Multibagger Stock: Small-cap Apollo Micro Systems clocks 386% gain in 2 years, 920% in 4 years

Indian companies operating in the defence and space sectors have garnered significant interest from Dalal Street investors. This comes amid the Indian government’s emphasis on reducing defence imports and promoting domestic procurement, which has led to strong orders for local companies and, in turn, improved financial performance.

Against this backdrop, stocks in the defence and space sectors have delivered stellar returns, with Apollo Micro Systems being one of them, as its shares have risen rapidly in recent years.

The company's shares, which were trading at ₹21 apiece two years ago, have soared 386% to their current level of ₹102. Over the last four years, the stock has yielded a return of 920%. From June 2022 to November, the stock experienced a sharp, one-way surge, delivering an impressive 1,370% return to investors.

Amid the recent downturn in mid- and small-cap stocks in October, the shares have declined 37% below their recent peak of ₹161. However, investors responded positively to the company’s recently released September quarter results, driving the stock up by 12% in the last three trading sessions.

Stellar performance in Q2

In Q2 FY25, the company achieved a robust revenue growth of 84.38%, reaching ₹161 crore compared to ₹87 crore in Q2 FY24. This growth was largely driven by the effective execution of its order book.

Its EBITDA (excluding Other Income) followed a similar upward trend, increasing by 77.73% to ₹33 crore in Q2 FY25, compared to ₹18 crore in the same quarter last year.

Its PAT for Q2 FY25 rose significantly to ₹15.7 crore, up from ₹7 crore in Q2 FY24. For the half-year performance, the company recorded a revenue increase of 73.91%, totalling ₹252 crore as compared to ₹148 crore in H1 FY24.

The EBITDA grew by 75.02%, amounting to ₹52 crore in H1 FY25 versus ₹31 crore in H1 FY24, with margins at 21.94% in H1 FY25, up slightly from 21.48% in H1 FY24.

Notably, PAT saw a remarkable increase of 194.19%, reaching ₹24 crore in H1 FY25, up from ₹8.2 crore in H1 FY24. Looking at the recent order wins, the company has emerged as the lowest bidder for orders worth ₹28.7 crore from Bharat Electronics.

Apollo Micro Systems is a Hyderabad-based company engaged in the business of electronic, electro-mechanical, engineering designs, manufacturing, and supply. It is engaged in the design, development, and sale of high-performance, mission- and time-critical solutions to defence, space, and homeland security for the Ministry of Defense, government-controlled public sector undertakings, and private sectors.

It also offers custom-built COTS (commercially off-the-shelf) solutions based on specific requirements for defence and space customers.

Outlook

The company is well-positioned, supported by the government’s ambitious goal of exporting over ₹50,000 crore in defence equipment by FY 2028-29. The substantial increase in defence production, which reached ₹1,26,887 crore in FY 2023-24—a notable 16.8% growth from the previous year—demonstrates the sector's strong momentum.

In FY24, India achieved a historic milestone in defence exports, reaching a record ₹21,083 crore, surpassing the previous year’s ₹15,920 crore, as reported by the Ministry of Defense (MoD).

The company is optimistic about its growth prospects. Increasing demand for electronic solutions in the defence sector, combined with the company’s specialised technology offerings, positions it well to capture new opportunities.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.