Buy Apollo Micro Systems Ltd For Target Rs. 240 - Choice Broking Ltd
Q1 margin beat; Strategic depth supports long-term view
We believe APOLLO has delivered a steady quarter, broadly in line with its guidance and continues to demonstrate operational consistency. What stands out is APOLLO’s strong presence across almost all key missile programs under India’s defence modernisation drive. We assume this depth of engagement gives the company a long-term strategic edge, especially as many of these programs move from development to production in the next 1–2 years.
We view APOLLO’s dual-growth engine, i.e. organic innovation and inorganic expansion, as a solid foundation for scalable growth. The IDL Explosives acquisition and RF capability build-out reflect deeper value chain integration, which we believe can enhance profitability and positioning. Looking ahead, with Unit-3 adding capacity and systemlevel deliveries ramping up from FY27E, APOLLO is well-placed to capitalise on strong order momentum. Backed by a INR 735 Cr order book, robust pipeline and rising export visibility, we see it as a compelling long-term play on India’s defence indigenisation.
Missed on Revenue and PAT, but beat on margin
* Revenue for Q1FY26 up by 46.5% YoY & down by 17.4% QoQ at INR 1,336 Mn (vs CIE Est. INR 1,548 Mn)
* EBIDTA for Q1FY26 up by 83.0% YoY and up 13.7% QoQ at INR 409 Mn (vs CIE Est. INR 395 Mn). The EBITDA Margin stood at 30.6%, improved by 612bps YoY (vs CIE Est. of 25.3%)
* PAT for Q1FY26 up by 109.8% YoY and up 26.7% QoQ at INR 177 Mn (vs CIE Est. INR 195 Mn). PAT Margin improved by 400bps YoY, reaching 13.2% (vs CIE Est. 12.6%)
View & valuation: We maintain our BUY rating on APOLLO, backed by its strategic shift from a component supplier to a full-fledged system integrator. The company’s expanding role across key defence programs, robust order pipeline and visible margin trajectory reinforce our conviction in its long-term growth story. Based on our average FY27/28E EPS estimates, we arrive at a target price of INR 240, valuing the stock at 45x forward earnings.
For Detailed Report With Disclaimer Visit. https://choicebroking.in/disclaimer
SEBI Registration no.: INZ 000160131
 2.jpg)