Dr. Vikram Ambalal Sarabhai, father of India’s space programme, once said, “We do not have the fantasy of competing with the economically advanced nations in the exploration of the moon or the planets or manned space flight. But we are convinced that if we are to play a meaningful role nationally, and in the community of nations, we must be second to none in the application of advanced technologies to the real problems of man and society.”
India has made its mark in the global space industry with successful, cost-efficient missions such as Chandrayan and Mangalyaan. It now aims to expand its share of the global space economy from 2% to more than 10% by 2030. Instead of focusing solely on space exploration, it is eyeing growth potential in downstream space tech, where industries use satellites for real-time data to make decisions and manage resources.
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According to a Deloitte report, downstream space tech could be a $610 billion opportunity by 2031, with major growth expected in satellite communication, remote sensing and positioning, navigation, and timing (PNT). These are India’s areas of focus.
In September 2024, Infosys invested in satellite imaging startup GalaxEye to tap the growing demand for precise, real-time satellite data that increase operational efficiency in critical sectors such as defence, logistics, insurance, utilities, infrastructure, agriculture, disaster management and mining.
With the adoption of space data growing, we decided to look for investment opportunities in India’s space tech industry.
India’s space tech industry is practically brand new – the sector was opened to private companies just two or three years ago. Most pure-play space tech stocks are startups, and none of them are unicorns yet.
Companies operating in diverse sectors such as aerospace & defence, IT, electronics and infrastructure are shaping India’s space economy. We compiled a list of 18 stocks from various such sectors, ones that got a boost when the government announced investments and allowed foreign direct investment (FDI) in the space sector.Of these, we picked the three companies that reported the fastest revenue growth in the past five years.
The results will surprise you.
#1 Avantel Limited
Avantel Limited tops our list with a five-year revenue CAGR of 35%. It also grew net profit at a CAGR of 42% between 2019 and 2024 thanks to increasing government investment in the space and defence sectors.
With a market cap of around ₹3,900 crore, Avantel is a small-cap stock engaged in satellite communication, wireless communication and embedded systems. It mainly serves government organisations in the defence and aerospace sectors such as Defense Research and Development Organisation (DRDO), Indian Space Research Organisation (ISRO), shipyards, and Indian Railways.
Avantel supplies radio frequency components that facilitate communication, navigation, and data transmission between spacecraft, launch vehicles and ground stations.
If you’re worried about the balance sheet, know that Avantel is almost debt-free, which means shareholders enjoy higher earnings per share (EPS). The company has been sharing its profits with shareholders with regular dividends in 11 of the last 12 years. It did not pay dividends in 2014 as it reported a net loss. The company has also announced two bonus issues and a stock split in the past five years, delivering strong returns to shareholders.
Avantel stock price momentum (2019–2024)
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Strong fundamentals and shareholder returns have driven Avantel’s stock up 3,500% in the past five years. Today, it trades at a price-to-earnings (PE) ratio of 63.9, well above the five-year median of 22.2. The stock may look expensive, but remember the space sector was not as exciting five years ago as it is today.
The demand for satellite data has only just begun. Supportive government policies and growing demand for space downstream services have the potential to generate more orders for Avantel. You could consider tracking this stock even at the current valuation if you are bullish on India’s space economy over the long term.
#2 Data Patterns (India)
Data Patterns (India) is at the second spot with a five-year revenue CAGR of 32%. It grew its net profit at a 87% CAGR over this period. A growing defence budget drove this growth.However, it reported a 12% and 13% decline in the second-quarter net profit and revenue as a customer of completed products deferred their delivery. However, its long-term growth prospects are strong, given its strategic position in the government’s space and defence investments.
With a market cap of around ₹14,700 crore, Data Patterns is a mid-cap stock that manufactures radars, underwater electronics, an electronic warfare suite, avionics and small satellites for the defence and aerospace sectors. About 48% of its revenue comes from DRDO alone. The company is a key contributor to light combat aircraft Tejas, HAL Light Utility Helicopter, and BrahMos missiles.
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Data Patterns has an ISRO-approved space-grade manufacturing facility to develop high-precision data acquisition systems, planar DC-DC converters, and more. IN-SPACe has licensed it to develop miniature synthetic aperture radar (SAR) technology. These licenses and contributions to defence and space make it a key beneficiary of the government’s space and defence investments. The company has a strong order book worth ₹1,281 crore and is targeting orders worth another ₹2,000-3,000 crore in the next 18 to 24 months.
The company is almost debt-free and has ₹1,338 crore in reserve. It shares its profits with shareholders through regular dividends that increase every year.
Data Patterns stock price momentum (December 2021-2024)
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Data Patterns (India) harnessed the bullish momentum in space stocks and listed on the stock exchange in December 2021. Its stock price has surged 246% in these three years. It now trades at a PE ratio of 79.6, slightly above the three-year median of 69.
#3 MTAR Technologies
MTAR Technologies came in third with a five-year revenue CAGR of 26%. Net profit grew at a CAGR of just 7% over this period as it almost halved in FY24 after rising more than 70% in FY23. This sharp dip was due to the company’s over-reliance on a single client, Bloom Energy, which accounted for 70% of its revenue in FY23. Bloom delayed orders because of technological transitions and rising interest rates in the United States, increasing MTAR’s inventory levels and reducing profits.
With a market cap of around ₹5,387 crore, MTAR Technologies is a small-cap stock that manufactures components and equipment for the defence, aerospace, nuclear and clean-energy sectors. Around 62% of its revenue comes from clean energy and just 5% from space. Despite its small share in space tech, its stock got a huge boost when the government announced 100% FDI for manufacturing components and systems/sub-systems for satellites, ground segments and user segments in February 2024.
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That’s because MTAR has been supplying critical components to ISRO for launch vehicles and satellites since 1989. It played a crucial role in the development of the space vehicles that made the Mangalyaan and Chandrayaan II missions a success. MTAR is a high-margin, low-volume business and its profits are thus subject to significant volatility.
Unlike the first two companies, MTAR has ₹184 crore of debt on its balance sheet, which is nonetheless manageable. However, its huge dependence on a single client creates working-capital risks.
MTAR Technologies stock price momentum (March 2021-2024)
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MTAR Technologies listed on the stock exchanges in March 2021 and its stock has surged 72% since. It now trades at a PE ratio of 138, well above the three-year median of 74.4. While the company has working-capital issues, it is well-placed to benefit from India’s ambition to mass-produce and launch space launch vehicles.
Conclusion
Most space tech companies have been operating for 20 to 30 years but listed the stock market only recently, when India opened its space sector to private firms. These three companies show space tech can be a profitable sector, but its growth depends on the government’s policies and budget for the space economy, as private investment is still tiny.
While there is a risk of budget cuts, there is also immense growth potential in the long term.
For the full list of 18 space tech stocks we used, access the Screener.in list here.
For more such analysis, read Profit Pulse.
Note: We have relied on data from Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only.
Puja Tayal is a seasoned financial writer with more than 17 years of experience in fundamental research. She brings a good blend of comprehensive, well-researched insights into a company’s work in her articles.
Disclosure: The writer and her dependants do hold the stocks/commodities/cryptos/any other asset discussed in this article.
