Apollo Micro Systems Ltd has emerged as one of the most prominent defence technology stocks, attracting strong investor attention over the past year. The defence and strategic electronics sector has been witnessing heightened demand, driven by domestic production initiatives, global defence modernization, and an increasing focus on indigenous capabilities. Over the last 12 months, the stock has delivered an exceptional return, reflecting both investor confidence and strong execution in key programmes.
Apollo Micro Systems Ltd currently commands a market capitalization of Rs. 11,503.53 crore, with its shares trading at Rs. 344.90. The stock has recorded a remarkable one-year return of 223.78 percent, underscoring its robust growth trajectory and market sentiment.
Company Overview
Founded in 1985 and based in Hyderabad, Apollo Micro Systems Ltd is a leading provider of high-performance, mission-critical solutions for the defence and aerospace sectors. The company specializes in electronic and electromechanical systems, engineering design, and end-to-end manufacturing of advanced defence platforms. Its portfolio spans Missile Systems, Satellite and Space Systems, Naval Systems, Avionics, and Homeland Security. Over four decades, AMS has developed more than 700 on-board technologies.
The company emphasizes integrated capabilities, providing R&D, design, development, assembly, testing, and mass manufacturing under a single roof. AMS’s systems are engineered to endure extreme conditions, ensuring reliability in critical defence operations.
Additionally, the company offers custom Commercial Off-the-Shelf (COTS) solutions, alongside technology-driven platforms for secure communications, underwater electronic warfare, and air defence.
Group Structure and Strategic Subsidiaries
Apollo Micro Systems has structured its operations to strengthen both innovation and manufacturing capacity. Ananya SIP RF Technologies Pvt Ltd focuses on RF and microwave components, modules, and sub-systems.
Apollo Defence Industries Pvt Ltd, incorporated in September 2023, aims to expand AMS’s manufacturing footprint in defence products. The group maintains a strong order book of approximately Rs. 735 crore, reflecting consistent demand across its strategic offerings.
Q1FY26 Key Highlights
In Q1FY26, AMS achieved several milestones signaling robust growth. The company secured its first export order valued at USD 13.37 million (approximately Rs. 113.81 crore) for an advanced Avionic System serving civil and military aircraft platforms. Capital raising efforts via a preference round were highly successful, with 100 percent of warrants and roughly 86.94 percent of equity shares subscribed, highlighting strong investor confidence.
Operational expansion is a central focus, with greenfield and brownfield projects aiming to triple manufacturing capacity. Hyderabad-based facilities are equipped with electrostatic discharge-compliant labs, a full ESS testing unit, and DGQA-standard inspections.
Construction of the Integrated Plant for Ingenious Defence Systems (lPiDS) will enhance in-house capabilities, while a new weapon integration facility in Unit III will consolidate production operations. Unit I remains dedicated to R&D, and Phase 1 of Unit III is expected to commence operations in September CY2025, with Phase 2 beginning in Q4 FY26.
Marquee Clients and Public Sector Collaborations
AMS serves a broad client base, including the Ministry of Defence, public sector undertakings, and private corporations such as Solar Industries, Bharat Dynamics Limited, Bharat Electronics, IndianOil, ISRO, L&T, HAL, AMD, and Tata Advanced Systems.
The company is an approved collaborative R&D partner for Bharat Electronics Limited and has participated in over 60 DRDO programs as a sub-system partner. AMS has also signed strategic MoUs with Munitions India Ltd, TCL, BDL, and GRSE for joint development and supply of advanced weapons and electronic systems.
Breakthroughs in Defence R&D
FY25 witnessed major innovations, with successful development of Aerial Bombs, Underwater Acoustic Sensors, Critical Actuation Systems, and Secured Data Links. AMS’s dedicated R&D team, comprising experts in embedded hardware and software, has remained fully intact, ensuring continuity and innovation. The company has earmarked Rs. 100 crore for R&D in FY26, emphasizing its commitment to advancing aerospace, avionics, space, naval, and ground support technologies.
Strategic Acquisition: IDL Explosives Ltd
Apollo Defence Industries Pvt Ltd acquired 100 percent of IDL Explosives Ltd for Rs. 107 crore in an all-cash transaction. IDL specializes in packaged and bulk explosives for mining and infrastructure and exports products to over 20 countries. The acquisition provides a substantial land bank, with only 40 percent currently utilized, offering significant potential for brownfield expansion and scaling defence production. Financial consolidation of IDL will begin from Q2 FY26.
Capex and Manufacturing Roadmap
Unit II is scheduled to start manufacturing in Q2 FY26, while Unit III will be developed in two phases. Phase 1 of Unit III has a capital allocation of Rs. 150 crore, and Phase 2 will require an additional Rs. 100 crore, starting in Q4 FY26. Several programs transitioning into production are expected to reduce the working capital cycle by 100–120 days from FY27 onwards.
Future Outlook and Strategic Growth
AMS anticipates rising internal demand for explosives and propellants, driven by large-scale production of underwater mines, anti-submarine rockets, short- and medium-range rockets, and other critical munitions. The company aims to expand R&D, pursue high-value, technically complex projects with better margins, and provide end-to-end solutions across the munitions and weapons value chain. Its strategy focuses on achieving global OEM status, expanding domestic and international footprints, and leveraging acquisitions and organic growth to enhance market presence.
Financial Snapshot – Q1FY26
Quarter-on-Quarter (QoQ) Performance: Apollo Micro Systems Ltd reported Q1FY26 sales of Rs. 134 crore, down from Rs. 162 crore in Q4FY25, marking a decline of 17.28 percent. Operating profit increased from Rs. 36 crore to Rs. 41 crore, a rise of 13.89 percent. Profit before tax (PBT) grew from Rs. 22 crore to Rs. 25 crore, an increase of 13.64 percent, while net profit rose from Rs. 14 crore to Rs. 18 crore, up 28.57 percent.
Year-on-Year (YoY) Performance: Compared to Q1FY25, sales surged from Rs. 91 crore to Rs. 134 crore, reflecting a strong growth of 47.25 percent. Operating profit jumped from Rs. 22 crore to Rs. 41 crore, an increase of 86.36 percent. PBT more than doubled from Rs. 12 crore to Rs. 25 crore, up 108.33 percent, and net profit grew from Rs. 8 crore to Rs. 18 crore, marking a 125 percent rise.
Will the Rally Continue?
While Apollo Micro Systems has demonstrated exceptional growth, delivering over 220 percent returns in the past year, the next phase of the rally will depend on upcoming earnings performance and execution of strategic expansion plans.
With Q2FY26 results on the horizon and several initiatives such as export orders, new manufacturing units, and strategic acquisitions underway, investors will be closely watching how effectively the company converts these opportunities into tangible revenue and margin expansion.
Written By Manan Gangwar
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