The Rising Fortunes of Apollo Micro Systems: Key Factors Driving Share Price Surge

In the financial market, a single piece of news can act like a small yet powerful ant capable of toppling a mountain of sugar. This analogy perfectly describes the recent surge in Apollo Micro Systems’ share price. Known for designing and building custom electronic and electro-mechanical solutions, the company’s stock had been on a downward trend throughout 2024. However, a significant announcement has reversed this trajectory, causing the share price to rise by 1.2% this year. Let’s delve into what triggered this turnaround and boosted investor confidence.

Major Order Acquisition

On July 12, 2024, Apollo Micro Systems announced it had been shortlisted for a Make II project by the Indian Army. This prestigious project involves developing a vehicle-mounted counter swarm drone system (VMCSDS) under the Make II category of DAP-2020. Notably, this is Apollo’s first Make II project, and the systems developed for it are highly advanced and futuristic.

The contract, awarded by the Directorate General of AAD, IHQ of MOD (Army), is to be executed within 85 weeks for single-stage composite trials and staff evaluation. This significant order has bolstered the company’s share price by showcasing its capability and potential for future growth in defense technology.

Conversion of Share Warrants

In addition to the significant order win, Apollo Micro Systems made headlines on July 16, 2024, by announcing the listing of additional shares on a preferential basis due to the conversion of warrants. The National Stock Exchange of India (NSE) and BSE granted trading approval for 7.6 million equity shares of Re 1 each. These shares, initially issued to non-promoters on a preferential basis, are now listed and available for trading.

The details of the newly listed shares are as follows:

• 2.1 million shares (distinctive numbers 298864861 to 301024860) are locked in until January 30, 2026.

• 5.4 million shares (distinctive numbers 301024861 to 306489560) are locked in until January 30, 2025.

Future Outlook

Apollo Micro Systems is poised for continued growth following its strong performance in FY24. The company’s revenue and profit have seen significant increases, driven by robust order execution and increased operational scale. This positive momentum is expected to carry forward into FY25.

The company's order book remains strong, with many contracts transitioning from development to production. This shift provides greater visibility for future revenue growth. Apollo Micro Systems continues to focus on developing innovative defense solutions with significant export potential. Participation in Make-II defense projects and potential collaborations for larger platforms will further support this growth.

Expansion and Innovation

Apollo Micro Systems is expanding its manufacturing capabilities with the development of new facilities, including the Integrated Plant for Ingenious Defense Systems (IPiDS) in Hyderabad. This plant will enhance its capabilities in missile and unmanned systems development. Additional facilities under development will significantly boost production capacity to meet growing demand.

The company Is well-positioned to capitalize on the increasing demand for defense exports, particularly in the Middle East. Continuous investment in manufacturing, manpower, and technological capabilities aims to seize these emerging opportunities.

Looking ahead, the company expects revenue to grow by 25% in FY25, driven by new defense contracts and increased production capacity. EBITDA margins are anticipated to be between 22% and 24%. The order book is expected to grow with recent defense orders, ensuring a steady stream of future revenue. Additionally, its subsidiary, Apollo Defence Industries, is exploring potential acquisitions to further strengthen its market position.

Commitment to Excellence

Apollo Micro Systems remains committed to innovation and excellence, focusing on creating value for its employees, customers, and shareholders. The company is confident in its ability to contribute to India’s self-reliance in defense technologies and achieve continued success.

Recent Performance of Apollo Micro Systems’ Share Price

Over the past five days, Apollo Micro Systems’ share price has rallied by 14.3%. In the last month, it has increased by 11.1%. So far in 2024, the share price is up 1.2%, and the stock has surged by 97.2% over the past year.

The stock reached Its 52-week high of Rs 304 on November 20, 2023, and a 52-week low of Rs 52.1 on November 6, 2023.

Company Background

Established in 1985, Apollo Micro Systems is a pioneer in the design, development, and assembly of custom-built electronics and electro-mechanical solutions. It offers state-of-the-art solutions primarily for aerospace, defense, and space customers, while also catering to the railways, automotive, and homeland security markets. Its wide spectrum of technological solutions and end-to-end design, assembly, and testing capabilities give the company an edge over the competition.

In Conclusion, Apollo Micro Systems is on an upward trajectory, driven by significant order wins, strategic share conversions, and robust financial performance. As the company continues to innovate and expand its capabilities, it is well-positioned to capitalize on emerging opportunities in the defense sector. Investors can expect continued growth and value creation as Apollo Micro Systems contributes to India’s defense self-reliance and technological advancements.