are from the domestic sector. In that, Defense and Aerospace together close to INR 750 crores and from space sector about INR 100 crores. Meteorology and Hyderology together about INR 80 crores. And the exports, we have planned to book INR 150 crores.
Okay. And in exports also, we have almost like a similar margin profile to domestic?
No. And exports out of INR 150 crores, INR 50 crores is from BTS, again is BTS contracts and INR 100 crores BTP, which is a low margin.
Your next question from the line of Ketan Gandhi from Gandhi Securities.
Sir, as a follow-up on NavIC, the tender which we lost it is in alpha S- band or Alpha and F dual band module.
There's a dual band.
Okay. So now we are working on Alpha or s-band?
Yes, Alpha.
Alpha. okay. And government may, any mandatory fitment of the NavIC chip into mobile telephone and all the other equipment?
Yes. We expect these policies to be out. I think government -- in fact, what we heard this and working towards that. And the only thing is that waiting for the more manufacturer in this particular domain. Like only limited players have come in the indigenous development. Now once we more number of players will be there, then I think probably policies can be made. That is what we heard about from different agencies.
Okay. And can -- sir, in [indiscernible] document, it's written that Alpha band is expected cost per unit is around INR 5,000 and Alpha and S [indiscernible] band is around INR 10,000 per unit. Is that understanding correct? .
Yes, yes, you're right.
[Operator Instructions]
We have next question from the line of Pulkit Jhunjhunwala an Investor.
Just wanted to get some clarification on the fundraising that we had proposed to raise INR 400 crores. Any ideas on that? Could you give us some clarity?
Sure, we are on the job. Right now, the members voting is going on. And Yes, we are on it. Probably you'll come to know more developments maybe in the next fortnight.
And is it like an issue of shares or like which model are we going for in order to raise that INR 400 crores. There will be dilution? .
Yes, it will be dilution.
Just clarify, the resolution is up to INR 400 crores.
And I think this -- is that a perspective. And why do we need this capital at this point in time? Is it for working capital for future orders? .
It is a mix of both. Primarily, as you know, the defense procurement policy, there is a drastic changes have come in. Where the government is encouraging the private sector to take the risk, invest in new product development, get the product developed, so that the companies can compete as and when this business is available. And also because of this import embargo, a good amount of opportunities available for the private sectors to identify their key areas where they have the expertise.
And we should be able to take that financial risk in developing those products and be ready for a demonstration as and when those opportunities arises. Majority of this QAP or the fund raise is to make the company financially strong so that it can invest in these technologies and develop their products. A small portion of that, of course, is therefore working capital. But I would say that majority of that is for the -- this kind of new product developments.
We have next question from the line of Subrata Sarkar from Mount Intra Finance.
Hello. Sir, a couple of questions. First, sir, can you clarify 1 small the target which you have given for [ 2000 ] like next -- after next 5 years, what kind of revenue and order book we were expecting that you told like can you read it once more, sir, for better I understand you.
For the next 5 years, starting from the financial. We should be able to do a cumulative sales of about INR 8,000 crores. Cumulative sales of about INR 8,000 crores. And at the end of the year 2028, we should have an order book of about INR 6,000 crores.
Okay. Perfect. Sir, now from our presentation in 27 or Slide #27, you have mentioned like we have expertising you have given the expertise of various players across segment. And there, we have mentioned like we have system expertise. So can you just elaborate a little bit like which systems we are talking about and what is the potential of that system, sir?
In fact, first of all, no, your voice is not very clear. It is breaking away. Directly, you would like to know what kind of expertise we have in the systems. Am I right?
Yes, sir. You have mentioned like we have system expertise. So I just wonder a little bit more elaboration on that.
Systems, we already started delivering radar systems. And we build a systems group within Astra and addressing radar and electronic warfare. In Electronic Warfare segment, we just initiated designing the systems for airborne applications and as well as for the ground application.
Whereas in radar, we're already delivering this telemetry tracking radars and also surveillance small range surveillance up. And we are developing counter-drone radar. And also, we are planning to develop bird detection radar kind of radars, we have in pipeline. So likewise, we have developed the system expertise within the company. And apart from that, in the future, going forward, in space domain also, we are trying to build payloads, satellite payloads.
Last question, you have mentioned about like media purpose of this fundraising is major part will go for new product development. So if you can elaborate again a little bit more like which area like or which specific product we want to be prepared with so that there is a new opportunity comes from the government side, defense side, we can exclude that. So if you throw some light on what are the areas and new products we are trying to develop with these new funds here?
Many projects, which we could see having good potential in going in future and which have been already come under import embargo. So today, we have picked up a few projects and also based on the responses what we have sent and what we are having that confidence to develop, so we could take a few project development, which are basically in domain of radar and electronic warfare in defense. And as far as the satellite is concerned, we are also getting into the defense payloads. These are the few important projects which we picked up.
Yes, it will not be [indiscernible] names of the product.
Do you know the negative list, which have come out, right? There are more than 400 objects on the negative list.
Yes, that's a major list.
Right now completion. Hello, can you hear me?
Yes, sir.
What are the items? Yes. So more than 400 items in the negative let. We are right now operating in probably 40, 45 items only, which are in our domain, order there's 400 plus, of which we are operating currently in around 15, which leaves us with a huge amount of products and which we can fill in, in the negative list alone, while we are developing a whole range of other products in the segments which [indiscernible] just mentioned.
[Operator Instructions] we have next question from the line of Viral Shah from Shah Investments.
Just wanted to know, are we expecting any orders from Hindustan analytics with respect to the new [indiscernible]?
From HAL, we are expecting orders for that [indiscernible] UTTAM radar -- and also going forward, other airborne radar, what we are going to develop for the airborne platforms.
We have the next question from the line of Amit Dixit from ICICI Securities.
Yes. Hi. Good afternoon, everyone, and thanks for the opportunity. First of all, congratulations for a good set of numbers. I have a couple of questions. The first one is essentially, if you look at the Q4 results of other companies like HAL, BEL and even BDL they were a tagged low on execution. So do we -- going forward, do we see a risk of some of the orders that we were expecting getting delayed in FY '24?
As of now, we yes. As of now, whatever the numbers which we have mentioned, I think we have a good probability in booking these orders -- and this is as on date, whatever visibility we have, with that only we are presenting this. I think we should be in a position to book this INR 1,000 crores order in next year.
But Amit, we are not a quarterly driven company. Amit, we are not a quarterly driven company, right? So I think you have to look at this on a rolling quarter basis. There may be delays, some critical components may be delayed coming, et cetera, et cetera.
So I think this company is not a company where you can put in place a quarterly number and expect that we will hit that number every possible time, right? I think [indiscernible] as you already have done a tremendous job in terms of exceeding the targets which have been set out
But be cognizant that there could be delays in the system itself, which can sometimes push the numbers out. And sometimes, maybe we can get lucky also, and we can be getting some excellent orders, which may not we may not have anticipated. You are aware that recently, there are 4 Doppler radars were dedicated to the nation. The minister came out and said that he is expecting Doppler radar to be installed all over the country.
Now that's a massive business, which we had not anticipated. But we will be getting a product. We have delivered 10 Doppler radars to the country at this point in time. And that's a significant piece of business, which can -- which is evolving, which is not anticipated also.
Great. The second question is essentially, if you get it possible to provide the breakup between BTS and BTP orders, I mean, as far as the execution is concerned in this quarter? And going forward, what would be the mix that you would be targeting between BTS and BTP?
Yes. For the current quarter, we don't have any BTS export -- BTP export order. But going forward, next year, as I mentioned, out of INR 150 crores, which we are expecting from the export segment, INR 50 crores from the BTS and INR 100 crores on the BTP. Rest all in domestic, as you know, all our BTS orders. We don't have any BTP in the domestic business.
We take the next question from the line of Bhavik Shah from Emkay Ventures.
And sir, congratulations on a good set of numbers. Sir, I just wanted to understand the developments on the anti-drone front. So you're going to demonstrate it by January or February not wrong mentioned in the last call. So sir, any update on that front?
Yes. We are going to demonstrate very soon. I think it's in the final testing stage. -- definitely, we'll -- we'll hear good news in the next few weeks' time.
Okay. And sir, now could we sense what opportunity could this be for the company? Or we still need to wait for that?
Opportunities there. Like we have participated in a few tenders recently from Air Force and Army. I think we are gearing up for a demonstration of this particular product. once they are true, then I think we'll be in a position to inform you exactly how much business we can get in this. But otherwise, opportunity wise, yes, we have a good amount of opportunity for this particular radar.
And sir, any developments on the space front like last couple of years were not that good for the space and. So like how do you see space going ahead?
Yes. As you know, that bar in communication satellite sector, which in fact been open for industries to take up the historic [indiscernible] is continually working on the strategic segment we -- from which we can expect the subsystem order from [indiscernible].
And [indiscernible] I think definitely, with some kind of a business we can get for the couple of years. Apart from that, as I mentioned, just now, and we are also trying to build the satellite payloads to -- for the strategic applications. That is something, which we are launching soon.
Right, right. And any update on the tax front, like what is our CapEx till 9 months? And what could be your CapEx going ahead?
Yes. For this financial year, the overall CapEx will be about INR 25 crores. And after 9 months, I think we have spent close to about INR 15 crores. .
Okay, sir. And any guidance on the CapEx end for next year?
Yes, for upgrading the existing requirements, probably we may be spending about INR 10 crores to INR 15 crores. But a larger plan in terms of creating facilities for the overall systems, whatever we are planning for. Those details probably we can share with you in the next call.
[Operator Instructions] We have next question from the line of Shuja Siddiqui an Investor.
Sir, there is a [indiscernible] otherwise is taking. The question that I have is what are the cost which is stopping you today from executing...
Sorry to interrupt Mr. Siddiqui. Your volume is very loud. Could you please speak a little close to your mic? Hold the mic close to you and then speak a little slow.
Yes. So my question is that there is a massive opportunity in the test today. The question to the company, what are the constraints that's stopping the company from either executing more from the order book that is already there and getting more orders going forward? How do you create the machine which continues to be on the treadmill of getting on orders and executing more orders?
See, we are doing that. If you look at the profile of the products delivered by the company, it is largely components and subsystems what we are doing. This product base has its own limitations in terms of execution.
But going forward, that is what we are sharing with you. The overall environment is also changing where in the private sector has to be more aggressive in terms of bidding for the projects which we are planning to do. Therefore, you see more accelerated action coming in from the company in the near future.
Is there -- are you in a position to share something at the moment about your future strategy?
Future strategy, we already shared. See, we are planning to raise some capital resources so that we'll be investing in new product developments so that we can compete with other people when the market is actually opening. Yes, that is what we are. We are graduating from a subsystem company to a systems company in a bigger way. And accordingly, we are planning our actions so that we'll be there to take that market as and when it is open.
Do you need some strategic [indiscernible] like for you to get more -- develop more products and get more strategic high-value products you will develop all of this on your own?
Now a few products, we are working with some OEMs. One is that with joint ventures. We have 1 joint venture with [indiscernible], where we have added 3 other product lines apart from the SDR what we are manufacturing in JV. Like we have added other 2 optics [indiscernible]. Eminently, we have some other products which we are discussing with some few OEMs. And you would see a few announcements in coming year or so. So I don't want to reveal at this.
We take next question from the line of Vignesh Iyer from Sequent Investments.
I just wanted to know how -- what is on the semiconductor side, how is the availability as compared to the earlier quarters. And if you could tell me what is our receivable days and a working capital cycle as on quarter 3.
As far as the availability of semiconductors is slightly improved as compared to the last quarter. I think the lead times are coming like in a normal mode. Still, yes, it's not so comfortable as we enjoyed pre-COVID situation. But I think maybe next 1 or 2 quarters, we expect that should come in a normal. And as far as working capital, I think S.G. will answer.
Yes, we have receivables of about INR 300 crores. Domestic is about INR 289 crores, and exports is about INR 228 crores. In terms of the working capital days, it is typical to semiconductor industry where an RF and micro industry, where the stocking of inventory is one of the critical items for execution of the projects on time. And also these semiconductor devices, which is a very critical input is available only from specific markets for actually the global leaders.
Therefore, we are forced to place orders on hand in advance and the sort the material for the [indiscernible] project duration cycle. Because of these factors, our working capital days are fairly high compared to the normal industry. And currently, it is around INR 300 plus the number of days is the working capital days.
Okay. So if I am not wrong our peak quarters as it comes to around quarter 3 and quarter 4 and with how things spanning out, are we still looking to front-load the inventory going ahead? Or we might see some inventory days coming down?
No, I don't see in terms of inventory management, I don't see any major changes happening. As it is now, we are struggling for availability of the semiconductor devices. Therefore, as and when they are available, we have to buy and the stock it. Therefore, at least in the near future, I don't see any major changes coming in.
Okay. And sir, at the start of the call, you said that the current quarter margins of like 23% is you're comfortable and you feel like this could be sustainable. So when you say that, I mean, EBITDA margins for the entire FY '23 you see more or less at the same level, right?
No, I am only talking at PBT level. The current year, we are likely to end about 13% to 13.5% of PBT. On a top line of about INR 825 crores, we are projecting a PBT of about INR 110 crores. I said that these margins are sustainable, and there is a fairly good chance of improvement over this.
[Operator Instructions] Your next question from the line of [indiscernible] from Bright Securities.
So I had 1 question. Sir, based on your current order book, can you give some guidance for the next year?
It's already done. At the top line, we'll do around about INR 950 crores and bottom line will be close to about INR 135 crores at a PBT level.
We take next question from the line of Ashit Kothi, an investor.
My question is, sir, with drone technologies getting commercialized, are -- is there a company planning to get into providing sensors or any products or subsystems to this particular category?
You mean to say sensors for drone?
Yes. I mean, sensors also would be required there also, right?
But we are not addressing drone market. We are only addressing drone detection, like on the drone system, but not in the drones. We are not operating in the drones.
No, I got your point. When you are -- my question was basically since you are already anti-drone devices kind of thing. So ultimately when the drone technology being exploited commercially for commercial applications, for the [indiscernible] part of it. So over there, there could be need for so many other things apart from -- I mean 1 of the major things would be sensors. So the...
We [indiscernible] to that market as of now.
So not so lucrative enough for us to look into it?
No.
[Operator Instructions]
We take next question from the line of Simal Deep from Negen Capital Services.
Congratulations on a great set of numbers. This is a bit of more strategic. Sir, could you just highlight some risks going forward in the business? Like chip shortages, which will happen through Taiwan and some other ones, if you can highlight them.
See, the major risk like timing of the orders based on the visibility what we have and the information, what we gather from our customers. We have been projecting, yes, there could be delays here and there based on the PRPs and based on the delays on overall projects from OEM and also from the user end. So those kind of delays are always there in the defense market.
As you know, it is not something new. And apart from that, on the execution front? Yes, [indiscernible] though, the situation of the components, especially in the semiconductor and power supplies, we've been facing CBS shortage. That I think probably is let improved compared to the last 2 quarters, but still more implement is required in that particular domain.
And because of that, probably on the execution front, like this current year also, we will be short of INR 20 crores as compared to the original [indiscernible]. But we have factored all these points, but we hope for the better situation in the components industry going forward in the next year.
All right. Sir, 1 last question. So could you help me with some sort of more from [indiscernible] clients, can you get some more work? Or are you diversifying in 1 of the more geographies as well?
We are already there in the international market, apart from the [indiscernible] industry.
See, one is that, like -- in fact, Mr. Atim Kabra is looking after this particular area. Like we are trying to develop solutions for the countries using our particular systems, what we have today. And we are trying to sell the complete solution.
It's too early to disclose about these solutions. I think probably maybe after the, I think next investor call, probably we can share in a detailed existing road map for this. But otherwise, yes, we are trying to explore the exports, like the international business with a different concept.
From the existing product, 1 second. For the existing product line, as I mentioned, my customers who are giving us BTP business already started giving us the BTS orders. We have initiated -- we got a couple of good inquiries, which are trying to be materialized in the first quarter of the next year. And we are discussing with many companies for this BTS business as they are planning to develop systems for the Indian market. Yes, Atim, go ahead.
Yes. And I just was just adding that there, once you get into systems, there is an international market, which is there for us to compete in. But it works not on a tender basis, but on a slightly different sales process.
It will take time. We have -- you should be aware that we have products which are identified and strategies are being put in place as we speak to explore those markets. And these are fairly big, sizable numbers. But we would be -- but it might take time, so we'd rather come across to you and share the good news to you, and we have clear orders in sight on these markets from these markets. So this is a sizable opportunity where we can make a big difference to our client and to our bottom line also.
We take the next question from the line of Pulkit Jhunjhunwala an investor.
Yes. I was just wondering other investors when we see our peers are in space, we find ourselves in a situation where our top line is maybe twice there and maybe they trade at a sales to market cap of maybe 20x and whereas we are less than 1.
And we feel that we -- although the management has done some great work, the operating margins are increasing. But when we do a brief comparison the operating margins that they are trading at, I mean, they're having a more of 14% kind of operating profit margin.
So is there -- I mean, I'm sure you heard so many things about what is in the pipeline from this call. I was just wondering, is there anything that you can share now where we can understand that our top line is bigger, our -- the technical skills is better from what I'm understanding. So where are we lacking? Like do you think something is some -- I mean, the opportunities are there for the taking? So could you just elaborate on that, please?
The opportunity set is there. We are now more proactive in communicating our story. You have seen how we have been -- how forthcoming we have been in the last few investor calls. And as the story gets out, I'm sure there will be a set of investors, incremental set of investors who would be interested in us. Why somebody -- this is a big market. we don't want to comment on why somebody is being valued slightly higher, okay? Maybe they've communicated the story better, maybe they are better in the perception of the folks.
We are fairly confident about our story. We are confident, as we have very clearly mentioned to you and committed. But this is a rising, sustainable margin story. We have -- we are RF guys. Our BOM is already there. As we increase in size, maybe there will be efficiencies, which will be coming in.
So suffice to say that we can only communicate to you that this is increasing sales, significantly increasing sales story with sustainable increasing margins for you. The return ratios will obviously look better. So where you value somebody in the food chain is not for us to comment.
But it's a big market for everybody to operate, and I'm not sure everybody is equally competent.
We take next question from the line of Ashit Kothi, an investor
Yes, sir. Sir, just continuing with the earlier questions where the explanation was given with regards to the export market that the process is a bit different. It is not a tender system. If you could throw some more light, is it more a joint venture? Is it more on high-ups how exactly we are exploring the market, export market?
Export markets don't work on tenders typically. If you are looking at the civil industry, right, you are looking at ROI-based kind of an approach, which is where you define what the investments are for others and you are trying to capture the enhanced returns of the savings which they make. And therefore, explaining to the buyer what exactly is the ROI, right? So that's 1 thing.
In a G2G tender, there is a very different dynamic which is at work, right? So depending on where exactly we see maximum sales impact and sales effort impact coming in, we would be employing a variety of strategies. It's too early to say whether we would be partnering in any joint venture format with somebody else or not. But definitely, they will require partners across the globe as for local implementation. What form it will take? We don't know. It's very early days right now. Am I answering your question?
Yes, it would have been better. I mean if you would have thrown some more detail. But maybe it's not possible.
Let's save something for some surprise, right? Positive surprise. .
Okay. right.
It's very early days. It's very early.
[Operator Instructions] as there are no further questions -- we got last question from line of Ashit Kothi.
Sir, as far as the move have come a long way from OTCI lifting in '90s to where it is today. So if we have to look at Extra Microwave as from year onwards through next decade.
Yes, I think we have already gave a picture for the half decade. Probably now looking at 1 decade, it is too early now. So we'll take it forward from that.
I would say a defense industry as a sector has established. You are aware of Atma Nirbhar Bharat. That is becoming a reality. You are aware of BEL, HAL making great strides. You are aware that they are tracking or they are beginning to track the export market.
There are multiple defense [indiscernible] itself, which are coming of age and with increasing visibility and increasing certainty about of business. The earnings stream in itself is becoming more predictable and sustainable. I think these are the ingredients for an industry which is becoming mature, will become more mature as we go further. And I think there is -- it's a such a sizable industry in terms of macro numbers that there's going to be a huge amount of business, which should be coming across all participants.
We have to make sure we are conservative enough in terms of our balance sheet management and be prepared for the long haul. That's our vision. That's what we are playing at. So thank you for highlighting our journey from when we started. And I think as an analogy, which I like to say, is that we have lifted off the runway. We are gaining all retail.
And I think we will be at a cruise stage very soon, and that will be a very nice moment for all of us who have believed in the story.
As there are no further questions from the participants, I'd now like to hand the conference over to Mr. S.G. Reddy, Managing Director, for closing comments. Over to you, sir.
Thank you for being there with us probably 1 hour. I hope to see you at the end of Q4. Thank you.
Thank you.
Ladies and gentlemen, on behalf of Astra Microwave Products Limited, that concludes this conference. Thank you for joining with us. You may now disconnect your lines.