Overview
Apollo Micro Systems Limited (AMS), based in Hyderabad, India, is a pioneering design and development organization specializing in high-performance electronic systems and solutions for defense, aerospace, and other industrial sectors. Established in 1997, AMS has grown into a significant player in designing and manufacturing cutting-edge technologies tailored for critical applications in extreme environments.
Core Expertise
AMS focuses on end-to-end solutions, including design, development, assembly, and testing. Their core strengths lie in:
- Build-to-Specifications (BTS): Developing custom designs based on client specifications, involving hardware and software development, prototyping, and qualification testing to meet targeted environmental and functional requirements.
- Build-to-Print (BTP): Manufacturing and assembling systems using customer-provided designs, ensuring adherence to stringent standards and quality expectations.
- R&D Capabilities: Certified by CEMILAC for developing airworthiness systems, AMS’s in-house R&D team works across multiple verticals, including aerospace, avionics, space, naval, and automotive sectors.
- Collaborative Partnerships: Recognized as a collaborative R&D partner by Bharat Electronics Limited (BEL), AMS also provides lifecycle support for its solutions.
Solutions and Services
AMS operates in diverse domains, offering innovative solutions and services:
- Defense: Development of rugged electronics meeting military standards for ground, air, and naval applications, including embedded hardware and software for extreme conditions.
- Aerospace and Avionics: Advanced on-board systems and ground support equipment designed for aerospace missions.
- Transportation and Homeland Security: Embedded solutions for security, monitoring, and operational efficiency.
- Electronic Manufacturing Services (EMS): Comprehensive services for hardware design, CAD, and IT/software integration, catering to various industries.
Infrastructure
AMS boasts state-of-the-art facilities and advanced infrastructure to support its extensive R&D and production activities. This includes a robust supply chain management system, ensuring seamless procurement and manufacturing processes.
Achievements and Certifications
AMS’s certifications and consistent quality benchmarks highlight its commitment to excellence. It operates under stringent quality assurance processes, ensuring compliance with both customer requirements and global standards.
Global Reach and Vision
Apollo Micro Systems aims to position itself as a global leader in its domain by continuously innovating and maintaining its focus on customer satisfaction and mission-critical solutions.
Financial Performance Table (FY21-FY24)
Profit and Loss
Summary
Apollo Micro Systems has shown a steady focus on expanding its operations, particularly in defense and aerospace sectors. In FY24, the company reported an 8.52% Profit After Tax (PAT) margin and a 23.27% EBITDA margin, highlighting its operational efficiency and profitability. The company’s ongoing investment in research, development, and manufacturing capabilities continues to strengthen its position in the market
Key Observations:
- Revenue saw a steady year-on-year growth from ₹203.00 crores in FY21 to ₹373.00 crores in FY24.
- Net profit improved proportionately, highlighting operational efficiencies, despite slight sequential reduction from Q4 FY24 due to project cycle
Apollo Micro Systems reported an operating revenue of ₹478.69 crore on a trailing 12-month basis, showcasing an impressive annual revenue growth of 25%. The company’s pre-tax margin stands at a robust 12%, reflecting healthy profitability, while its return on equity (ROE) is 6%, indicating moderate efficiency with room for improvement. With a low debt-to-equity ratio of 2%, the company maintains a strong and stable balance sheet. On the technical front, the stock is currently trading below its key moving averages, and a sustained breakout above these levels is essential for any significant upward momentum.
Recent Significant Order Wins
On 12 July 2024, Apollo Micro Systems announced it was shortlisted for a Make II project by the Indian Army.
This project involves the procurement of a vehicle mounted counter swarm drone system (VMCSDS) (Version I) under the Make II category of DAP-2020. It is the company’s first Make II project and is considered very prestigious.
The systems developed for this project are state-of-the-art and highly futuristic. There is no cost obligation involved for the company in this project.
The Directorate General of AAD, IHQ of MOD (Army), awarded the contract. The nature of the contract is categorized under Make II of DAP-2020, and the order is to be executed within 85 weeks for single-stage composite trials and staff evaluation.
This order boosts the company’s share price by increasing investor confidence. It highlights the company’s capability and potential for future growth in defense technology.
Apart from the big order, the company was also under focused as it announced that it has converted some share warrants into shares.
What Next?
Apollo Micro Systems is set 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.
Its order book is strong, with many contracts moving from development to production. This shift provides greater visibility for future revenue growth.
The company 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.
The company 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. The additional facilities under development will significantly boost production capacity to meet growing demand.
Looking ahead, the company expects revenue to grow by 25% in FY25, driven by new defense contracts and increased production capacity. In FY25 EBITDA margins are anticipated to be between 22% and 24%.
From 2023-24 AR
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.
Disclosure: Invested
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