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Systematix Report
Domestic brokerage firm Systematix has initiated coverage on the defence the defence engineering company Apollo Micro Systems Ltd. with a Buy rating and has set a target price of Rs 570, based on 55 times average FY28E and FY29E earnings per share, implying a potential upside of 46% from the reports current market price of Rs 390.
The brokerage sees a potential structural opportunity for Apollo Micro Systems to evolve from a subsystem and electronics supplier into an integrated weapon systems manufacturer. Government of India's keenness to provide complete transfer of technology (ToTs) from DRDO to private players could enable Apollo Micro Systems to secure large, platform-level opportunities, similar to Solar Industries' evolution into manufacturing complete Pinaka systems.
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Moreover, DAP 2026 promises-
- increased indigenization content requirement for domestic projects,
- assured long-term order visibility,
- increased budgetary allocation in research & development, and
- greater access to the private sector.
In addition, the company is a major production partner in missile systems (across land, air, and water) and a market leader in underwater homing systems for torpedoes and mines. It is also developing UAVs, anti-tank mines, and expanding its physical infrastructure to enable it to execute and test larger platforms. Apollo Micro Systems hopes to garner Rs 12,000 crore worth of orders over the next 24 months from mines, torpedoes and missiles.
The integration of IDL and PEL should provide AMS with complete platform capabilities in missiles, in line with GoI's objective of missile integration capability development by private companies. Its significant presence in key programs like MIGM mines, Pinaka and QRSAM, EHWT and LWT torpedoes provide significant near-term order inflow visibility.
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