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Published: November 16, 2023
Updated: November 16, 2023

Apollo Micro Systems Surges Over 100% in One Month: A Deep Dive into the Aerospace & Defence Triumph

Shares of Apollo Micro Systems (AMS) have skyrocketed, hitting a remarkable 104% surge in just one month, outpacing the S&P BSE Sensex. The private aerospace & defence company's ascent is attributed to robust earnings and a positive business outlook.

Aerospace & Defence Pioneer:

In a Nutshell:
In the last month, AMS's stock price has more than doubled, reaching a new high of Rs 133.90. This growth stands in stark contrast to the broader market trend, with the S&P BSE Sensex experiencing a 1% dip during the same period. AMS, a pioneer in Design, Development, and assembly of Custom Built Electronics, has seen a substantial increase in its market value.

Diverse Industry Presence:

Industry Spectrum:
AMS's products span various sectors, including Aerospace Systems, Ground Defence, Space, Avionics Systems, Homeland Security, and Transportation. The company's client portfolio boasts prestigious names such as the Defence Research and Development Organisation (DRDO), Indian Army, Indian Navy, and private players like Adani and L&T.

Financial Highlights:

Q2FY24 Performance:
AMS reported impressive financials for the July to September quarter. Consolidated profit after tax doubled to Rs 6.56 crore, with a 54.9% YoY growth in revenue from operations, reaching Rs 87.16 crore. The management attributes this success to strong demand for defence programs like TAL, VARUNASTRA, EHWT, signalling sustained growth in the defence industry.

Strategic Moves and Expansion:

Strategic Initiatives:
AMS has formed a subsidiary, Apollo Defence Industries Private Limited, suggesting potential diversification into the defence industry. The company is entering significant agreements with DRDO and gradually scaling up to be a Weapon Design, Development, and manufacturing entity. The government's allocation of Rs 5.95 lakh crore for the Ministry of Defence in Budget 2023-24 aligns with the company's plans for indigenization.

Government Initiatives and Growth Prospects:

Indian Defence Industry Outlook:
The Indian defence industry is witnessing rapid growth and importance, driven by modernization and indigenization programs. Government initiatives, such as increased foreign direct investment and defence corridors, aim to boost manufacturing and exports, aligning with the Make in India initiative.

Opportunities and International Collaboration:

Global Partnerships:
AMS is in discussions with international companies seeking to manufacture their products under the Make in India initiative. This aligns with the government's fourth Positive Indigenization List, encouraging domestic production and reducing reliance on imports.

Strategic Confidence:

Apollo Micro Systems' exceptional performance, strategic initiatives, and positive outlook in the dynamic Indian defence industry position it as a key player. As the company continues to ride the momentum, investors should keep a close watch on potential diversification, international collaborations, and its role in shaping the future of the defence sector.