New Delhi: In this article we talk about a defense company which has given multibagger returns to its investors almost 1190% returns in last 5 years and more than 300% return in the last year.
Apollo Micro Systems Ltd is micro cap company which is working in defense sector its share price was trading at Rs 10.3 on 22 Feb. The company has announced plans to set up a new manufacturing facility with an investment of 210 Cr. The company informed that it intends to manufacture missiles and its sub-systems and also undertake MRO of the weapons at the upcoming facility.
State Bank of India (SBI) approved a grant of Rs 100 crore as a loan to Hyderabad based aerospace and defence firm Apollo Micro Systems Limited. The company is expected to grow significantly with this investment. Stock price has been blooming with the spread of this news
Introduction
This defense stock is Apollo Micro System Ltd which deals in Aerospace and Defense. Apollo Micro System Ltd is an electronic, electro-mechanical, engineering designs, manufacturing and supplies company. it offers custom built commercially off-the shelf solutions based on specific requirements to defense and space customers.
The company’s 52 week low was 24.99 INR and touched the 52 week high 161.70 INR still trading at 129.70 with good opportunity to invest for long term.
Stock Performance
| 1 Year | 3 Year | |
|---|---|---|
| Compounded Sales Growth | 16% | 7% |
| Compounded Profit Growth | 30% | 15% |
| Stock Price CAGR | 310% | 126% |
| Return on Equity | 6% | 5% |
| Returns | 305% | 1000% |
Quarter 3 Performance
- The net sales increased by 10.9% to Rs 91.34 crore.
- Profit Before Tax (PBT) increased by 57.3% to Rs 14.37 crore and Profit After Tax (PAT) increased by 50.9% to Rs 9.96 crore.
- The Net Sales increased by 23.87% to Rs 235.20 crore in nine months.
- The Net Profit has been increased from 7 crore in Q2 to 10 crore in Q3.
| Dec’23 | Sep’23 | |
|---|---|---|
| Sales | 91 | 87 |
| Expenses | 67 | 69 |
| Operating Profit | 24 | 18 |
| Profit Before Tax | 15 | 9 |
| Net Profit | 10 | 7 |
Company Overview
Apollo Micro Systems Ltd was established in 1985 operating in Aerospace and Defense sector. Apollo Micro System Ltd is pioneer in design, development, assembly and testing of custom built electronic hardware & software solutions for Mission Critical applications.
The company offers solutions to Aerospace, Defense and Space as primary customers and also caters solutions for Railways, Automotive and Home Land Security markets. The company has specialized R&D team having expertise working on Aerospace, Avionics, Space, Naval, Automotive for On-Board Systems and Ground Support Equipment.
Financials
| Market Cap | 3,594 Cr |
| P/E Ratio | 141.44 |
| Industry P/E | 42.76 |
| Debt to Equity | 0.40 |
| Return on Equity | 5.69% |
| Dividend | 0.01% |
Net-Profit Margin
| Year | Revenue | Profit |
|---|---|---|
| 2023 | 298 | 19 |
| 2022 | 244 | 15 |
| 2021 | 204 | 10 |
| 2020 | 247 | 14 |
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Customers:
- Indian Railways
- ONGC
- BHEL
- NAL
- HAL
- SCCL
- NTPC
- ISRO
- NMDC
- RCI
- DRDO
- Tata Steel
- Aeronautical Development Agency
Strength
- The company is equipped with precision machining facilities, PCB assembly, inspection and ESS test facilities.
- Company provides End to End assembling, functional testing and environmental testing facilities making it a suitable partner for outsourcing requirements of the customers.
Weakness
- Net cash flow is almost zero that means company is totally depend on loans from banks and institutions in case of cash requirements.
Competitor
| Company | Market Cap | P/E Ratio |
|---|---|---|
| Bharat Electronic Ltd | 1,42,357 | 39.88 |
| Data Patterns (India) Ltd | 12,535 | 75.54 |
| Apollo Micro Systems Ltd | 3,662 | 135.69 |
| DCX Systems Ltd | 3,591 | 43.15 |
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Conclusion
Apollo Micro Systems Limited has to cross a long pathway in the Aerospace, Defense and Railways still the company has delivered a significant amount of profit to its investors. The Government of India is focusing on Make in India initiative and start the manufacturing operation in India itself.
In this Make in India initiative company is developing various projects for defense, space and Railways which is reflecting by its share price increase. Please comment your opinion on Apollo Micro System Limited.
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Disclaimer: I am not a SEBI-registered investment adviser or research analyst. The information shared is only for educational purposes. This is not an investment advice.
In this article we have discuss below points-