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Apollo Micro Systems is on fire. The stock surged nearly 8 per cent intraday today (May 21, 2025), hitting Rs 148 and clocking one of the biggest gains in the defence manufacturing pack. While the broader market moved cautiously, this small-cap player seemed to have found a new ignition source.
But what's fuelling this rally—and can it last?
What's happening
The stock has delivered a solid 1,450 per cent return in the last five years. And it's not just historical glory—recent events are keeping the momentum alive:
On May 20, Apollo's stock rose 7.95 per cent in a day, vastly outperforming the Nifty Defence index.
Trading volumes were significantly above average, with bullish momentum across technical indicators.
It's now trading well above its 5-day to 200-day moving averages—a classic sign of sustained investor interest.
Why the rally?
1. Acquisition-led growth
Apollo Defence Industries, a subsidiary, acquired IDL Explosives from GOCL Corporation for Rs 107 crore. This move brings ammunition capabilities into Apollo's fold, strengthening its defence ecosystem.
2. Big fundraising, bigger plans
Recently, the company raised around Rs 790 crore via a preferential issue of shares and warrants. According to exchange filings, this capital will go towards setting up new manufacturing lines and R&D infrastructure, both seen as margin-accretive in the long run.
3. Strong past performance
In Q3 FY25, Apollo Micro reported a 62.5 per cent YoY growth in revenue, reinforcing the business momentum.
What the company does
Hyderabad-based Apollo Micro Systems builds electronic and electromechanical systems for the defence, aerospace, and space sectors. It caters to ISRO, DRDO, Bharat Electronics , and other defence PSUs. Over the years, it's moved from just supplying components to offering integrated defence solutions, including rugged systems for missiles, radars, and combat aircraft.
Key financials
| Metric | Value |
|---|---|
| Market cap | Rs 4,440 crore |
| Revenue (TTM) | Rs 536 crore |
| Net profit (TTM) | Rs 55 crore |
| ROE | 7.4 per cent |
| ROCE | 11.9 per cent |
| P/E ratio | 80.2 |
| P/B ratio | 7.5 |
| Industry P/E | 74.91 |
| EV/EBITDA | 37.1 |
| Dividend yield | 0 per cent |
| Debt-to-equity ratio | 0.4 |
| EPS | Rs 1.8 |
Value Research ratings
| Parameter | Rating |
|---|---|
| Overall | 2/5 stars |
| Quality | 2/10 |
| Growth | 5/10 |
| Valuation | 1/10 |
| Momentum | 9/10 |
High on momentum, but low on fundamentals—investors should tread carefully.
Final word
Apollo Micro Systems is riding strong defence tailwinds, backed by fresh capital and new verticals. But with a steep P/E of 80 and a sharp stock run-up, it's priced for perfection—leaving little room for safety.
Near-term volatility is a risk, though long-term investors bullish on India's defence push may still want to keep it on their watchlist. The company's ambition is clear, but the real test is whether it can sustain momentum without burning out.
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Disclaimer: This is not a stock recommendation. This story was created with the assistance of artificial intelligence and is intended for informational purposes only. Please take it with a pinch of salt and do your own research or consult a financial advisor before making investment decisions.
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