Apollo Micro Sys

Apollo Micro Systems reported a strong FY25, with revenue reaching ₹562.07 crores, marking a 51.24% year-on-year growth. EBITDA for the full year stood at ₹132 crores, reflecting a 54% increase and a healthy margin of 23.5%. Net profit surged by 81.18% year-on-year. For Q4 FY25, revenue increased by 19% to ₹162 crores, and EBITDA grew by 25% to ₹36 crores, with the EBITDA margin expanding by 100 basis points to 22% compared to Q4 FY24.

The company announced the strategic acquisition of IDL Explosives Ltd., a move aimed at becoming a fully integrated Tier-1 defense OEM. This acquisition will enhance manufacturing capabilities, broaden the solution portfolio to include warheads, rocket propellants, and rocket motor designs, and enable entry into the complete ammunition cycle. While IDL Explosives had not reported gross profits in the past three years due to COGS issues, management expects it to achieve positive EBITDA in subsequent quarters post-takeover, with financial consolidation beginning Q2 FY26. The accumulated losses of IDL are also expected to provide tax benefits to Apollo Micro Systems.

Apollo Micro Systems is expanding its operational footprint with Unit-2 scheduled to commence full-fledged manufacturing operations from Q2 FY26, with partial operations already underway. Unit-3 will be occupied in phases, with Phase-1 capital expenditure of ₹150 crores and Phase-2 of ₹100 crores, the latter commencing work in Q4 FY26. The company is investing over ₹50 crores in Unit-3 for critical test equipment. These expansions, coupled with the transition of several products into the series production phase, are expected to significantly reduce the working capital cycle by 100-120 days from FY27 onwards, improving operational cash flow.

The current order book stands at ₹615 crores as of May 23, 2025, and management aims to triple this by March '26. The company is actively involved in several critical defense programs, including Project Kusha (S-400 type), QRSAM, Akash-NG, and ASTRA, providing various subsystems and launcher systems. Significant progress has been made on naval programs, with combat trials for multi-influence ground mines successfully completed and orders expected in the current financial year. Financial approvals for heavy-weight torpedoes (Varunastra, ALWT) are obtained, with orders from BDL anticipated this financial year. Limited series orders for EHWT torpedoes are also expected within the next two weeks.

Apollo Micro Systems is undertaking a preferential round to raise ₹816 crores, with approvals already received from exchanges. These funds will be utilized for working capital, R&D expenditure, innovation in future technologies, and general corporate purposes. The promoter group has participated in this fundraise, and management clarified that funds raised through share pledging are deployed into the company, not for personal use. The promoter shareholding is expected to adjust from around 55% to approximately 51% post-dilution, and a 15% reduction in promoter pledge percentage is anticipated within the next 1-2 weeks.