Skip to content

    Apollo Micro Sys

    APOLLO
    Capital Goods·4 Aug 2025
    Management Summary

    Apollo Micro Systems delivered a robust Q1 FY26, marked by strong revenue and profit growth, significant margin expansion, and a maiden export order. The company is actively pursuing a substantial order pipeline in the defense sector, progressing with its capex plans, and nearing completion of the IDL Explosives acquisition for backward integration. Management provided optimistic guidance for future revenue growth and margin improvement, alongside updates on key defense projects.

    Highlights

    8
    • Revenue surged 46% YoY to INR234 crores.

    • EBITDA increased 83% YoY to INR41 crores.

    • EBITDA margin expanded by 600 basis points to 31%.

    • PAT more than doubled, growing 110% YoY to INR18 crores.

    • PAT margin improved by 400 basis points to 13%.

    • Secured a maiden export order valued at $13.37 million (INR113.81 crores).

    • Credit rating upgraded to ACUITE A- / A2+.

    • Order book stood at INR735 crores as of June 30, 2025.

    What Changed2

    vs Q2 FY26

    Guidance items8 → 11 (+3)Risks discussed1 → 3 (+2)

    Key financials

    Single quarter

    05 metrics
    1. 01Revenue₹234 Cr+46%YoY
    2. 02EBITDA₹41 Cr+83%YoY
    3. 03EBITDA Margin31%+6%YoY
    4. 04PAT₹18 Cr+110.0%YoY
    5. 05PAT Margin13%+4%YoY

    Order Book

    high confidence

    Total Value

    ₹ 735 crores

    as of 2025-06-30

    quantified

    Inflow this qtr

    ₹ 113.81 crores

    Pipeline

    qualified rfp

    MOD is releasing INR2 lakh crores worth of orders in next six months. Apollo is involved in 63% of electronics and electromechanical activities for missile programs. MIGM for Apollo and BDL could be around INR2,000 crores each. QRSAM order expected before December. ATGM order expected before September.

    "The company has a robust order book and is expecting significant new orders from various defense programs, including QRSAM, MIGM, ATGM, and torpedo systems, with strong participation in MOD's upcoming INR2 lakh crores orders."

    Source:
    Prepared remarks

    Capital allocation

    3
    high confidence
    CategoryHeadline
    Capex

    Capex disclosed

    M&A

    IDL Explosives

    acquisition · pending regulatory · Consideration ₹NaN (undisclosed)

    Liquidity

    Liquidity disclosed

    50% of the warrants amount received, remaining INR325 crores expected within next four months for working capital.

    Guidance & targets

    11
    CategoryTargetPriority
    Revenue
    Revenue CAGR
    45-50%
    High
    Margin
    Operating Margins
    Improve
    High
    Margin
    Operating Margins
    Moderate margin expansion
    High
    Working Capital
    Working Capital Cycle Days
    Reduce by 100-120 days
    High
    Promoter Pledge
    Promoter Pledge
    Zero
    High
    Export
    Earmarked for Export Product Development
    INR1,000 million
    High
    Order Inflow
    QRSAM Order
    Expected
    High
    Order Inflow
    ATGM Order
    Expected
    High
    Order Inflow
    MIGM Order
    Expected
    High
    Order Inflow
    MOD Order Release
    INR2 lakh crores
    High
    Project Timeline
    Project Kusha Development Completion
    Complete
    High

    IDL Explosives Acquisition Completion

    Next quarter
    CurrentFormalities ongoing, expected to complete this week
    TargetAcquisition closed, integration started

    Why it matters

    Crucial for backward integration and expanding product capabilities, especially for MIGM, impacting future revenue and margins.

    IDL acquisition formalities going on. I think most probably this week we'll be completing.

    How to verify

    capital_allocation.m_and_a[target='IDL Explosives'].status

    Risks & concerns

    3
    RiskSeverity

    National Security Sensitivity of Discussions

    Management requested participants to avoid extremely sensitive questions as recorded calls are published and could jeopardize national security.Management acknowledged

    medium

    Rare Earth Metal Supply Chain Challenges

    Analyst inquired about challenges from rare earth metal restrictions; management stated no current challenges but it's a sensitive topic they are restrained from discussing.Analyst downplayed

    low

    Exclusivity of DRDO Technology Transfer for DCPP Partners

    Analyst questioned if DCPP partners have sole access to DRDO technology, citing DRDO website; management stated it's an internal issue being addressed, clarifying MIGM case is unique.Analyst acknowledged

    medium

    Q&A highlights

    8

    “Okay. The order book currently stands at around INR735 crores. And regarding the MIGM order update, I would like to say that the priorities keep shifting in certain things. ... I'm expecting before December, this QRSAM order we are expecting.”

    Provides the current order book value and specific timelines for anticipated large defense orders, crucial for future revenue visibility.

    asked by Shreyansh Gatani

    3 min read8 chapters

    Detailed Narrative

    01

    Q1 FY26 Financial Performance Highlights

    Apollo Micro Systems reported a strong Q1 FY26, with revenues increasing 46% year-over-year to INR234 crores. EBITDA grew by 83% to INR41 crores, resulting in a 600 basis point expansion of the EBITDA margin to 31%. Net profit saw a significant rise of 110% year-over-year, reaching INR18 crores, and the PAT margin improved by 400 basis points to 13%. These results underscore consistent execution and operational discipline.

    02

    Strategic Milestones: Export Order & Credit Rating Upgrade

    The company achieved a maiden export order valued at $13.37 million, equivalent to approximately INR113.81 crores, for advanced avionics systems with dual-use applications. This marks a significant step in global progress. Additionally, ACUITE Ratings upgraded Apollo's long-term credit rating by two notches to A- (A2+ for short-term), reflecting enhanced confidence in the company's financial strength and future trajectory.

    03

    Order Book and Key Project Updates

    As of June 30, 2025, the order book stood at INR735 crores. Management anticipates significant order inflows, including QRSAM orders before December and ATGM orders before September. Apollo is a DCPP partner for MIGM, expecting orders potentially around INR2,000 crores. The company is also involved in Project Kusha, developing onboard systems and software, with trial tests planned in the coming months and production expected within two years. MOD is projected to release INR2 lakh crores worth of orders in the next six months, with Apollo participating in 63% of the electronics and electromechanical activities for missile programs.

    04

    Capital Expenditure and Capacity Expansion

    The second phase of Apollo's capex program is progressing smoothly, with no delays. This expansion is critical for future production capabilities and is expected to contribute to reducing the working capital cycle from FY27 onwards. Unit 3 is on track to be ready for occupation by October 2025, with operational listing targeted by December 2025, further enhancing the company's manufacturing capacity.

    05

    IDL Explosives Acquisition and Backward Integration

    The acquisition formalities for IDL Explosives are expected to be completed within the current week. This strategic acquisition is aimed at backward integration, allowing Apollo to develop in-house propulsion and warhead capabilities. This will enable the company to produce full-fledged products such as short-range rockets, anti-submarine warheads, mines, and aerial bombs, thereby increasing its value share in various missile programs.

    06

    Financial Guidance and Long-Term Outlook

    Apollo projects a revenue CAGR of 45-50% for FY26 and FY27, driven by its core business. Operating margins are expected to improve in the first half of FY26 due to favorable operating leverage and product mix, with moderate expansion continuing into FY27. The company is also committed to reducing its promoter pledge to zero by FY26 and aims to reduce the working capital cycle by 100-120 days from FY27 onwards.

    07

    Working Capital Management and Fund Utilization

    To support its growth and operational needs, Apollo has raised funds through warrants. Currently, 50% of the warrants amount has been received, with the remaining INR325 crores expected within the next four months. These funds are specifically earmarked for meeting the company's working capital requirements, rather than for capital expenditure.

    08

    New Initiatives: RF Business and Drones

    Apollo is actively building its own RF capabilities and had contemplated an acquisition in this area, though the IDL acquisition took precedence. The company is also developing delivery cargo drones, including for defense applications, with a final model to be released after internal trials. These initiatives highlight Apollo's focus on expanding its technological offerings and exploring new growth avenues in the defense sector.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.