Why Systematix is bullish on Apollo Micro Systems after 47% YTD rally; check target price

Systematix Institutional Equities initiated coverage on Apollo Micro Systems with a Buy rating and a target price of Rs 570, indicating a potential upside of around 40% from the brokerage’s reference price of Rs 390.

Following the coverage, shares of the defence company climbed up to 4.4% to Rs 406 on the National Stock Exchange (NSE) around 11:37 am on Monday. The stock opened at Rs 391 and touched an intraday high of Rs 406.50, compared with its previous close of Rs 388.90.

Systematix valued Apollo Micro Systems at 55 times the average of its estimated FY28 and FY29 earnings per share, arriving at a target price of Rs 570.


Apollo Micro Systems shares have gained over 46% on a year-to-date basis, sharply outperforming the benchmark’s 2.33% decline on NSE. The stock touched its 52-week high of Rs 466.50 on July 3, 2026.

Why is Systematix bullish?

The brokerage firm expects Apollo Micro Systems to transition from a supplier of electronic components and subsystems into an integrated manufacturer of complete weapon systems.

The company is present across missile, rocket, torpedo and underwater-mine programmes. Its capabilities include guidance and navigation systems, actuators, safety-arming mechanisms, onboard computers and other electromechanical systems.

The firm said that the government’s focus on transferring defence technology to private companies could allow Apollo Micro Systems to secure larger platform-level orders and move towards becoming a tier-I defence supplier.

Rs 12,000-crore order opportunity

Apollo Micro Systems expects potential orders of around Rs 12,000 crore over the next 24 months from mines, torpedoes and missile programmes, according to the brokerage.

Systematix highlighted the company’s position in underwater homing systems. Apollo has developed systems for heavyweight torpedoes and has a portfolio covering shallow-water, deep-water and limpet mines.

The brokerage estimates an opportunity of around Rs 7,000 crore from mines and torpedoes. This includes Multi-Influence Ground Mines, moored mines, limpet mines and several torpedo programmes.

Apollo is also involved in missile and rocket programmes such as QRSAM, Akash-NG, Pinaka, Kusha, Astra and BrahMos. Near-term opportunities from QRSAM, Akash-NG and Pinaka alone could be worth around Rs 3,000-4,000 crore for the company, the brokerage firm said.

Capacity expansion and acquisitions

Apollo Micro Systems plans to invest around Rs 600 crore in capacity expansion across three phases.

It also acquired IDL Explosives for approximately Rs 107 crore in November 2025, gaining access to explosives, propellants and warhead materials. It has also proposed acquiring a controlling stake in Premier Explosives, which would add capabilities in high-energy materials, rocket motors and solid propellants. The Premier transaction remains subject to regulatory approvals.

Systematix believes these acquisitions could help Apollo provide a more integrated offering across fuzes, seekers, actuators, warheads, propulsion systems and complete weapons.

Growth estimates

Systematix expects Apollo Micro Systems’ revenue to grow at a compound annual rate of 65% between FY26 and FY28, rising from Rs 904 crore to Rs 2,460 crore.

EBITDA is projected to increase from Rs 218 crore in FY26 to Rs 625 crore in FY28, translating into a CAGR of around 70%. The EBITDA margin is expected to decline temporarily to 19.3% in FY27 before recovering to 25.4% in FY28.

Adjusted profit is estimated to rise from Rs 107 crore in FY26 to Rs 336 crore in FY28, representing an annual growth rate of around 80%.

The brokerage also expects the company’s cash-conversion cycle to improve from approximately 360 days in FY26 to around 300 days by FY27-FY28.

What key risks does it face?

Key risks include delays in converting defence programmes into orders, dependence on government and defence PSU tenders, high working-capital requirements and execution challenges as the company moves into complete weapon-system manufacturing.

The company is also exposed to currency fluctuations because of imported components, long defence-development cycles and increasing competition from larger players as it moves up the value chain.

Meanwhile, India’s defence production increased from Rs 53,000 crore in FY16 to Rs 1.78 lakh crore in FY26. The government has set a target of Rs 3 lakh crore by FY29, supported by higher domestic procurement and indigenisation.

This article has been written by Somanjali Das, who is not a SEBI-registered Research Analyst or an investment advisor. Somanjali Das does not hold any financial interest in Apollo Micro Systemsas of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of the EconomicTimes Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment.