🧭 1. At a Glance
Apollo Micro Systems Ltd is a smallcap defense electronics player that designs and builds embedded systems, custom electronic assemblies, and sub-systems for India’s military and aerospace projects. Post its ₹107 Cr acquisition of IDL Explosives, it’s eyeing full-stack defense manufacturing status. The stock has doubled in a year, but at a P/E of nearly 100 and heavy promoter pledging, risk is as real as reward.
🎬 2. Hook – The Smallcap That Wants to Be India’s Mini-DRDO
When you think “Indian defense tech,” you imagine Hindustan Aeronautics, DRDO, or that one uncle who built a DIY drone that scared the neighbors. What you don’t think of is Apollo Micro—a tiny Hyderabad-based firm that’s wiring the future of India’s missiles, aircrafts, and more.
The company has suddenly gone from “nobody knows” to “everybody wants.”
📈 Stock up 110% in 1 year
🎯 ₹250 Cr capex incoming
🧨 Just bought IDL Explosives
🇮🇳 Now bidding for massive PSU orders
But with a P/E of 100 and 46% of promoter stake pledged… can this moon mission sustain orbit?
⚙️ 3. WTF Do They Even Do?
Here’s Apollo’s arsenal of services:
- 📟 Embedded systems design – Used in avionics, naval & ground-based defense.
- 🔧 Electro-mechanical assemblies – The “hardware” inside smart bombs.
- 📦 PCB assembly & testing – They turn code and silicon into physical weapons systems.
- 🛰️ Avionics, satellite systems, and drones – Actively involved in 150+ indigenous projects, 60+ DcPP programs.
- 🔬 Acquired IDL Explosives (2024) – Entering defense-grade explosive manufacturing.
Their pitch: If BEL builds the radar, Apollo builds the brains.
📊 4. Financials – Profit Rocket or Margin Mirage?
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| 🔼 Revenue (₹ Cr) | 298 | 372 | 562 |
| 🔥 Net Profit (₹ Cr) | 19 | 32 | 57 |
| 📈 EPS (₹) | 0.92 | 1.12 | 1.87 |
| 💰 EBITDA Margin (%) | 22% | 23% | 23% |
| 💼 ROCE (%) | 11% | 12% | 14.5% |
💡 5-Year PAT CAGR: 33%
💡 3-Year PAT CAGR: 57%
💡 FY25 Revenue Growth: 51%
💡 FY25 PAT Growth: 81%
Solid growth. But can this justify a 99.8 P/E? 🤔
💸 5. Valuation – Is It Cheap, Meh, or Crack?
| Metric | Value |
|---|---|
| P/E | 99.8x |
| P/B | 9.39x |
| ROE (TTM) | 10.2% |
| Market Cap | ₹5,714 Cr |
| EV/EBITDA (Est.) | ~40x |
This is crack territory valuation… unless FY26 profit triples, which the company claims might happen.
🧮 Fair Value Calculation (Conservative Range):
- FY27E PAT: ₹110 Cr (Assuming 40-50% growth from ₹57 Cr)
- Fair P/E: 30–35x (Smallcap defense rerating)
- FV Range: ₹1,320–₹1,540 Cr market cap
- FV/Share (Post dilution): ₹140–₹165
🧮 Current Price: ₹186 = already ahead of conservative FV
🍿 6. What’s Cooking – News, Triggers, Drama
- ✅ ₹416 Cr fundraise in Jun 2025 via preferential allotment at ₹114/share
- ✅ Acquisition of IDL Explosives completed for ₹107 Cr
- ✅ Secured $13.37 Mn export order for advanced avionics
- ✅ ₹250 Cr capex planned for next-gen defense manufacturing
- ✅ Participating in Make in India defense bids (involving HAL, BEL, BDL)
Basically: Government money is pouring in → Apollo is building infrastructure → investors are front-running FY26 dreams.
🏦 7. Balance Sheet – How Much Debt, How Many Dreams?
| Item | FY25 |
|---|---|
| Equity Capital | ₹31 Cr |
| Reserves | ₹578 Cr |
| Borrowings | ₹295 Cr |
| Total Liabilities | ₹1,262 Cr |
| Fixed Assets + CWIP | ₹240 Cr |
| Inventory Days | 552 😵 |
| Debtor Days | 155 😐 |
| Pledged Promoter Stake | 46% 🚨 |
That pledge alone deserves a “sab theek hai” meme.
💵 8. Cash Flow – Sab Number Game Hai
| Year | CFO (₹ Cr) | FCF (approx) |
|---|---|---|
| FY23 | -₹16 Cr | Negative |
| FY24 | -₹80 Cr | Very Negative |
| FY25 | ₹12 Cr | Barely Positive |
📉 High working capital, long receivables, big capex = poor cash generation.
Not a cash cow yet… more like a startup with defense badges.
🧮 9. Ratios – Sexy or Stressy?
| Ratio | FY25 Value |
|---|---|
| OPM (%) | 23% |
| ROCE (%) | 14.5% |
| ROE (%) | 10.2% |
| Debtor Days | 155 |
| Inventory Days | 552 |
| Debt/Equity | ~0.5x |
| Pledged Shares | 46% 😬 |
✅ Margins sexy
❌ Working capital painful
❌ Pledge ugly
📈 10. P&L Breakdown – Show Me the Money
Apollo’s business is lumpy but growing fast:
- 📅 FY25 Q4 Sales: ₹162 Cr (up 20% YoY)
- 🧾 FY25 PAT: ₹57 Cr vs ₹32 Cr in FY24
- ⚙️ Operating Leverage Kicking In: OPM stayed above 20%
- 🛠️ R&D & Infra spends up 2x in FY25
Still relies heavily on tender-based and milestone-based projects → cash flow mismatch is real.
🤝 11. Peer Comparison – Who Else in the Game?
| Company | P/E | ROCE (%) | PAT Growth | Market Cap |
|---|---|---|---|---|
| Apollo Micro | 99.8 | 14.5% | 81% | ₹5,714 Cr |
| Zen Technologies | 61.1 | 36.7% | 203% | ₹17,117 Cr |
| Data Patterns | 74.3 | 21.6% | 60% | ₹16,491 Cr |
| Astra Microwave | 63.2 | 19.1% | 35% | ₹9,707 Cr |
| Bharat Dynamics | 126.2 | 19.6% | -5% | ₹69,382 Cr |
| HAL | 39.3 | 33.9% | -8% | ₹3,28,743 Cr |
Apollo is cheapest by market cap, most expensive by valuation
Growth is catching up, but not HAL-grade yet.
🧾 12. Misc – Promoters, Shareholding, KMP
| Shareholding (June 2025) | % |
|---|---|
| Promoters | 50.65% |
| FIIs | 6.58% |
| DIIs | 1.41% |
| Public | 41.37% |
📉 Promoter holding down from 59.1% in Mar 2023 to 50.65%
⚠️ Pledge remains high despite fundraise
Key Management:
- Mr. B. Suneel Kumar (CMD)
- Focused on defense integrations and export expansion
🧑⚖️ 13. EduInvesting Verdict™
Apollo Micro Systems is a rare play on India’s defense manufacturing renaissance. It’s gone from a niche contractor to a budding integrated OEM in just 24 months. The numbers are flying high. The vision is ambitious. And the sector tailwind is real.
BUT…
- 99x P/E = zero margin of error
- 46% promoter pledge = 🚨
- Free cash flow = LOL
- Inventory/Receivables = 🤯
This isn’t BEL. This isn’t HAL.
This is a “high-octane defense-themed smallcap” – thrilling and terrifying. Handle with helmet.
✍️ Written by Prashant | 📅 July 11, 2025
Tags: Apollo Micro Systems, Defense Stocks, Smallcap Boom, IDL Explosives, Indian Army Tenders, Make in India, Aerospace OEM, High P/E Stocks, EduInvesting
