Apollo Micro Systems Limited IPO Review

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Apollo Micro Systems Limited IPO

7.3

Company Background

6.0/10

Price Band

8.0/10

Company Financials

8.0/10

IPO Industry Situation

7.5/10

Reliability

7.0/10

Pros

  • Strong Financial Performance
  • Seasoned Promoters
  • Stable Industry

Cons

  • Small IPO, Low Chances of Allotment
  • Untested Industry

Apollo Micro Systems Limited IPO Background

Before we jump into the details of this upcoming Apollo Micro Systems Limited IPO, let’s look at some of the numbers to get a quick understanding:

IPO NameApollo Micro Systems LimitedApollo Micro Systems Limited
Opening Date10th January, 2018
Shares Issue Size41,44,95556,72,727
Face Value₹10
IPO Price Band₹270 - ₹275
Bid Lot50 Shares
Total Bid Amount₹13,500 - ₹13,700
Listing AtNSE, BSE
Retail Allocation35%
Estimated IPO Size₹156 Crore
Day#No. of Shares SubscribedShares Subscription %age
Day 188,60,5002.14
Day 23,72,44,150 8.99
Day 31,02,47,74,850248

 


Apollo Micro Systems Limited was incorporated in 1985. Apollo Micro Systems is a well established and recognized company with a proven track record of more than 25 years. The company is based in Hyderabad and deals in the business of electronics, electro-mechanical and engineering designs, manufacturing and supply.

Apollo Micro Systems Limited is known for providing high performance and critical solutions to Space, Defense, and Home Land Security for the defence ministry, public sector undertakings (PSU) and private sector companies. The company provides customize commercially off the shelf (COTS) solutions to its defence and space clients.

Apollo Micro Systems Limited is the part of several Indigenous Missile programs such as underwater missiles, surface to air missile, surface to surface missile, and the nuclear missile. The company also involved in various indigenous underwater electronic warfare, submarine programs, UAV’s short and long endurance, ships, and space programs.  

Design and manufacturing unit of Apollo Micro System is located in Hyderabad and have support centres all across the country. The company is a pioneer in design, development and product ionization of customizing Ruggedized software and hardware solutions. Apollo Micro Systems (AMS) has clients in aerospace, space, defence, automotive, railway, and homeland security sector.

The company also is known for its customized rugged weapon system, ground checkout system, fire control systems, launcher control system, etc.

Promoters of the Apollo Micro Systems Limited

Apollo Micro Systems Limited was founded by Baddam Karunakar Reddy. Currently, he is the Managing director of the company. After completing graduation choose to be an entrepreneur and founded Apollo Micro Systems Limited. He has been a part of many successful projects.

The company has the vision to develop indigenous technology which can meet Indian defence requirements to reduce the dependency on the dependency on the imported technology.

The technical director of AMS Chandrapati Venkata Siva Prasad has more than 25 years of experience and known for building complex weapon systems.

His design and product development capabilities are best available in the industry.

Apollo Micro Systems Limited IPO Data Points

The IPO of this Hyderabad based company Apollo Micro Systems Limited will open on 10th January 2018 and close on 12th January 2018. The price band of the Apollo Micro Systems Limited IPO is in the range of ₹270 – ₹275 per share.

The company is offering ₹12 per share discount to the employee and retail investors. Minimum share quantity which retail investors can buy is 50 shares so retail investors can apply in the multiple of 50 shares. For 50 shares the price will be between ₹13,500 – ₹13,700.

The issue structure is 50% qualified institutional buyer (QIB), 15% non-institutional investors (NII), and 35% retail investors. The face value of the equity share is ₹10 and the company is going to issue 19,78,454 shares for retail investors. In total 56,72,727 shares will be issued in this IPO. The issue will fetch around ₹156 crore for Apollo Micro Systems Limited.

The main objective of the issue is to

  • Meet the working capital requirement
  • For general corporate purpose

For working-capital company needs around ₹118.92 crore and the rest of funds which is ₹37.08 crore will be used for other corporate purposes.

In most of the IPO filings, there is a specific direction in place in terms of the kind entities in which the working capital expenses will be made. There seems to be no bifurcation here.

Company revenue and other financial details

Financial of Apollo Micro Systems is quite strong.

The company is showing a steady revenue growth from past several years. The total revenue of the company was ₹37.45 crore in 2013 and in 2017 it reached to ₹211 crore.

Likewise, the net profit of the company was ₹2.95 crore in 2013 and it reached to ₹18.57 crore in 2017. From 2013 to 2017 the net profit of the company has increased 520%.

The table below will give you a quick idea about the financials of the company.

 

If we compare any other industry player with Apollo Micro Systems, the company stays among the top performers in the industry.

The EPS of AMS is 13.54 which is higher than the Bharat Electronics Ltd 6.64 and Astra Microwave Products Ltd. 6.53 but lower than the Centum Electronics Ltd 24.24.

Here is the graphical representation:

PE ratio of the Apollo Micro Systems is higher than the Astra Microwave Products Ltd. 19.92 but lower than the Bharat Electronics Ltd 28.72 and Centum Electronics Ltd 27.27. Return on Net Worth (RoNW) for AMS is 29.3% which is higher than all of its competitors like Centum Electronics, Astra Microwave Products Ltd., and Bharat Electronics Ltd. Make in India campaign and government policies towards the Indigenous product are also supporting the company.

Again, here is the graphical representation for a clearer understanding:

We hope in near future this company will get more projects which will contribute towards the steady growth of the company.

IPO Events

The IPO of Apollo Micro Systems Ltd. will open on 10th January 2018 and close on 12th January 2018. the price band of the issue is fixed at ₹270 at the lower side and ₹275 at the higher side.

Finalization of allotment will be on 17th January 2018. If you have applied for the share you and allocated than you will get the shares in your Demat account on 19 January otherwise your funds will be returned to your account on 18 January.

The company will be listed at the NSE and BSE on 22 January 2018.

Here are the details:

EventDate
IPO Open Date 10th January, 2018
IPO Close Date12th January, 2018
Finalization of Basis of Allotment17th January, 2018
Initiation of Refund18th January, 2018
Credit of Shares to Demat Accounts19th January, 2018
Listing on Exchange22nd January, 2018

 

Apollo Micro Systems Ltd. contact information

The contact information of Apollo Micro Systems Ltd. is given below. For more information, you can also visit their website http://apollo-micro.com/

Recommendation (buy/sell/hold)

The company has developed a brand in the defence Electronic System Design & Manufacturing (ESDM) sector from past more than two decades. The proven track record of performance makes AMS a perfect choice for the investors. Some of the key strengths of the Apollo Micro Systems are

  • Strong financial performance from past many years
  • Proven track record of developing new technological systems
  • Experienced and qualified higher management and workforce
  • Strong research and development (R&D) capabilities
  • Current government initiatives such as Make in India and Digital India are going to provide huge opportunities to the entire sector. It can be an added advantage for the company.
  • The company has diversified its services and also developed technologies for the non-defence sector.

As per our analysis, the company has strong fundamentals and financial records. The growing demand for indigenous products will provide a huge scope for the company growth. We recommend buying the shares of Apollo Micro Systems Ltd. and keeping them for a long-term, although the IPO has the strength of providing short-term quick profits as well.

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