Apollo Micro up 8% on Rs 150-cr capex plan to set up defence mfg facility

The proposed new units will add an additional infrastructure of 300,000 sq ft to its existing infrastructure, and will be capable of handling bulk production

Shares of Apollo Micro Systems (AMS) surged 8 per cent to Rs 61.55 on the BSE in Tuesday's intraday trade, amid heavy volumes, after the company announced Rs 150-crore capex plan to set up a defence equipment manufacturing facility at Hardware Park, Hyderabad.

At 12:04 PM, AMS was trading 7 per cent higher at Rs 60.54 as compared to 0.55 per cent decline in the S&P BSE Sensex. Average trading volume on the counter more-than-doubled today with a combined 3.72 million equity shares having changed hands, thus far, on the NSE and BSE. The stock hit a 52-week high of Rs 63.58 on August 8, 2023.

AMS said the proposed capex plan is subject to approval by the board of directors. The company intends to perform Bhumi Pooja for the plant during the upcoming Dusshera, and plans to complete the project within nine months.

The proposed new units will add an additional infrastructure of 300,000 square feet to its existing infrastructure, and will house a defence electronics and electro-mechanical manufacturing facility capable of handling bulk production.

AMS said the company has also signed multiple Transfer of Technology (ToT) agreements with Defence Research and Development Organisation (DRDO).

Meanwhile, the Government allocated Rs 5.95 trillion to the Ministry of Defence in the Budget 2023-24. During the year, the Government has notified fourth Positive Indigenisation List consisting of 101 items for which there would be an embargo on the imports.

"This represents a great opportunity for the Indian defence industry to manufacture these items using indigenous design, and development capabilities to meet the demand of the armed forces. The company is in discussion with various international companies who wish to manufacture their products under 'Make in India', and this facility would be utilised to meet their manufacturing requirements," said Baddam Karunakar Reddy, Managing Director of the company.

AMS is an electronic, electromechanical and engineering design, manufacturing and supplies company. It designs, develops, and sells high performance, mission, and time critical solutions to Aerospace, Defence, Space & Homeland Security for the Ministry of Defence, government controlled public sector undertakings, and the private sector.

Government of India has set a target of Rs 1.75 trillion of defence production by 2025, which includes an export target of $5 billion. The Indian defence industry comprises public and private sector companies that manufacture defence equipment, systems, and technologies. India has been exporting a range of defence equipment, including helicopters, naval vessels, aircraft, missiles, and armoured vehicles, among others.

Indian space startups have received a total funding of over $200 million since 2021, and with Isro's plan to set up its own space station by 2030, there is potential for further investments by the private sector. From one start-up company in 2012, there are now 196 start-ups in the space sector registered with the Department for Promotion of Industry and Internal Trade (DPIIT).

"Presently, FDI in the satellite establishment and operations is allowed up to 100 per cent through government route only subject to sectoral guidelines of the Department of Space (DoS). This favourable policy can help the sector grow sustainably in the near future," AMS said in its FY23 annual report.