Apollo Micro Systems Limited — Q3 FY26 earnings call

Call held 9 Feb 2026

Management summary

Apollo Micro Systems delivered its highest-ever quarterly and nine-month revenue in Q3 FY26, driven by strong order book execution and successful product transitions. The company is strategically expanding its capabilities through significant capex investments and planned acquisitions, aiming to evolve into a full-fledged weapon system manufacturer. Management provided updates on key defense projects, the integration of IDL Explosives, and reiterated its robust growth outlook.

Highlights

  • Q3 FY26 revenue reached INR 252 crores, marking a 70% YoY growth.

  • EBITDA (excluding other income) for Q3 FY26 grew by 33% YoY to INR 50 crores.

  • PAT for Q3 FY26 increased by 25% YoY to INR 23 crores.

  • For the nine months of FY26, revenue stood at INR 611 crores (up 53% YoY) and PAT at INR 71 crores (up 67% YoY).

  • The consolidated order book as of December 31, 2025, was INR 1,305 crores.

  • The company maintains a revenue CAGR guidance of 45-50% over the next three years from its core business.

  • IDL Explosives contributed INR 50.8 crores to Q3 revenue and is expected to achieve EBITDA break-even this quarter.

Key financials

2 periods

Headline

  • Revenue
    ₹252 Cr
    YoY +70.3%
  • EBITDA (excl. other income)
    ₹50 Cr
    YoY +33%
  • PAT
    ₹23 Cr
    YoY +25%
  • IDL Explosives Q3 Revenue Contribution
    ₹50.8 Cr

9M

  • FY26 Revenue
    ₹611 Cr
    YoY +52.8%
  • FY26 EBITDA (excl. other income)
    ₹151 Cr
    YoY +62.4%
  • FY26 EBITDA Margin Expansion
    134 bps
  • FY26 PAT
    ₹71 Cr
    YoY +67%

What they filed

Q1 FY27: revenue up 87.3%, net profit up 38.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue161 148 162 134 225 +40%252 +70%293 +81%251 +87%
EBITDA33 38 36 41 59 +79%50 +32%68 +89%54 +32%
Net profit16 18 14 18 30 +88%23 +28%37 +164%25 +39%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

high confidence

Total value

₹1,305 Cr

as of 2025-12-31 quantified

Execution

Partially of current financial year, rest in next financial year. Orders for next 45-50 days are in pipeline.

Composition

Mix 2 entities
  • IDL Explosives 38.3%
  • Standalone 61.7%

Share of order book by entity

Pipeline

L1 awaiting loa

MOORED Mine order awaiting DAC approval, QRSAM, Akash NG, Heavyweight torpedo, underwater mine programs, anti-drone swarm drones, anti-ship program, RGB 60 program.

The company has a healthy order book with multiple products entering the production phase, including significant contributions to QRSAM, Akash NG, and various naval and missile programs.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex Capex disclosed
    • Phase 3 expansion at Hardware Park (partly commissioned) ₹150 Cr
    • Further expansion on 2.5 acres acquired at Hardware Park
    • Further expansion on 5 acres allotted from Telangana Government ₹100 Cr
    As Phase 3 at Hardware Park we have already commissioned partly in the October end, with a INR150 crores outlay with a term loan of INR110 crores from State Bank of India. With our margin, INR150 crores worth of project we have already implemented and another 2.5 acres we have acquired and we have started civil works for further expansion. And also, we have recently got allotment of another 5 acres of land adjacent to the existing expansion plant from Government of Telangana, where we will be spending at least INR100 to INR150 crores for further expansion.
  • Debt Debt disclosed
    • New borrowing Term loan sanctioned by one of the banks for R&D ₹75 Cr
    • New borrowing Term loan from State Bank of India for Hardware Park Phase 3 capex ₹110 Cr
    As far as finance is concerned, we have mobilized funds as through preferential issue and bank finance is also made available to us as long as we need it, and all the things are in place.
  • M&A IDL Explosives Acquisition · Integrated

    To become a full-fledged weapon manufacturer and produce defense-grade explosives.

    Caused a small dip in consolidated PAT margins in the short term, but expected to be EBITDA break-even this quarter and PAT positive from Q1 FY27.

    And as you know like, explosive company also like we acquired IDL Explosives, we are now going for a good expansion, we want to produce defense-grade explosive we want to produce, and I think we are going to start another six months' time we definitely going to start producing defense-grade explosive also. That is another plan is going on.
  • M&A ADIPL additional acquisition Acquisition · Pending regulatory

    To significantly enhance organic growth and overall strength.

    First, we are also pleased to announce that an additional acquisition by ADIPL, which is expected to be completed before the end of this financial year. This acquisition will significantly enhance our organic growth and overall strength.
  • M&A Couple of companies (unnamed) Acquisition · Pipeline

    To gain presence in new areas.

    And also, we are planning to acquire couple of companies where we don't have presence. I think, in fact, I think, before this financial year end, at least some three companies we are going to, we are going for due diligence. Due diligence is going on, at least one we will be able to close for sure. Yes, if everything goes well, three companies are in pipeline and at least one or two companies' acquisition we want to complete before this financial year end.
  • Liquidity Liquidity disclosed Funds mobilized through preferential issue and bank finance are available as needed.
    As far as finance is concerned, we have mobilized funds as through preferential issue and bank finance is also made available to us as long as we need it, and all the things are in place.

Guidance & targets

Revenue

  • Revenue CAGR (core business) Revenue · next 3 years · High confidence 45-50%
    Looking ahead, we expect revenue to grow at least at a CAGR of 45% to 50% over the next three years, which has always been our, guidance since few quarters, solely by the core business, excluding any contribution from the recent acquisition or the future acquisitions that we do in this financial year.

    — Sai Kumar

Profitability

  • Standalone PAT level Profitability · High confidence 15%
    See on a PAT level, if I talk about, we are going, we are targeting for a 15% PAT level. Yes, consolidated there could be a small, dip in the consolidated basis. Okay, I just want to talk on a standalone basis, I'll just want to talk about standalone basis that, standalone basis the net profit percentage, PAT percentage, we are targeting for 15%.

    — Sai Kumar

  • IDL Explosives EBITDA Profitability · Q3 FY26 · High confidence Break-even
    This quarter I think, we are expecting an EBITDA level to be, break even, break even, okay.

    — Sai Kumar

  • Consolidated PAT guidance Profitability · Q1 next financial year onwards · Medium confidence Will be provided
    But from Q1 next financial year onwards, we will be able to give a guidance on the consolidated basis. But the only thing, guidance that I can give at this point of time, not in an absolute number, is that even after consolidation, even after there is a small dip also, year-on-year point of view, the PAT level margins are going to be on higher side.

    — Sai Kumar

R&D

  • R&D expenditure as % of outlay R&D · subsequent years · Medium confidence 9-10%

    Previously 6-8% → 9-10%

    As you already know, if you visualize, we have been spending around 9% to 10% of our outlay, topline, as R&D expenditure since our company is a bread and butter is R&D. Unless we do R&D, we cannot sustain and we cannot grow in the business. That's why sizable amount is allocated for R&D, and we have even availed a term loan sanctioned by one of the banks, INR75 crores. Lot of programs we have taken up for R&D and around INR50 to INR60 crores we are going to spend in the near future on R&D itself. That is one part.

    — Sudarshan Chiluveru

Market context

  • IDL Explosives PAT/EBITDA Profitability · Q1 FY27 onwards · High confidence Positive
    From next financial year Q1 onwards, the EBITDA level and at a PAT level it was going to be a positive PAT, a positive EBITDA company actually.

    — Sai Kumar

What to watch in Q4 FY26

IDL Explosives EBITDA break-even

Q3 FY26
Current INR 4 crores loss in Q3 FY26 (for 45 days)
Target EBITDA break-even

Why it matters

Crucial for the overall profitability and successful integration of the acquired entity.

This quarter I think, we are expecting an EBITDA level to be, break even, break even, okay.

Risks & concerns

  • Margin dilution from IDL Explosives acquisition

    medium

    The IDL acquisition is causing a temporary dip in consolidated PAT margins, though standalone margins have improved.

    Analyst acknowledged

  • Shareholder rejection of corporate guarantee for subsidiaries

    medium

    Mutual funds voted against a resolution for corporate guarantee to subsidiaries, which management clarified is for support, not related party transactions, and plans to re-engage.

    Analyst explained

  • Supply chain issues affecting DPSUs

    low

    Management indicated that the IDL acquisition provides backward, forward, and vertical integration to address potential supply chain challenges and meet internal/external needs.

    Analyst addressed

Q&A highlights

3 direct, 1 evasive
Shareholder rejection of corporate guarantee for subsidiaries Direct
The fact is that the resolution got defeated because certain people did not understand, whoever has voted negative we have reapproached and we have given a presentation, but they being certain mutual funds, they go by these agencies' reports actually. We did not further move that resolution once again for a reason that even if we move now for the next financial year starting from 1st April we will have to once again approach for, shareholder approval.

This question addressed concerns about corporate governance and related party transactions, clarifying management's intent to support subsidiaries and their plan to re-engage shareholders.

Asked by Manoj Jain

Status of DAC approval for MOORED Mine order Partial
All necessary approvals at all levels are over actually. The, it is just awaiting for a DAC approval, it has come to that level actually. We are most positive and likely that, it may, the file may come up for the DAC approval in the upcoming DAC meeting or maybe it, if it gets slipped, for an operational reasons because certain files, certain number of X number of files only they take up actually, if it slips it may go for another DAC meeting.

This highlights the pending approval for a significant INR 2,500 crores order, which is crucial for the company's future revenue growth and operational scale.

Asked by Deekshant

IDL Explosives standalone losses and turnaround timeline Direct
See primarily, if you see, there is INR4 crores loss that got added actually in the quarter, okay, out of the 45 days that this thing is there. This quarter I think, we are expecting an EBITDA level to be, break even, break even, okay. From next financial year Q1 onwards, the EBITDA level and at a PAT level it was going to be a positive PAT, a positive EBITDA company actually.

Provides clarity on the short-term financial impact of the IDL acquisition and the expected timeline for its profitability, which is key for consolidated margins.

Asked by Abhi Shah

Timeline for clearing promoter pledge Partial
Okay, see like everything goes well, no, like -- We are we are working towards it in few quarters, we should be coming out. We have initially contemplated to come out in this quarter actually, but I think in next few quarters, step by step one after other we should be coming out.

Addresses investor concerns regarding promoter share pledges, indicating management's intention to resolve it in the near future, which can impact investor confidence.

Asked by Akshay

Expectation for consolidated PAT margin Partial
No, no, no, on standalone basis 15%. There will be a dip in the consolidation, because of the IDL, that's what I was trying to say. But from Q1 next financial year onwards, we will be able to give a guidance on the consolidated basis.

Clarifies that while standalone PAT target is 15%, consolidated margins will be impacted by IDL in the short term, with specific guidance to be provided next fiscal year.

Asked by Deekshant

Details on the new acquisition in pipeline Evasive
Acquisition is strategic in nature once again, okay. But we are bound by NDA, I cannot disclose, on exactly what it is actually because many of the people, will make their own assumptions out of it, but good strategic acquisition. Wherever we are doing acquisitions, we will be doing where we do not have a significant presence or we do not have a presence at all.

While management could not disclose specifics due to NDA, it signals ongoing strategic M&A activity to expand capabilities and market presence.

Asked by Shreyans Gathani

Progress on defense explosives licensing and commercial production Partial
Sir, it is too detailed an information which I am not in a position to disclose at this point of time. But broadly, I will answer your question, that a detailed compendium of the different explosives related to defense explosives has, is already ready. And we are for some of the things, we have already started placing orders for the machinery. For some of the things, negotiation is going on, parallelly licensing activity is also parallelly going on. And there is a team of expert consultants who have been nominated to do this job actually. Next financial year, we are likely to get, large-cap, weapon system orders for which we are geared up.

Provides an update on a critical strategic initiative to become a full-fledged weapon system manufacturer, indicating significant progress towards commercialization and future large orders.

Asked by Deepen

Order book execution pace and funding for acquisitions Direct
Sir, the current outstanding order book is around INR1,300 crores. On a consolidated basis actually, okay. So partially of that will be concluded in this financial year, and some running orders, fresh orders, keep coming on a short-term this thing. But majorly, the current for the next 45 days, 50 days to for the end of this financial year, the orders what has to be executed everything are already in the pipeline. Rest of the orders, what do you call are the ones which will be executed in the next financial year where we have further funnel, where we are expecting orders, to contemplate for the guidance that is given on a standalone basis for the company actually. As far as, the ADIPL, which is going to do the acquisition, okay, we are going to infuse funds into that, which will meet that this thing, sir, actually. Currently internal accrual, sir.

Clarifies the execution timeline for the existing order book and confirms that acquisitions will be funded through internal accruals, addressing concerns about debt.

Asked by Santosh Singh

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Detailed narrative

Strong Q3 FY26 Performance and 9M Growth

Apollo Micro Systems reported its highest-ever quarterly and nine-month revenue. For Q3 FY26, revenue surged by 70% YoY to INR 252 crores, with EBITDA (excluding other income) growing 33% YoY to INR 50 crores, and PAT increasing 25% YoY to INR 23 crores. The nine-month performance for FY26 also showed robust growth, with revenue at INR 611 crores (up 53% YoY) and PAT at INR 71 crores (up 67% YoY), demonstrating consistent execution and operational discipline.

Strategic Evolution and Order Book Strength

The company is transitioning from a subsystem manufacturer to a full-fledged weapon system manufacturer, aiming to become a multidisciplinary defense system powerhouse. The consolidated order book stood at INR 1,305 crores as of December 31, 2025, with INR 500 crores attributed to IDL Explosives and INR 800 crores to standalone operations. Key projects like QRSAM, Akash NG, and various naval and missile programs, including a potential INR 2,500 crores MOORED Mine order awaiting DAC approval, underpin future growth.

Aggressive Capex and Acquisition Strategy

Apollo Micro Systems is undertaking significant capital expenditure to expand its capabilities. This includes a INR 150 crores outlay for Phase 3 at Hardware Park, partly commissioned, and plans for another INR 100-150 crores for expansion on 5 acres allotted by the Telangana Government. The company is also actively pursuing acquisitions, with an additional acquisition by ADIPL expected to close before the financial year-end, and 1-2 more companies from a pipeline of three targeted for acquisition to enhance its market presence.

R&D Investment and Operational Efficiency

R&D remains a core focus, with 9-10% of outlay allocated for R&D in subsequent years, supported by a INR 75 crores term loan. The company has allocated INR 100 crores for R&D, with INR 50-60 crores to be spent in the near future. Operational efficiency is being enhanced through SAP implementation, automation to Industry 4.0 standards across factories, and micro-level monitoring of manpower and machinery utilization across its expanding facilities.

IDL Explosives Integration and Profitability Outlook

The acquisition of IDL Explosives is strategic, aiming to enable the production of defense-grade explosives and support backward/forward integration. While IDL contributed INR 50.8 crores to Q3 revenue (for 45 days) and incurred a INR 4 crores loss, it is expected to achieve EBITDA break-even this quarter and become PAT/EBITDA positive from Q1 FY27. This integration is anticipated to improve consolidated margins in the long term, despite a short-term dip.

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