Stock of this private defense company has zoomed 170% in 6 months

In the past three months, the stock of Apollo Micro Systems has outperformed market as shares surged 75 per cent, as against 4.8 per cent rise in the S&P BSE Sensex.

Shares of Apollo Micro Systems hit an over four-year high of Rs 321.85, as they gained 5 per cent on the BSE in Wednesday’s intra-day trade in an otherwise weak market. The stock of private aerospace & defense company was trading at its highest level since February 2018. In comparison, the S&P BSE Sensex was down 0.71 per cent at 60,860 at 11:38 AM.

In the past three months, the stock has outperformed market as shares surged 75 per cent, as against 4.8 per cent rise in the S&P BSE Sensex. Moreover, in the past six months, the stock zoomed 170 per cent, as compared to 14 per cent gain in the benchmark index.

Apollo Micro Systems stock price had hit a record high of Rs 480 on listing day i.e. January 22, 2018. The company allotted shares at issue price of Rs 275 per share (discount of Rs 12 per share to retail individual investors and to eligible employees bidding in the employee reservation portion).

On December 5, 2022, Apollo Micro Systems allotted 9.89 million warrants on preferential basis at an issue price and the warrant exercise price of Rs 186 per share aggregating to Rs 183.86 crore to Karunakar Reddy Baddam, Promoter of the Company and to certain other non-promoter persons/ entities. The warrants were convertible into, or exchangeable for, one equity share within the period of 18 months.

The company allotted 4.62 million warrants to Karunakar Reddy Baddam, Promoter and Managing Director of Apollo Micro Systems. The company allotted 1.9 million warrants to Nexpact Limited, Mauritius and 1.2 million warrants to Maybank Securities Pte. Ltd.

Apollo Microsystems is an electronic, electro-mechanical, engineering designs, manufacturing and supplies company. It is involved in design, development and sale of high-performance, mission and time critical solutions to defence, space and home land security of the defence ministry, government controlled public sector undertakings, and private sectors.

That apart, the company has also participated in several indigenous missile programmes, underwater electronic warfare, underwater missiles, surface to air missiles, nuclear missile programmes, surface to surface missile programmes, indigenous submarine programmes, UAV’s long and short endurance, ships, and space programmes.

The management said with national security being an important concern; demand for defence, avionics, naval combat systems and homeland security are on the rise. The government of India’s resolute focuses on ‘Make in India’ and building indigenous weapon systems within the country will contribute to business growth for the Company.

India has an ambitious policy to shift from being the world's largest importer of defence equipment to meeting the majority of its needs through domestic production. This could include joint ventures with foreign firms. The Government is also focusing on weapon export and defence ground system which will benefit the company in the long run, Apollo Micro Systems said in FY22 annual report.

Under the PLI (Production-Linked Incentive) scheme for drones and drone components, incentives totaling Rs 120 crore are provided over the course of three fiscal years, which is over twice the aggregate revenue of all domestic drone manufacturers in FY 2020–21. This momentum will boost the defence industry for a couple of decades and thereby the company, the company said.