Target: ₹570
CMP: ₹403.90
We initiate coverage on Apollo Micro Systems with a Buy rating and a TP of ₹570, based on 55x average FY28E and FY29E EPS. We see a potential structural opportunity for Apollo to evolve from a subsystem and electronics supplier into an integrated weapon systems manufacturer. GoI’s keenness to provide complete transfer of technology (ToTs) from DRDO to private players could enable Apollo to secure large, platform-level opportunities, similar to Solar Industries’ evolution into manufacturing complete Pinaka systems.
Moreover, DAP 2026 promises increased indigenisation 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 hopes to garner ₹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 programmes like MIGM mines, Pinaka and QRSAM, EHWT & LWT torpedoes provide significant near-term order inflow visibility.