AMS Targets Rs 18.15 Bn Fundraising For Defence Integration, Eyes Tripling of Order Book By FY26

A small-cap company in the Indian defence industry, Apollo Micro Systems, recovered over 60% in May, faring better than a 4% dip in April. With the stock rising almost 3% on the day to touch a new 52-week high of Rs 194 on May 30, bullish sentiment in the defence sector seems to be backing the rally, which has supported the stock gaining 82% over the year. The stock further, has further become a multibagger, delivering more than 1400% returns in 3 years.

The surge was further fueled by the international export contract the company announced on May 28. Having a value of $13.37 million (about Rs 113.81 crore), the contract is for the development of an advanced avionics system intended for use in both civil and military aircraft. The sensitive nature of the engagement has forced the company to withhold technical and program details due to non-disclosure agreements with the client.

Supported by strong order flow and positive outlook, analysts consider positive long-term growth for the company. Share and Stock Brokers Anand Rathi pointed out that Apollo Micro Systems has performed a critical acquisition and signed several MoUs since the December period. The firm focused on the marvellous MIGM mine trials, which are expected to turn into RFQs and possible order conversions in a month. It also expects commercial orders for the company's software-defined torpedo homing systems for heavyweight torpedoes.

"The company reported 29/35.3/53.4% revenue, EBITDA, PAT CAGRs over FY21-FY25. Besides, its RoE/RoCE (post-tax) have expanded 477bps/215bps to 6/6.7%, mainly led by margin expansion. At the CMP, the stock quotes at 102.1x FY25 EPS of Rs1.9," said Anand Rathi in a report.

"At endMar'25, the order book was Rs6.15bn, and management expects it to triple by the year end. In the medium term, the order book is expected to be skewed toward production orders as several defence programs enter the production phase. This should drive strong order-booking, support revenue expansion, improve margins and enhance working capital efficiency," the brokerage further stated.

Several defence programs are entering into a production stage, which is expected to enhance the execution pace of orders and revenue, margin, and working capital-fueled growth, control improvement. The brokerage firm highlighted the company's projections of 29 per cent revenue from FY21-FY25 CAGR, 35.3 percent EBITDA, and 53.4 per cent PAT as tracking strong growth prospects. They also highlighted a 477 bps increase in RoE, with a 215 bps increase to 6 per cent for RoCE as well as 6.7%, mostly due to growing margins. But they are sceptical that the recent surge in stock price will make the valuation less attractive.

The financial results for the quarter ending in March 2025 confirmed these trends. Apollo Micro Systems declared a consolidated net profit of Rs 14 crore, which translates to an increase of 17% YoY, alongside revenue growth of 19.44%, resulting in the total revenue figure of Rs 161.77 crore. The company's EBITDA also experienced a year-on-year growth of 25% and stood at Rs 35.99 crores for the quarter, with EBITDA margin also improving to 22% from 21% in Q4FY24, although this is a sequential decline of 5% QoQ. The board has proposed a final dividend of Rs 0.25 per equity share for FY25, pending shareholder approval at the forthcoming AGM.

Given the robust fundamentals and increasing institutional interest, Apollo MicroSystems continues to attract investor attention as a growing contender in India's defence manufacturing ecosystem.