The shares of Apollo Micro Systems Ltd soared 14% higher today, to hit over a four-year high of ₹ 247.45 apiece on the Bombay Stock Exchange (BSE). The share price of the company is on the rise since the past three trading sessions and has clocked fresh 52-week highs in all of them.
Investor interest was piqued in the defence stock after it announced the issuance of warrants to the tune of ₹185 crores. In fact, it surged on the back of heavy volumes and a stable outlook. 37.33 lakh shares changed hands by 02:56 PM on Friday.
Apollo Micro Systems Ltd designs, develops and sells high-performance, mission and time-critical solutions to defence, space and homeland security of the Defence Ministry, government-controlled public sector undertakings and private sectors.
Bharat Dynamics Limited, Bharat Electronics Limited, and Defence Research and Development Organisation (DRDO) are some of the major clients of the company. As of June 2022, it had an unexecuted order book position of ₹ 280 crores.
Issue of warrants and change in authorized share capital
The company in an exchange filing informed the bourses that it will issue up to 1,01,00,070 warrants to Mr Karunakar Reddy Baddam, Promoter and Managing Director of the Company and to certain other non-promoter group persons.
These warrants will be convertible into or exchangeable for one equity share within the period of 18 months, at a price of ₹ 183.30 each (including the warrant subscription price and the warrant exercise price). This will aggregate up to ₹ 185,13,42,831.
Further, it said that it will hold an extraordinary general meeting (EGM) of the members (shareholders) of the company on Saturday, November 12, 2022, to seek members’ consent for the issue of warrants. Friday, 4th November 2022, has been set as the cut-off date for determining the eligibility of the members entitled to vote in the EGM.
The company will be increasing its authorized share capital to ₹ 36 crores divided into 3.6 crore shares equity shares of a face value of ₹ 10 each. This will also be subject to the approval of the shareholders in the EGM.
Multibagger Returns
In the past month, the company’s shares have outperformed the market as its shares zoomed 44.32% as compared to a 3.45% fall in the BSE Sensex. In fact, the shares were trading at ₹ 113.20 on 20th June 2022. Since then, the share price surged by 107.82% to give multibagger returns. Therefore if an investor would have invested in the company’s shares about three months ago, the value of their holdings would have been ₹ 2.07 lakhs today!
“Apollo Micro Systems operates in niche segment of high entry barrier defence and aerospace industry, and the client profile comprises of mostly government organizations, with repeat orders received over the years, which mitigates the counter party credit risk to a large extent,” said rating agency Acuité as it reaffirmed its long-term and short term rating of the bank facilities Apollo Micro Systems with ‘stable’ outlook in September this year.
The rating agency added that the Indian Government’s focus towards indigenisation in the defence sector amid the Make in India thrust implies healthy growth prospects for the company.
Written by Simran Bafna
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