Whalesbook
📉 The Financial Deep Dive
Apollo Micro Systems Limited (AMS) has posted record financial results, with consolidated revenue from operations hitting ₹2522 million in the third quarter of FY26, marking a substantial 70% year-on-year (YoY) increase. For the nine-month period ending December 31, 2025, consolidated revenue grew by 53% YoY to ₹6111 million. These figures underscore robust demand in its core business segments.
The Numbers:
- Q3 FY26 (Consolidated): Revenue ₹2522 million (+70% YoY). EBITDA (excluding other income) ₹504 million (+33% YoY) with a margin of 20.0%. PAT ₹229 million (+25% YoY) with a margin of 9.1%.
- 9M FY26 (Consolidated): Revenue ₹6111 million (+53% YoY). EBITDA ₹1505 million (+61% YoY) with margin expansion to 24.6% (+134 bps YoY). PAT ₹706 million (+67% YoY) with margin improvement to 11.6% (+100 bps YoY).
- Standalone Performance: Standalone revenue also saw strong growth, up 35% YoY in Q3 and 40% YoY for the nine months, with standalone PAT increasing by 66% and 94% respectively for the periods.
The Quality:
While consolidated EBITDA growth trailed revenue growth in Q3, the nine-month EBITDA saw a significant 61% jump. Margin expansion was notable on a nine-month basis, with consolidated EBITDA margin improving by 134 basis points and PAT margin by 100 basis points. Standalone performance showed even stronger margin expansion.
Financial Deep Dive & Balance Sheet:
Borrowings have increased significantly from ₹2080 million in FY24 to ₹3353 million in FY25, indicating reliance on debt financing for expansion. Net Block stood at ₹1722 million and Capital Work in Progress at ₹722 million in FY25. A key operational highlight is the improvement in the working capital cycle, reducing from an extensive 600 days in FY24 to 445 days in FY25. This, coupled with an improved Interest Coverage Ratio of 3.3x in FY25 (up from 2.4x in FY24), suggests better debt servicing capability despite higher debt levels.
🚩 Risks & Outlook
The company has set an ambitious target of 45-50% revenue CAGR over the next three years, excluding contributions from the IDL Explosives acquisition. This guidance is supported by a healthy order book of ₹13050 million and an ongoing ₹300 crore greenfield expansion project. Key risks include the high existing debt levels and the considerable working capital days, which require continuous monitoring for operational efficiency. Execution risk on the ambitious expansion and R&D investments (₹100 crores for FY26) also needs to be managed. However, the strong participation in indigenous defence programs and the 'Atmanirbhar Bharat' initiative provide a favourable macro tailwind.
Big Picture & Opportunities:
AMS is strategically positioning itself as an integrated Tier-1 defence OEM following the acquisition of IDL Explosives Ltd. Its focus on providing complete solutions from systems to platforms aligns with India's defence indigenization push. The company's investment in R&D and its aspiration to become a global OEM are significant long-term drivers. The recent credit rating upgrade to ACUITE A- (Long Term) and A2+ (Short Term) further bolsters its financial standing and investor confidence.