Apollo Micro Systems Ltd, an Indian electronics and defense manufacturing company, is expanding its operations with new facilities and increased investments in defense production.
Expansion Plans
The company is developing two new facilities spanning 40,000 sq. ft. and 350,000 sq. ft., expected to be completed by 2025. Additionally, Apollo Micro Systems is establishing an integrated defense manufacturing plant in Hyderabad with a planned investment of ₹210 crore. This facility will focus on missile manufacturing, sub-systems, and maintenance, repair, and overhaul (MRO) of weapons. The facility will also support the production of Unmanned Aerial Systems (UAS) and Unmanned Ground Systems (UGS). The company has also approved an investment of ₹5 crore for composite manufacturing plant and machinery.
Diversification and Subsidiary Formation
As part of its diversification strategy, the company formed a subsidiary, Apollo Defence Industries Pvt. Ltd, in September 2023 to expand its defense sector operations.
Financial Developments
In July 2024, the company’s board approved the issuance of 24,500,700 convertible warrants at ₹108 per warrant, amounting to ₹265 crore. The company projects a 25% revenue growth in FY25, with expected EBITDA margins between 22% and 24%. Growth is anticipated due to recent orders from various Defense Public Sector Undertakings (PSUs) and private defense clients.
Financial Performance
Apollo Micro Systems reported a market capitalization of ₹3,935 crore and an enterprise value of ₹4,128 crore. The company recorded sales of ₹536 crore and a profit after tax of ₹56 crore, with an earnings per share (EPS) of ₹1.87. The return on capital employed (ROCE) stood at 12.0%, while the return on equity (ROE) was 7.04%. The company maintained a debt-to-equity ratio of 0.37 and a stock price of ₹128 per share. Sales growth was reported at 56.2%, with profit growth at 108% and a six-month return of 16.3%. Trading at a price-to-earnings (P/E) ratio of 70.2 compared to the industry average of 63.0, the company had an EV/EBITDA of 32.8, indicating a premium valuation. Debt stood at ₹212 crore, with promoter holding at 55.1%.
Apollo Micro Systems continues to expand its footprint in the defense sector with increased manufacturing capacity and financial commitments, positioning itself to leverage future opportunities in domestic defense production.