Apollo Micro Systems Limited

Industrials — Aerospace & Defense · NSE

₹432.00+₹14.90 (+3.57%)

DalalBaazaar Score

63 / 100

🟢 Good

Verdict

NEUTRAL

Risk

High

Driven by negative free cash flow, small-cap size, which brings sharper price swings, a beta above 1.3, so it swings harder than the index.

In simple words: Reasonable but unspectacular business quality, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:09 pm

Caution warranted. Multiple fundamental metrics — flagged in red below — point to either valuation stretch, leverage risk, or weakening profitability. This doesn't mean avoid the stock outright, but it does mean the burden of proof is on the growth story to justify the current price.

Understanding the Business

Company site ↗

The 60-second version of Apollo Micro Systems Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Apollo Micro Systems Limited designs, develops, and assembles electronic and electromechanical solutions in India.

IndustryAerospace & Defense

SectorIndustrials

Employees434

Annual revenue₹904 Cr

How does it make money?

Turns over ₹904 Cr a year. Of every ₹100 of sales, about ₹12 reaches shareholders as profit, with ₹24 left at the operating level before interest, tax and depreciation. Each of its 434 employees supports ₹2.08 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin24.1%

Net margin12.5%

Revenue / employee₹2.08 Cr

Who are its competitors?

The closest listed comparisons in its industry are LARSEN & TOUBRO LTD., SIEMENS LTD, ABB INDIA LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

LARSEN & TOUBRO LTD.P/E 30.1x · ROE 15.2%

SIEMENS LTDP/E 88.8x · ROE 10.5%

ABB INDIA LIMITEDP/E 92.6x · ROE 19.1%

What is its competitive advantage?Little sign of one

Returns on capital of 13.0% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

ROCE13.0%

ROE8.6%

Peer median ROE15.2%

What is the outlook?

4 analysts covering the stock expect revenue to grow about 50.5% and earnings to grow about 85.4% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+50.5%

Est. earnings growth+85.4%

Analysts4

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +204% while net margin moved +98% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+204%

Margin effect+98%

DalalBaazaar Score

63/ 100

Good

Weighted across six categories. Every point is explained below.

✗ Beta of 1.32 — amplifies market moves in both directions
✗ Small Cap: thinner liquidity and sharper drawdowns are normal
✗ Profits have swung sharply from year to year — earnings are hard to forecast
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

72/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

35/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

A good business, but the price already reflects that. The quality is real; the question is whether you are overpaying for it today.

Historical Valuation

Current P/E

127.4x

3Y Median

146.2x

40 monthly readings · mean 144.8x · range 85.9x–228.4x

Sector Median

88.8x

median of 3 sector peers

🟢Current valuation is approximately 13% below its 3y median of 146.2x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

⚠️Against its sector it trades 43% above the peer median of 88.8x.

vs. its own history

Fair

146.2x median over 40 months · -13%

vs. sector peers

Expensive

88.8x median of 3 peers · +43%

vs. generic bands

Expensive

Above 35x

P/E (Trailing)

127.4x

P/B

11.35x

EV/EBITDA

75.7x

PEG

1.56

Dividend Yield

0.06%

What's Good / What's Bad

🟢 What's Going Well4

Margins are improving
EBITDA margin is up from 18.3% to 24.1% over 3 years.
Return on equity is rising
ROE has improved from 4.9% to 8.6%.
Return on capital is rising
ROCE has improved from 9.9% to 13.0%.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention3

Debt is rising
Total debt is up 278% over 3 years — worth checking what it funded.
Free cash flow is negative
The business is not currently covering its capital spending from operations.
Receivables growing faster than sales
Receivables are up 228% against revenue growth of 204% — customers are taking longer to pay.

Red Flags

5 items require attention · 3 high · 2 watch

🔴Debt has risen sharplyFinancial
Total debt is up 278% over 3 years, from ₹144 Cr to ₹543 Cr.
🔴Free cash flow negative for 4 yearsFinancial
The business has not covered its capital spending from operations for several years running, which has to be funded externally.
🔴Profit up while operating cash flow fallsFinancial
Reported profit rose but cash generated by operations declined — worth checking whether earnings are being supported by non-cash items or working capital.
🟡Receivables growing faster than salesFinancial
Receivables up 228% against revenue up 204% — sales are being booked faster than they are collected.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 72% over 3 years — each existing share owns a smaller slice of the company.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 18.3% to 24.1%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Sales are being booked faster than collected
Receivables are up 228% against revenue up 204%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
A premium to the sector to defend
It trades 43% above the peer median. That premium needs a reason that persists, or it closes.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.
Several serious flags at once
3 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 34% a year✓ 44.9% CAGR
Latest reported year was 88.1%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 22%✓ 24.1%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA stays below 2x✗ 2.5x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4Free cash flow remains positive✗ -₹357 Cr
Profit that never becomes cash eventually stops being profit.
5ROCE stays above 10%✓ 13.0%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

8 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✗ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

4 good · 4 neutral · 3 weak

Market Cap

₹16,053 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

127.4x

Expensive

Expensive — verify against sector peers

P/B Ratio

11.35x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹3.39

Profitable

Profitable on a per-share basis

ROE

8.6%

Moderate

Moderate capital efficiency

ROCE

13.0%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.42x

Low

Conservative leverage

Revenue Growth (YoY)

88.1%

Healthy

Healthy top-line growth

Profit Growth (YoY)

38.9%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.06%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

-₹357 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹432

P/E (Forward)

54.5x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

18.4%

Good

Healthy core-business profitability

Net Margin

11.9%

Good

Strong bottom-line conversion

Current Ratio

1.90

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

1.32

High swing

Swings more than the market in both directions

52W Range Position

88%

Near high

Near its 52-week high

Technical Snapshot

SMA 20 / SMA 50

402.7 / 396.1

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

63.3

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹298 Cr	₹372 Cr	₹562 Cr	₹904 Cr	+44.9%
EBITDA	₹55 Cr	₹70 Cr	₹119 Cr	₹218 Cr	+58.7%
EBITDA Margin	18.3%	18.9%	21.1%	24.1%	—
PAT (Net Profit)	₹19 Cr	₹31 Cr	₹56 Cr	₹113 Cr	+81.9%
EPS	₹0.61	₹1.17	₹1.86	₹3.31	+75.6%
ROE	4.9%	6.0%	9.3%	8.6%	—
ROCE	9.9%	10.5%	14.3%	13.0%	—
Total Debt	₹144 Cr	₹208 Cr	₹335 Cr	₹543 Cr	+55.8%
Free Cash Flow	-₹50 Cr	-₹131 Cr	-₹82 Cr	-₹357 Cr	—

🟢 Revenue has grown at 44.9% a year over 3 years.

🟢 EBITDA has grown at 58.7% a year over 3 years.

🟢 EBITDA Margin has risen from 18.3% to 24.1% over 3 years (+5.8 pts).

🟢 PAT (Net Profit) has grown at 81.9% a year over 3 years.

🟢 EPS has grown at 75.6% a year over 3 years.

🟢 ROE has risen from 4.9% to 8.6% over 3 years (+3.7 pts).

🟢 ROCE has risen from 9.9% to 13.0% over 3 years (+3.1 pts).

🔴 Total Debt has grown at 55.8% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹2,368 Cr

Total Liabilities

₹1,060 Cr

Total Debt

₹543 Cr

Cash & Equivalents

₹90 Cr

Operating Cash Flow

-₹130 Cr

Capex

-₹228 Cr

Shareholding (proxy)

Institutional Holding

3.0%

Insider Holding

55.3%

Corporate Actions

Dividend Rate

₹0.25

Ex-Dividend Date

23 Sept 2026

Analyst Consensus

Recommendations

3 Buy · 0 Hold · 1 Sell

Target Price (Mean)

₹468.75

+8.5% vs CMP

Target Range

₹400 – ₹570

Peer Comparison

Company	P/E	ROE
LARSEN & TOUBRO LTD.	30.1x	15.2%
SIEMENS LTD	88.8x	10.5%
ABB INDIA LIMITED	92.6x	19.1%

Recent News

4 mixed2 general

Apollo Micro Systems to host Q2FY27 earnings call on Oct 26

scanx.trade, 16 OctResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Why Systematix is bullish on Apollo Micro Systems after 47% YTD rally; check target price

The Economic Times, 07 SeptAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Apollo Micro Systems Receives CCI Clearance for Premier Explosives Acquisition

Sahi, 24 SeptM&A

🟡Mixed / dependsAcquisitions change the balance sheet before they change the earnings. Look at what was paid, how it was funded, and whether debt rose.

Apollo Micro Systems Has Returned 3,075% in Five Years: The Real Question Is Whether the Next Phase Is as Compelling as the Last

Dalal Street Investment Journal, 04 Aug

Apollo Micro Systems Ltd is Rated Buy

MarketsMojo, 04 Oct

Defence stock rallies 100% in 6 months! ICICI Direct sees 25% upside in Apollo Micro Systems, check target price

Livemint, 22 SeptAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🟢Business QualityStrong14.5/20

🟡Financial HealthAdequate11.8/20

🟢GrowthStrong18.5/20

🟡ProfitabilityModerate9.4/15

🔴ValuationDemanding5.3/15

🔴RiskHigh3.1/10

Good business, demanding price

The quality is real and the price already reflects it. Buying here is a bet that the business keeps compounding for long enough to grow into the multiple — which good businesses often do, but it removes the margin for error that a lower price would have given you. 3 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓Revenue growth stays above 34% a year44.9% CAGR
✓EBITDA margin holds above 22%24.1%
✗Debt / EBITDA stays below 2x2.5x
✗Free cash flow remains positive-₹357 Cr
✓ROCE stays above 10%13.0%