Apollo Micro Systems 140% gain is 2x higher than every other defence stock. Can you buy it now?

Apollo Micro Systems (AMS) has rewarded investors with a hefty 140% gain in just six months, making it the best-performing stock in India’s defence pack. At a market value of about Rs 8,000 crore, the company has delivered at least twice the return of every other listed defence stock.

For comparison, Bharat Dynamics saw a 28% gain, while Hindustan Aeronautics (HAL) and Cochin Shipyard delivered only 6% and 3% returns this year, respectively. Other reputed defence names like DCX Systems, BEL, Bharat Forge, and BEML were also left behind.

Why Apollo Micro Systems is soaring

According to experts, the smallcap company’s success stems from record financial results, a swelling order book, and entry into exports.

In Q1FY26, revenue grew 46% year-on-year (YoY) to Rs 133.6 crore. Profits more than doubled to Rs 17.6 crore, while margins improved sharply.

The company bagged its first export order worth $13.4 million (Rs 114 crore) this year. Its order book has climbed from around Rs 500 crore last year to Rs 735 crore by June 2025, with management guiding for a threefold jump by March 2026.

AMS is also broadening its scope. It supplies key systems for missile programmes like QRSAM and Project Kusha, naval systems such as Varunastra and advanced torpedoes, and is expanding into mines and artillery. Analysts see order potential of around Rs 2,000 crore in these categories.

“The rally is powered by strong financials, a rapidly expanding order book, and strategic positioning. Unlike larger defence players delivering steady growth, AMS’s smallcap base and earnings compounding make it particularly attractive,” said Vinit Bolinjkar, Head of Research at Ventura.

Divam Sharma of Green Portfolio PMS noted that recent approvals as the production agency for the multi-influence ground mine and new orders from DRDO and defence PSUs have only added to investor interest.

The company has also made strategic moves to strengthen its profile. AMS acquired IDL Explosives for Rs 107 crore, which will help it become a Tier-1 original equipment maker (OEM). It is also investing 6% of revenue in R&D to build future technologies.

Defence sector tailwinds

The broader defence sector has been buzzing thanks to the Make in India initiative and rising government spending. In FY25, India signed defence contracts worth Rs 2.09 lakh crore. The FY26 defence budget is Rs 6.81 lakh crore, with a large share marked for capital expenditure.

According to Sharma, “The sector is positioned for 20% CAGR growth till FY2029, with defence production expected to hit Rs 3 lakh crore by then, up from Rs 1.27 lakh crore now. Exports could reach Rs 50,000 crore by 2029.”

What’s next for Apollo

Apollo’s outperformance also shows up on the charts. The stock trades above key moving averages and is holding firm near Rs 267.

Riyank Arora of Mehta Equities said, “The stock has built a solid base around Rs 255, which now acts as support. A breakout above Rs 275 can lead to Rs 285–295 in the short term. Overall, the outlook stays positive with a buy-on-dips strategy.”

In the longer term, AMS’s plans to expand capacity with a new weapons integration unit by FY26, its sticky DRDO-linked contracts, and its 700-plus proprietary technologies could help it secure a leadership spot among small-cap defence plays.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)