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Apollo Micro Systems shares extended their sharp rebound this week, as strong March quarter numbers and upbeat brokerage commentary kept buying interest intact. The stock closed Tuesday at ₹340 per share, up nearly 10%, after a 6% jump in the previous session. This two-day rally of 16% came alongside March quarter results that exceeded market expectations on profit and revenue growth.

Domestic brokerage firm Choice Institutional Equities said the March quarter performance beat its projections and showed steady project execution. The brokerage now expects the positive trend in Apollo Micro Systems shares to sustain, even after the steep short-term rally. However, given the swift price rise, Choice Institutional Equities has shifted its stance to a more moderate recommendation while still seeing upside from current levels.

Apollo Micro Systems shares: brokerage view and earnings outlook

Choice Institutional Equities backed its view on Apollo Micro Systems shares by highlighting the company's shift in business model. The brokerage said Apollo Micro Systems is moving from being mainly a component vendor to operating as a complete system integrator for defence and related clients. This strategic change, along with backward integration, is expected to strengthen profitability over the medium term.

The brokerage stated, "We gleaned from the management commentary that the broader strategy remains on track, with a gradual shift towards system-level and backward integration. We believe this should support margins in the medium term as the company gains better control over its value chain," adding that order visibility and margin trends support its long-term growth view on the company.

Apollo Micro Systems shares: revised estimates and valuation call

On the back of the strong operating performance, Choice Institutional Equities raised its earnings forecasts for Apollo Micro Systems. The brokerage increased its FY27E and FY28E EPS projections by 27.5% and 19.5%, respectively. It now expects the company's revenue, EBITDA and PAT to rise at compound annual growth rates of 52.9%, 52.9% and 54.6% between FY27 and FY29E.

Despite this optimistic earnings outlook, the brokerage cut its rating on Apollo Micro Systems shares to 'Add' from 'Buy', reflecting the sharp appreciation in the stock price in recent weeks. Even with the rating change, Choice Institutional Equities has set a target price of ₹365 per share, indicating scope for further gains from Tuesday's closing level of ₹340.

Apollo Micro Systems shares: quarterly and yearly financial performance

The March quarter results showed a major jump in profitability for Apollo Micro Systems. Net profit for the period climbed to ₹36.79 crore, up from ₹13.96 crore in the same quarter last year, a year-on-year rise of 163.5%. Consolidated revenue from operations increased to ₹293.26 crore from ₹161.77 crore a year earlier, reflecting 81.3% growth on a yearly basis.

For the full financial year FY26, Apollo Micro Systems reported consolidated revenue from operations of ₹904.32 crore. This compared with ₹562.07 crore in FY25, implying annual growth of 60.9%. The strong operational performance, combined with management's strategy to move up the value chain, has helped the company regain investor attention after a period of sharp price correction.