Apollo Micro Systems: A Hidden Gem In Defence Space

Apollo Micro Systems – Company Overview

Apollo Micro Systems Limited (AMS) is a prominent player in the Indian Defence sector, particularly in the areas of electronic manufacturing, hardware designing, weapon integration, and platform integration. It specializes in the design, development, and sale of high-performance solutions that are critical for mission and time-sensitivity operations. 

AMS’s products are used across multiple industries including Aerospace Systems, Ground Defence, Space, Avionics Systems, Homeland Security, and Transportation. It has a manufacturing facility in India which is located in Hyderabad and has a built-up area of 55,000 Square feet with a team of over 300 employees out of this, 150 employees are engaged in research and development. 

The company has over 38 years of experience in the design, development, and assembly of custom-built electronic and electro-mechanical solutions. It provides a gamut of products and services which includes designing, electronic manufacturing services, PCB fabrication, embedded software design and development, circuit board assembly, hardware design services, concept-to-product development, host interface development, and custom-built electronic systems. 

They actively invest an average of 7% to 8% of the revenue in R&D for developing and testing critical components under DRDO programs. 

The company’s clientele consists of prominent government institutions such as the DRDO, Indian Army, Indian Navy, and DPSU’s well as private players like Adani, L&T, and many more.

Also Read: Larsen & Toubro Signs a Contract with DRDO

Financial Performance

During FY23 Company’s revenue surged by 22.34% from Rs 243 Crore to Rs 298 Crore. The Operating Margin stood at Rs 64 Crore with an operating profit margin of 24%. While the Net profit has increased from Rs 15 Crore to Rs 19 Crore. On the company’s balance sheet, the debt is mentioned as around Rs 143 Crore with a debt-to-equity ratio of 0.37 times. If we look at the size of the balance sheet it has increased from Rs 465 Crore to Rs 693 Crore in the last three years. The company is maintaining its ROCE & ROE by 11.4% & 5.92% respectively and the stock is trading at a PE of 47.6 times. 

As per the latest quarterly update, the Promoter holding in the company is 53.21% while FIIs have increased their stake in the company from 0.12% to 5.31% and the DIIs hold 3.22%. The remaining 38.25% is held by public investors. 

Stock Performance

Today, Apollo Micro Systems stock crossed its debut price of Rs 46.50 and also got locked into the upper circuit. It opened at Rs 47.02 up by 3.4% from the previous day’s closing of Rs 45.47 in the BSE. The stock was trading at an all-time high and eventually, it closed at Rs 47.74. Its 52-week high and 52-week lows are Rs 47.74 and Rs 11.31 respectively. The current market capitalisation of the company is Rs 991.27 Crore. The stock has given a magnificent return of 85% in the last six months whereas it has delivered a multibagger return of 304% in just a year. 

Conclusion:

AMS’s position as a leading company in the Indian Defence sector, its specialization in high-performance solutions, and its wide range of industry applications showcase its expertise, capabilities, and dedication to delivering cutting-edge solutions for critical operations. India aims to enhance its defence industry and foster self-reliance through various initiatives to effectively address threats posed by its competitors. The country’s decision is a response to escalating national security concerns, compelling India to prioritize the development of its own defence capabilities. 

Furthermore, the “Make in India” initiative has provided a significant boost to domestic companies, encouraging them to invest in capital expenditures and expand their production capacities. This has resulted in favourable business conditions and, ultimately, improved profitability for these companies. This also boosts the export of defence equipment across the globe from India. Investors must keep this stock on their radar.