Apollo Micro Systems Limited - Research Report

 

Apollo Micro Systems Limited is an B /T+1 group Aerospace & Defense company with having Face value of Rs. 1. The company is a pioneer in design, development, assembly, and testing of electronic and electro mechanical solutions. The co. develops and sells high-performance, mission and time-critical solutions to various industries such as Missile Defence, Naval Defence, Ground Defence, Avionics, Space, Homeland Security, Automotive and Telecom for the Ministry of Defence, government-controlled public sector undertakings and private sector. Company’s clientele includes the Ministry of Defence (MoD), Defence Research and Development Organisation (DRDO), BrahMos Aerospace Private Limited, Bharat Electronics Limited (BEL), Hindustan Aeronautics Limited (HAL), and units operated by the Indian Space Research Organisation (ISRO) . Company invests nearly 7% to 8% of revenues on R&D every year to enhance their operating efficiency and build new capabilities to introduce pioneering products and services. Company has been engaged in discussions with different innovative start-up companies in the defence and space research sector with the objective to acquire and integrate their innovative technologies with their own. Company has few upcoming key projects such as Universal Homing System for Light & Heavy Weight Torpedoes, Landing Gear Actuators for Avionic Platforms, Digital RF Seeker Signal Processor, Integrated Guidance Kit for Various Platforms and Under Water Mines. Company clocked revenue of ₹29,752.60 lakhs in FY23, representing a 22.34% increase YoY backed by increase in the order execution and its EBIDTA for the year stood at ₹6,217.49 lakhs, an increase of 34.34% compared to the previous year.

 

Fundamentals (FY22-23):

CMP	Rs. 69.30
52 - week high	Rs. 71.60
52 – week low	Rs. 17.61
Dividend yield % (consolidated)	0.04%
ROE	4.88%
BVPS (Rs.)	185.03
Sales (Rs.)	57 cr.
Debt to Equity	0.37
P/E ratio	3.07
EPS (consolidated)	9.02
P/B ratio	1.50
Market Cap	1,613 Cr.
Face value	Rs. 1

 

 

  

 

Financial Results:

Company’s Net Sales was at Rs 57.69 crore in June 2023 up 2.52%, Quarterly Net Profit at Rs. 1.66 crore in June 2023 up 1.17% and EBITDA stands at Rs. 12.97 crore in June 2023 up 29.18% as compared to June 2022. Company’s EPS has decreased to Rs. 0.08 in June 2023 from Rs. 0.79 in June 2022.

Key Points:

1. Company has bagged projects for strategic programmes worth INR 43.98 Crores and INR 6.88 Crores from various Government organizations.
2. Company has bagged orders from Bharath Dynamics Limited and DRDO, Hyderabad, worth INR 15.30 Crores for TAL Project.
3. Company has also bagged orders worth INR 5.72 Crores from DRDO for installation of CCTV based Security Surveillance and Animal Monitoring Systems at Nehru Zoological Park, Hyderabad.
4. It has also bagged an order for the supply of Electronic Control System for a strategic programme from DRDO worth INR 5.30 Crores.
5. Company also bagged an order for supplying of security & surveillances systems worth INR 59.62 Crores.
6. It bagged a supply order from Bharat Electronics Limited (“BEL”) a Defence Public Sector Undertaking worth INR 49.86 Crores with a repeat order clause, for maximum of 120% of the units originally ordered.
7. Company also incorporated a subsidiary named Ananya SIP RF Technologies Private Limited with 51% equity stake in the company. The subsidiary company has the necessary expertise in Design, Engineering, Development, Manufacture of Modules or sub-modules in RF & Microwave products.
8. The Company has launched new products/ systems in India in association with Form Co. Ltd. , Russia for  Automatic Test Equipment (ATE) for IC, semiconductor, relay and circuit
9. board testing and with Cielo Inertial Solutions Ltd, Israel for Inertial Navigation Solutions like Inertial Measurement Unit (IMU’s), IRU, Gyrocompass, North Finder & INS.
10. Company has entered into an Agreement (”the Agreement”) with M/s Steadicopter Ltd (”Steadicopter”), Israel market and promote Black Eagle 50 Rotary Unmanned Aerial Vehicles (”RUAV”) in India or any other territory.
11. Company has also bagged a supply order from Bharat Dynamics Limited (”BDL”) a Defence Public Sector Undertaking worth INR 129.99 Million.
12. Company has entered into an Agreement
13. M/s P2M Aviation Sagl ("P2M"), Switzerland to market and promote Speed Canard Aircraft across the world. Subsequently, AMS & P2M shall enter into Definitive Agreement pursuant to which P2M shall transfer Technology to AMS which will enable AMS to commence manufacturing of Aircraft.
14. Company has also signed an MOU with BS BRIGHTSTAR GROUP LIMITED, ISREL for Marketing & Technical Consultant for all products and services offered by the Company.
15. Company has also allocated ₹3,077.71 lakhs during the year towards capacity expansion along with plans to set up two new manufacturing units at Hyderabad location over the next few years through organic means. The company also plans to expand the same manufacturing facility to 3,30,000+ sq. ft in near future.

 

In last 3 Years the stock gave a return of 500% as compared to the rise of Sensex and Nifty in the same period.

The Ministry of Defence, under the Government of India, has allocated ₹5,25,166 crores for the modernization of armed forces, production facilities, maintenance, and research and development. Ministry of Defence has also approved the purchase of military equipment and platforms worth ₹76,390 crores from domestic industries along with the proactive approach to foreign trade by increasing joint agreements with countries like UAE, Kazakhstan, and the US for defence manufacturing and strengthening defence ties. Considering company’s clientele filled with Defence and Space companies, it is in a very sweet spot to enjoy long term benefits bigger defence allocations. Company’s strong order book positions, long term ties, Joint Ventures, and Acquisitions along with good financial performance make it a good option for long term investors.

 

HET ZAVERI

info@smartinvestment.in

 

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