An electronic, electromechanical and engineering design, manufacturing and supplies company is worth keeping in your radar after the company announced its Q2 FY26 financial results, order book, acquisitions, management commentary & guidance and more.
We are talking about Apollo Micro Systems Limited, which is mainly into the supply of electronics and electro-mechanical systems and components, including design, research & development of systems which are used in missile programmes, underwater missile programmes, avionics systems, ship-borne systems, submarine systems, etc.
With a market cap of Rs. 9,244 crores, shares of Apollo Micro Systems Limited surged around 2 percent to Rs. 281.65 on Wednesday morning trading session, as against its previous closing of Rs. 276.5 on BSE. The stock has delivered multibagger returns of around 186 percent in one year, but has fallen by over 12 percent in one month.
Company overview & Product Portfolio
Established in 1985 and headquartered in Hyderabad, Apollo Micro Systems Limited (AMS) is a leading technology provider of high-performance, mission-critical solutions for the defence sector. Its expertise spans weapon electronic systems across ground defence, missile defence and naval defence. AMS is the only company with the highest participation in the indigenous missile programs of DRDO.
The company’s existing portfolio comprises a range of weapon systems that have either completed qualification or are in advanced stages of the qualification process. These include underwater mines, underwater moored mines, anti-submarine warfare rockets, medium-range aerial rockets, limpet mines, and aerial bombs. All these systems have been indigenously developed and produced in-house.
In Q2 FY26, AMS achieved a major strategic milestone with the acquisition of IDL Explosives Ltd. This development marks a significant step forward in the company’s journey toward becoming a fully integrated Tier-1 defence OEM. The acquisition strengthens AMS’s manufacturing capabilities and expands its solutions portfolio across critical segments of India’s defence supply chain. This milestone represents an important advancement for the company, positioning it for greater scale, operational synergy, and long-term growth.
Manufacturing Capabilities
The company operates manufacturing units in Hyderabad and Rourkela (Odisha). As part of its backward integration strategy, AMS has initiated the construction of an Integrated Plant for Ingenious Defence Systems (IPIDS). This facility is expected to enhance in-house capabilities, expand production capacity, and strengthen its position as a Tier-I end-to-end OEM manufacturer. Once operational, it will support scaling up production to meet growing demand.
Additionally, the company has invested in a new weapon integration facility (Unit-III). While Unit-I will focus on R&D activities, production operations will be carried out at Unit-II and Unit-III. The new unit will also serve as a consolidated manufacturing hub, streamlining processes and integration.
In FY25, the company’s R&D efforts resulted in the successful development of aerial bombs, underwater acoustic sensors, critical actuation systems, secured data links, and several other advanced defence products. Ongoing projects include work on critical and next-generation solutions.
The dedicated R&D team consists of experienced engineers specialising in embedded hardware and software development, with expertise spanning aerospace, avionics, space, naval, on-board systems, and ground support equipment. For FY26, an allocation of Rs. 100 crore has been earmarked for R&D initiatives.
Management Commentary & Guidance
Recent geopolitical developments, particularly the India–Pakistan conflict, have accelerated the demand for indigenously developed defence solutions. During this period, several of the company’s systems were successfully tested and demonstrated, attracting strong interest and engagement across the defence value chain.
Looking ahead, AMS expects its revenue to grow at a compound annual growth rate (CAGR) of 45-50 percent over the next two years, driven entirely by its core business operations, excluding any contribution from the recent acquisition. This growth outlook is supported by a robust order book and a pipeline of products transitioning into the production phase.
The company’s receivables currently stand at Rs. 360 crore. The management stated that receivables are expected to decline significantly by the end of the current financial year. This improvement will be driven by the completion of several long-gestation projects that had extended payment cycles. A visible reduction is anticipated in Q3, with a more substantial drop in Q4.
They further added that from FY27 onwards, receivables should remain lower, as the company shifts focus towards production-based orders instead of R&D-heavy projects.
Financials & Order Book
In Q2 FY26, Apollo Micro Systems reported a consolidated revenue from operations of Rs. 225.3 crores, a significant growth of around 69 percent QoQ and 40 percent YoY. This strong performance was primarily driven by the efficient execution of the company’s order book and the smooth transition of multiple high-value systems into the production phase.
Similarly, the company’s net profit for the quarter stood at Rs. 30 crores, representing an increase of nearly 70 percent QoQ and 91 percent YoY. further, the PAT margin increased to 13.3 percent in Q2 FY26, up from 9.8 percent in Q2 FY25 and 13.2 percent in Q1 FY26, indicating stronger profitability.
The company reported a consolidated EBITDA of Rs. 59.2 crore in Q2 FY26, a 45 percent QoQ increase from Rs. 40.9 crore in Q1 FY26 and an 80 percent YoY rise from Rs. 33 crore in Q2 FY25. Meanwhile, the EBITDA margin explained by 600 basis points to 26.3 percent in Q2 FY26, compared to 20 percent in Q2 FY25, reflecting better operational efficiency despite a marginal dip from 30.6 percent in Q1 FY26. As of 30th September, the order book of AMS stood at Rs. 785 crores.
Written by Shivani Singh
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