Broker’s Call: Apollo Micro Systems (Buy)

Apollo Micro Systems reported a record performance in the second quarter of fiscal year 2027, with revenue, EBITDA, and PAT increasing by 72%, 88%, and 54% year on year, respectively. The company's order book grew marginally to ₹1,765 crore, highlighting the need to convert this pipeline into confirmed orders for sustained growth.

The Major Industrial Projects (MIGM) programme is a key near-term driver, with user trials completed and an order expected by February 2027. Apollo's exclusive supply of critical electronic subsystems and sensors presents significant upside potential upon securing new orders.

Management indicated that the order book could surpass ₹2,000 crore by the end of fiscal year 2027, excluding the MIGM programme, while maintaining revenue growth guidance of 35-45%. This outlook is contingent upon timely conversion of the identified pipeline and the smooth ramp-up of expanded manufacturing capacity. The article expresses optimism about Apollo's transition towards an integrated weapons-system player, noting the acquisition of Premier Explosives and Shauryastra's focus on complete weapon systems as offering long-term growth opportunities and expanding the company's presence across the missile value chain.

In light of these factors, the article raises the target price to ₹525, which values the stock at 50 times the average expected earnings per share for fiscal years 2028 and 2029. The rating is upgraded from "Reduce" to "Buy".