Some basic resources -
Following is Radar 101 for Indian Defence, mandatory reading to understand companies in radar.
Following is good summary of players/products in C-UAS (counter drone systems) in Indian defence.
Advancements of India in Counter-UAS Systems - alphadefense.in
Mr. Arun Krishnamurthi (DIN: 09408190) has submitted his resignation as Chief Executive Officer & Managing Director of the Company, vide letter dated January 02, 2025.
Mr. Arun Krishnamurthi has resigned as CEO & MD, how do the investors in the company see this development? Any thoughts from @rupeshtatiya would be much appreciated.
Disclosure: Not invested.
Arun Krishnamurthi steps down as CEO and MD.
To me, it seems that the new guard which brought fiscal discipline and turned around the company after the mistral acquisition, is out. Mr Shashi is still there though I think.
Bit sceptical about the storytelling of the new management. Might be wrong based on the market fancy.
So, the mystery of why Mr Arun Krishnamurthy seemed to be sidelined at the last concall where they announced the major restructuring, has been solved with the resignation. I don’t know, but the way this has all come about makes me feel this is more of a coup. What this means in terms of the transition, how seamless would it be, and the new course that the company would take, is to be seen
Mistral .pdf (269.6 KB)
Do these (forced) resignations including the CEO amidst restructuring mean any red flag?
For me at least, this is the whole thesis (management change). The capabilities have been there but hunger has been missing and ability to deal with misfortune lacking (renegotiating contracts, closing down loss-making entities, paring down headcount to improve bottomline etc.). I am relatively new to this business so my read could be wrong, but to me this move implies things are progressing in the right direction. Rajeev Ramachandra (CTO) and Mujahid Alam (CEO) have been with Mistral since founding in '97 but since exit after Axiscades acquired Mistral, their priorities are bound to be aligned differently. Murali Krishnan who takes over from them should be capable with his incentives aligned towards growth. The price-action as well implies that the market likes the moves being made.
Disc: Invested
Now this is interesting and also answers some of our questions regarding the management changes. Of course, they could have been more transparent during the investor call about what they are thinking.
They are getting in as group CEO, someone with good international experience in the ER&D space!
“Mr. Alfonso Martinez is a qualified Engineer & MBA with close to 3 decades of experience in Aerospace, Defence, Telecom, Automotive, Transportation, Energy, Infrastructures, Life Sciences, Financial Services, Public Administration, Naval, Railways, and Chemicals sectors globally.”
Discl: Invested
AXISCADES Appoints Nick Santhanam as Advisor for Electronics, Semiconductors and AI (ESAI) Domain
HIs LinkedIN Profile - Nick Santhanam - Avail Infrastructure Solutions | LinkedIn
How is Data Patterns and AstraMicro different from Axiscades? One of the posts here mentions their competencies being better and relative order size also bigger. By being bigger and better what is stopping them from doing what axiscades is doing?
Prima Facie, results seemed strong for Axiscades after a long long time of tracking the stock. Mainly due to the execution in defense segment the overall contribution to revenue by defense went up to ~34% as seen in the pictures below.
This contribution and swift execution led to defense EBITDA margins to ~18% from 8% YoY.
Waiting for the concall
Notes from concall ( please verify correctness )
Dr Sampath - Focus on top 3 core area Aerospace Defense & ESAI as 99% EBIT comes from these vertical.
Employee 60: 40 nos 1600 : 1100 core v/s non core.
Focus is to recalibrate noncore business employee count may drop or move to core from non core ( sense of call )
In Aerospace vertical revenue comes from repair support of old aircraft focus is to grow recalibration of old aircraft interior of aircraft and so on.
Margin 18% in defence & 24 % aerospace defence grew 88% aerospace 11% .
When asked management about vision and nos for Fy26 & onwards
Goal is to grow atleast 1.5X of FY 2025 nos by Fy 2026. With 300-350 bps higher margin. Topline will be function of that .
To be in top 3 player in aerospace defence & ESAI .
Presenantion details of investment.
Startegic investment 1 - GCC for unmanned warfare -&
Startegic investment 2- ESAI hub
1.8 lac & 44000 sq ft facility would require around 150-200 Cr investment . Will eventually lay plan on funding the same
Staregic investment 3 - Would require very big investment would come up with more details in a quarter or so .
The team & advisory board is in place with 1-2 more changes / new onboard hiring done and expected. Mainly team is X axiscades .
Looks well positioned with experience team in place . How does the order flow in defence flow needs to be seen.
With new team & introduction of them time for Q & A was found to be limited ( my view )
Disc - Invested and added in last 30 days. Not qualified to advise . Biased positively
What you seems to have missed is the vision that they shared.
They aspire to be a billion-dollar revenue company with a 25%+ EBITDA margin by FY29, and aims for a top 3 position in India across all core businesses with a substantial global presence.
Thats almost 50% cagr in revenues and ~90% cagr in Ebitda !!!
I had visited the Axiscades / Mistral stall in Aero India '25 along with a few others (@nirvana_laha @ananth @satishwe @GourabPaul @saintsat and Piyush). We spent over an hour at the stall in trying to understand all the products and pipeline. Summarizing them here with some pictures.
LCA Tejas
The most important thing we learned was that Mistral is already supplying to LCA Tejas Mk1. There is no delay due to GE Engine procurements. In fact the increase in production contribution in the last quarter is due to this.
The flyer with the parts being supplied from Mistral. The total per aircraft is around 10 Cr.
They had on display a scale model of LCA Tejas Mk1 along with actual parts being supplied to it placed around it.
The key component driving the numbers is the Exciter/Receiver processor for Radar jamming. There are two of these that go into each aircraft and their individual value is ~4 Cr (so 8 Cr per aircraft). There’s no competetion here for Mistral. They will supply this for the Mk1A and Mk2 as well. This component is high value-add and so high gross-margins as well.
This is the TR module operating in S-band (which I believe is GaN based) that will go into Uttam AESA radar and will be used in Tejas Mk1A and Mk2. So along with having a presence in Radar jammer, they will also have a presence in the actual radar as well in this subcomponent that goes into the cockpit.
Submarines
Flyer for submarines
They showed us a transparent submarine model video (from DRDO) that showed where these components would actually go. They had a scale model on display again with the actual components.
Mistral makes radar and sonar components here and the total value per submarine is 25 Cr. They will be supplying to 3 Scorpene class submarines this year.
Flyer for Mistral’s inhouse developed X-band radar used in the submarine. This is activated when submarine surfaces (sonar does the job underwater). This is one of the high value add components.
AEW&CS
AEW&CS stands for Airborne Early Warning and Control System. These aircrafts are used in military aviation for surveillance, command, and control. They can detect and track enemy aircraft, ships, and ground targets from a long distance.
Mistral currently supplies 100 Cr of components (6 in no.) per aircraft and is one of the high value suppliers. They are going to compete with Data Patterns, BEL, Astra etc. to be a system integrator which would mean a revenue of 3000 Cr for 6 aircrafts if they win it. It is an aspirational thing clearly for them to move up the value chain (new management also pushing for it)
Direct RF
This is perhaps the most high-tech and new age thing that they showed us. Direct RF tech was developed originally by US DoD/DARPA along with private players like Altera. Now US has allowed the use of such tech for allies like India and currently Mistral is the only one that has this tech. Although other players like Astra Microwave also had Direct RF on display in their stalls, what we understand is that those systems can handle only upto 6 GHz whereas Mistral’s will be able to go upto 32 GHz
The key difference appears to be speed of ADC/DAC data handling which Altera’s FPGAs provide to process signals in real-time. The key advantage along with speed of processing is the reduced number of components and cooling required and consequently the weight. The cost might be almost the same but performance benefits are huge.
Mistral seems to be pushing for Direct RF adoption in Su-30 upgrades.
LLTR Radar
The Arudhra LLTR radar control unit was on display. Looks like an upgrade of this one will be used in Ashwini LLTR
Counter-Drone Systems
The flyer
There are three systems in this pic. One hand-hand, one man-mounted (backpack) and another which is vehicle mounted or stationary.
Logistic Drones (Xherpa)
After having seen at least 20 other stalls with drones, which appears to be the most commoditised tech we saw, this was the least exciting product in the stall.
Other obsevation on management change - It appears that there’s lot of hunger going by inputs we got in terms of expansion, both in capabilities and capacities, as well as moving up the value-chain and general aggression in getting things done in the last 3 months.
P.S Please excuse the distortion in the pics. They were shot from close-ranges with wide-angle so there’s lot of barrel distortion in the pics. My knowledge of all this stuff is very rudimentary and novice level, so I am bound to have made several mistakes
Thanks to @rupeshtatiya @Sanjay_Kumar_E and @Anant for their inputs and discussion post our visit which helped piece together this post.
Disc: Invested
In December - As lack of manufacturing making them miss out on few big opportunities. Focus on acquiring a defense-class manufacturing company to address lack of manufacturing capabilities.
In Feb FY25Q3 - No immediate plans for inorganic acquisitions, focusing on core domains (Aerospace, Defense, ESAI).
Does facility in Electronic City – Bangalore is the replacement for planed manufacturing capabilities. through acquisition? Any more details for this direction change in such small time?
