Apollo Micro Systems Limited — Investor Meet, 11-02-2025: Analysts/Institutional Investor Meet/Con. Call Updates

1. **Financial Performance:** Apollo Micro Systems reported a strong financial performance for Q3 FY '25, with revenue of INR 1,483.9 million, a significant increase of 62.5% year-over-year. The EBITDA rose by 58.1%, reaching INR 379.6 million, resulting in a stable EBITDA margin of 25.6%. The profit after tax (PAT) surged 83.1% to INR 182.4 million, leading to a PAT margin enhancement of 140 basis points, now at 12.3%. For the nine-month period, revenue from operations grew 69.5% to INR 4,003 million, while PAT increased by an impressive 133.2%.

2. **Future Outlook and Growth Drivers:** Management highlighted plans for capacity expansion and strategic partnerships, particularly in defense systems. Upcoming projects include Unit 2 completion and the development of Unit 3, focused on weapon integration. Notable alliances include an MoU with GRSE for co-production of defense technologies and a consortium with Redon Systems for loitering munition production, showcasing a commitment to domestic defense initiatives.

3. **Order Book and Operational Updates:** The order book stands robust at INR 500-550 crore, primarily driven by missile defense and naval defense segments. Management is targeting to increase this order book to INR 2,500 crore by December '25, leveraging both existing and new projects.

4. **Analyst Q&A Insights (Detailed):**

- **Revenue and Profitability:** Analysts probed revenue projections, with management reaffirming a growth target of 45-50% for FY '26, driven by increased defense orders.

- **Market Position:** Analysts inquired about competitive positioning, with management noting their unique participation in nearly all DRDO missile programs, presenting a strong market foothold.

- **Operational Challenges:** Response to supply chain concerns was positive, with no noted payment delays from the government.

- **Capex and Capital Allocation:** A significant portion of raised capital will go towards working capital (INR 550 crore) and R&D, aligning with their growth strategy.

- **Strategic Priorities:** The convergence towards innovation through R&D partnerships reflects management’s long-term focus on sustaining market competitiveness.

5. **Market or Regulatory Updates:** Upcoming defense initiatives include the Aero India 2025 event, where Apollo will showcase its technological advancements.

6. **Strategic Focus Areas:** Key themes of operational excellence and innovative R&D investments emerged, with a clear trajectory towards market expansion in indigenous defense manufacturing.

7. **Investor Insight:** Considering the robust growth trajectory, strategic partnerships, and a healthy order book coupled with expected operational improvements, the financial health and growth potential suggest a favorable stance towards holding positions.