All-round beat in Q1, yet management cautious:We believe ASTM’s FY26 guidance of 18–20% revenue growth and INR 1,300–1,400 Cr order inflows seem to be modest as compared to the scale of opportunities emerging in India’s defence and space ecosystem. In our view, ASTM’s presence across radar, anti-drone systems and space programs positions it to outperform although management commentary reflects caution.We expect margin to remain resilient and may even expand, supported by higher domestic business and reduced Build-to-Print exposure. Q1FY26 margin already reflects this trend.In our view, ASTM is structurally well-placed to capitalise on the strong tailwind. We have introduced FY28E numbers and valued the stock at 40x of the average of FY27/28E EPS. Based on this, we arrived at a TP of INR 1,175, upgrading our rating to ‘ADD’ (from ‘REDUCE’). We expect Revenue/EBITDA/PAT to expand 21.8%/22.3%/26.2% CAGR over FY25–28E.We foresee optionality emerging from three areas: (1) Accelerated radar modernisation under DRDO, (2) Strong traction in the space vertical and (3) Adoption of anti-drone systems having advanced jamming features. Any meaningful upside to these programs could prompt us to revisit our stance with a more constructive assessment. Outperforms on All Key Metrics;▪Revenue for Q1FY26 up 28.7% YoY and down 51.0% QoQ at INR 1,997 Mn (vs CIE Est. INR 1,781 Mn)▪EBIDTA for Q1FY26 up 70.6% YoY and down 65.7% QoQ at INR 410 Mn (vs CIE Est. INR 321 Mn). The EBITDA margin stood at 20.5%, improved 504 bps YoY (vs CIE Est. of 18.0%)▪PAT for Q1FY26 up 125.9% YoY and down 77.8% QoQ at INR 163 Mn (vs CIE Est. INR 127 Mn). PAT margin improved 351 bps YoY, reaching 8.1% (vs CIE Est. 7.2%).

Expanding Market Share and Product PortfolioAL has steadily gained retail market share across both MHCV and LCVcategories in Q1FY26, with MHCV share rising to 31.1% from 29.8% YoY, andLCV share improving to 12.9%, despite a 2% industry decline.Product launches in higher horsepower MHCVs (280–360 HP tippers, tractortrailers, and multi-axle vehicles) position the company to tap demand in mining,construction, and logistics. AL also plans a bi-fuel LCV product for launch tomeet demand in large metros, along with many upgraded products forinternational markets. The upcoming LNG truck launch also opens a newsegment in alternative fuels. Additionally, AL is upgrading buses (13.5m and15m), catering to both domestic and export markets.We believe, these differentiated offerings will help AL strengthen pricingpower, customer stickiness, and competitive positioning. With demandrevival expected post-monsoon and government infrastructure push AL’sexpanded product pipeline positions it for sustainable future growth.View and Valuation: We revise our FY26/27 EPS estimates down by2.0%/5.5%. We value the core business at 20x (unchanged) on the averageFY27/28E EPS, while we introduce FY28 estimates and arrive at a value of INR131. We assign a value of INR 15 to HLFL and INR 4 to Switch Mobility (asdetailed in Exhibit 1), leading to a revised target price of INR 150. We maintainour BUY rating on the stock.

LTTS reported Q1FY26 performance in-line with consensus estimates• Revenue for Q1FY26 came at INR 28.6Bn, up 13.6% YoY but down 2.8% QoQ(vs Consensus est. at INR 29.1Bn).• EBIT for Q1FY26 came at INR 3.8Bn, down 0.6% YoY and 3.2% QoQ (vsConsensus est. at INR 3.9Bn). EBIT margin was down 228bps YoY but up10bps QoQ to 13.3% (vs Consensus est. at 13.4%).• PAT for Q1FY26 stood at INR 3.1Bn, up 0.7% YoY and 1.5% QoQ (vsConsensus est. at INR 3.1Bn).Mixed Q1; Strong deal wins & Sustainability segment to drive H2 recovery: InQ1FY26, LTTS reported revenue of USD 335.3Mn, decline of 2.9% QoQ but anincrease of 13.6% YoY in USD terms. In CC terms, growth was down 4.2% QoQ,highlighting short-term execution headwinds & weakness in Mobility & Technologyvertical partially offset by strong performance in Sustainability segment. Deal winsremained strong; with company crossing USD 200Mn in Large deal TCV for thethird consecutive quarter. Overall, the company reported a mixed Q1FY26performance, with SWC declining sequentially due to seasonality, whileSustainability remained a standout, crossing USD 100Mn quarterly run-rate drivenby high-margin large deals. Technology segment saw contributions from Intelliswiftbut faced margin pressure; Mobility stayed soft amid EV-related caution & pricingpressure, though a USD 50Mn deal win last quarter & Software DevelopmentVehicle (SDV) demand offer modest upside. Despite near-term headwinds, weremain constructive on the medium-term outlook, supported by strong multivertical portfolio, rising AI-led demand, & robust deal momentum. H2FY26 isexpected to drive recovery in revenue and profitability, backed by sustainedUSD 200M+ quarterly TCVs, deal ramp-ups, and Intelliswift integration.EBITM target of mid-16% by Q4FY27E remains intact: In Q1FY26, EBIT marginstood at 13.3%, up 10 bps sequentially, despite headwinds from revenue decline,SWC seasonality, & Intelliswift integration costs. Management expects H2FY26margins to improve, driven by broad-based growth, high-margin deal ramp-ups(especially in Sustainability), and SG&A leverage. LTTS reiterated its medium-termtarget of achieving mid-16% EBIT margin by Q4FY27. However, we anticipate aconservative margin expansion to 15.7% by FY27E.View & Valuation: LTTS is well-positioned for a recovery in H2FY26, driven bystrong large-deal wins, robust growth in the Sustainability vertical, and an improvingmargin trajectory. Continued execution on the Intelliswift integration and operatingleverage from SG&A rationalization are expected to support further marginexpansion. Moreover, a healthy pipeline and consistent large-deal TCVs enhancegrowth visibility. While revenue visibility & margin outlook have significantlyimproved, future growth depends on execution capabilities, we revise our PEmultiple to 28x (from 30x earlier) to align with sector peers & have rolled forward ourestimates to FY28E. We expect Revenue/EBIT/PAT to grow at a CAGR of13.4%/16.5%/16.3% over FY25–28E. Consequently, we revise our rating to ADD,maintaining our Target Price of INR 4,850, based on the average of FY27E &FY28E EPS of INR 173.2.