 "This smallcap defense stock has zoomed 60% in 1 month; nears record high")
Shares of Apollo Micro Systems (AMS) hit a 52-week high of Rs 150, as they rallied 14 per cent on the BSE in Monday’s intra-day trade amid heavy volumes on expectations of strong earnings. In one month, the stock price of this smallcap defense company has zoomed 60 per cent. In comparison, the BSE Sensex has shed 1 per cent during the same period. The stock is trading close to its record high level of Rs 161.75 touched on November 20, 2023.
At 12:15 PM, AMS shares were trading 12 per cent higher at Rs 147.65, as compared to the 0.74 per cent rise in the benchmark index. A combined 17.08 million equity shares have changed hands on the NSE and BSE.
On December 3, 2024, AMS announced that it has been declared the lowest bidder for orders worth Rs 21.42 crore from Bharat Electronics Limited (BEL) and a private company.
Earlier, on November 22, AMS said that it has received orders from the Defence Research and Development Organization (DRDO) and Adani worth Rs 4.65 crore. The company also said that it has been declared the lowest bidder for orders worth Rs 16.96 crore from DRDO, Public Sector Units, the Indian Navy and the Indian Army. The company said that it is eagerly anticipating the release of the official order copies shortly.
In the second quarter (Q2FY25), the company has secured fresh orders worth Rs 130.96 crore, which are yet to be executed, excluding orders obtained and executed in the same quarter. Looking ahead, the company remains optimistic about its growth prospects. The rising demand for electronic solutions in the defence sector, coupled with specialised technology offerings, positions the company well to seize new opportunities.
Meanwhile, on January 9, 2025, AMS’s board approved the allotment of 33.42 million equity shares, worth Rs 381 crore, through preferential allotment on a private placement basis to a select group of persons. The company will allot shares at price of Rs 114 per share.
The board also approved the allotment of 38.17 million convertible equity warrants of the company, at a price of Rs 114 per share, to the promoter group and to certain identified non-promoter persons or entities on a private placement basis.
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AMS is a Hyderabad-based company engaged in the business of electronic, electro-mechanical, engineering designs, manufacturing and supply. The company specialises in the design, development and sale of high-performance, mission and time critical solutions to defence, space and home land security for the Ministry of Defence, government controlled public sector undertakings and private sector companies. AMS also offers custom built COTS (Commercially off-the shelf) solutions based on specific requirements for defence and space customers. Its addressable industries include railways, automotive, and home land security.
Over the past few years, the Indian defence sector has undergone a significant transformation, driven by the government’s forward-thinking policies and a renewed commitment to making India a self-reliant nation.
"Initiatives like ‘Make in India’ and ‘Atmanirbhar Bharat’ have fostered a dynamic ecosystem where companies like ours can truly flourish. The government’s steadfast dedication to indigenous design, development, and manufacturing has unlocked unprecedented opportunities for innovation and growth. The introduction of the Indigenously Designed, Developed, and Manufactured (IDDM) category has been a turning point, finally aligning national policy with our long-standing vision of creating indigenous intellectual property," AMS said in its FY24 annual report.
“Furthermore, supportive policies and funding mechanisms, such as the opening of DRDO test facilities for industry use, and the establishment of dedicated Defence Industrial Corridors, are poised to create a wealth of opportunities for companies like ours”, the management said.
Meanwhile, for the first half (April to September) of the financial year 2024-25 (H1FY25), AMS had reported a robust 194 per cent year-on-year (YoY) jump in its consolidated profit after tax at Rs 24.16 crore, as against Rs 8.21 crore in H1FY24. Revenue from operations grew 73.9 per cent YoY to Rs 251.91 crore. Earnings before interest, tax, depreciation and amortisation (Ebitda) margin improved to 21.94 per cent from 21.48 per cent.
The management said they are encouraged by the government’s ambitious target of exporting over Rs 50,000 crore worth of defence equipment by FY 2028-2029. "The substantial increase in defence production, which reached Rs 1.3 trillion in FY 2023-24, an impressive growth of 16.8 percent from the previous year, highlights the positive momentum within the sector. The government’s commitment to strengthening India’s position as a global leader in defence manufacturing will further enhance our industry and support our strategic objectives," the management said while announcing Q2 results on October 25, 2024.