Any current/future new fundraising through debt or equity?

Currently, Apollo Micro Systems does not foresee an immediate need for additional capital infusion. Krishna Sai Kumar mentioned that unless a very large-ticket project comes in, no new debt or equity funding will be required soon. The company is optimizing working capital and expects improvement going forward. Discussions are ongoing for possible acquisitions to grow in the SME sector, which may imply future capital needs, but no specific fundraising mentioned. IPO proceeds utilization has been announced, with remaining balance details to be shared soon. Overall, the company is confident of su

Any current/future capex/capital investment/strategic investment?

The management is actively exploring strategic acquisitions in the SME sector to grow bigger in the defense electronics space. They are in discussions with a few companies and intend to clinch meaningful acquisitions. No specific details or timelines about the capital expenditure or exact investment amounts were disclosed during the call. Post-public issue, the company has started bidding for larger ticket projects which may impact working capital but no immediate additional capital infusion is expected unless very large projects materialize. The focus is on optimizing working capital, leverag

Future growth expectations in sales/revenue/volumes?

Apollo Micro Systems expects positive growth and strong visibility in many ongoing and futuristic programs, aided by initiatives like Make in India promoting indigenous systems. The company aims to maintain the momentum of growth similar to the previous financial year on a quarter-on-quarter and escalated basis. Current project executions and repeat orders from customers indicate consistent order inflow, supporting sustained sales growth. Expansion into larger ticket, turnkey projects post-public issue is planned, potentially increasing revenue scale. The company views itself evolving

Future growth expectations in earnings/operating earnings/profits/EPS?

The company expects to maintain a similar momentum of growth quarter-on-quarter as observed in the previous financial year, with an overall positive outlook (Page 6, 12). EBITDA margins are expected to be better than the previous year though exact figures are not provided to avoid speculation (Page 8). Operating margins typically remain stable with minor fluctuations (+/- 1-2%) and have shown historically consistent gross profit margins (Page 8). The company foresees strong visibility of orders from strategic programs, aided by initiatives like Make in India promoting indigenous systems (Page

Current/ Expected Orderbook/ Pending Orders?

Apollo Micro Systems maintains an order book with an average execution horizon of 9 to 12 months. The company expects to announce a significant repeat order from an existing customer shortly, post which a consolidated order book figure will be disclosed. Orders are picked strategically, often following platform manufacturer releases; repeat orders are key for business continuity. Current order inflows indicate strong visibility and positive momentum, aided by programs in defense and non-defense sectors. The company is working on a mix of projects including Make in India initiatives, with diver

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Apollo Micro Systems LtdQ3 FY19Aerospace & Defense

Apollo Micro Systems Ltd Q3 FY19 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹394P/E: 117.8Market Cap: ₹10.5K CrSector: Aerospace & Defense

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

Yes

Order

Yes

Capex

Yes

3 of 5 growth signals are positive.

Full analysis

Revenue guidance

Category 3

→Apollo Micro Systems expects positive growth and strong visibility in many ongoing and futuristic programs, aided by initiatives like Make in India promoting indigenous systems.
→The company aims to maintain the momentum of growth similar to the previous financial year on a quarter-on-quarter and escalated basis.
→Current project executions and repeat orders from customers indicate consistent order inflow, supporting sustained sales growth.
→Expansion into larger ticket, turnkey projects post-public issue is planned, potentially increasing revenue scale.
→The company views itself evolving into a prominent player with a strong role in ongoing programs, though not specifying exact revenue targets.
→Growth is expected with better working capital cycle management and strategic project acquisitions.
→No fixed yearly revenue guidance is provided, but Q2 figures and order book trends suggest revenue in the range of Rs. 450-500 crore manageable under current capital employed.

Margin guidance

Category 3

→The company expects to maintain a similar momentum of growth quarter-on-quarter as observed in the previous financial year, with an overall positive outlook (Page 6, 12).
→EBITDA margins are expected to be better than the previous year though exact figures are not provided to avoid speculation (Page 8).
→Operating margins typically remain stable with minor fluctuations (+/- 1-2%) and have shown historically consistent gross profit margins (Page 8).
→The company foresees strong visibility of orders from strategic programs, aided by initiatives like Make in India promoting indigenous systems (Page 12).
→Consistent order flow is anticipated in technology-driven segments with no immediate requirement for additional capital infusion unless very large-ticket projects occur (Pages 12-13).
→Interim dividend has been declared, indicating confidence in generating profits (Page 13).
→Overall, the company aims to be a prominent key player in its domain with optimistic growth in revenue and profits over the coming years (Page 12).

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Fundraise plans

Yes

→Currently, Apollo Micro Systems does not foresee an immediate need for additional capital infusion.
→Krishna Sai Kumar mentioned that unless a very large-ticket project comes in, no new debt or equity funding will be required soon.
→The company is optimizing working capital and expects improvement going forward.
→Discussions are ongoing for possible acquisitions to grow in the SME sector, which may imply future capital needs, but no specific fundraising mentioned.
→IPO proceeds utilization has been announced, with remaining balance details to be shared soon.
→Overall, the company is confident of sustaining operations and growth with existing capital employed (~350-400 crore).

Order book

Yes

→Apollo Micro Systems maintains an order book with an average execution horizon of 9 to 12 months.
→The company expects to announce a significant repeat order from an existing customer shortly, post which a consolidated order book figure will be disclosed.
→Orders are picked strategically, often following platform manufacturer releases; repeat orders are key for business continuity.
→Current order inflows indicate strong visibility and positive momentum, aided by programs in defense and non-defense sectors.
→The company is working on a mix of projects including Make in India initiatives, with diversified clientele spanning DRDO, PSUs, private defense, and others.
→No specific quantified order book value was provided in the transcript, but management indicated ongoing robust inquiry trends and strategic orders awaiting announcement.

Capex plans

Yes

→The management is actively exploring strategic acquisitions in the SME sector to grow bigger in the defense electronics space.
→They are in discussions with a few companies and intend to clinch meaningful acquisitions.
→No specific details or timelines about the capital expenditure or exact investment amounts were disclosed during the call.
→Post-public issue, the company has started bidding for larger ticket projects which may impact working capital but no immediate additional capital infusion is expected unless very large projects materialize.
→The focus is on optimizing working capital, leveraging similar/raw materials across programs, and scaling up operations rather than heavy capex.
→No explicit mention of standalone capex plans; emphasis appears more on strategic growth via acquisitions and project execution.

How does Apollo Micro Systems Ltd rank vs peers in Aerospace & Defense?

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1Apollo Micro Systems Ltd

Rev 3Mar 3

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