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Apollo Micro Systems’ IPO: All You Need To Know

Apollo Micro Systems looks to raise Rs 156 crore



A technician uses tweezers under a magnifying glass to install electronic chips. (Photographer: Goh Seng Chong/Bloomberg News)
A technician uses tweezers under a magnifying glass to install electronic chips. (Photographer: Goh Seng Chong/Bloomberg News)

Apollo Micro Systems Ltd. has launched the year’s first initial public offering as the maker of electronic parts for missiles to submarines bets on the government ‘Make in India’ initiative.

The Hyderabad-based company—in its three-day offer that opens today—is looking to raise close to Rs 156 crore by issuing 56.7 lakh fresh shares at Rs 270-275 apiece. It’s seeking a valuation of up to Rs 569 crore. The proceeds of the offer will be used for working capital requirements.

The offer comes after India’s record year of IPO when 36 companies raised about Rs 67,000 crore. Here’s all you need to know about the company and the offer…

Apollo Micro Systems’ IPO: All You Need To Know

Business

The company designs and makes electronic and electro-mechanical parts for defence, space and home land security. It also offers custom-built solutions. It counts both state-run and private companies among its clients.

Apollo Micro Systems’ manufacturing facility, located at Hyderabad, had a total order book of Rs 97.5 crore as of Nov. 25.

Financial Highlights

  • Apollo Micro Systems’ net worth stood at Rs 76 crore for the half year ended September, translating into a book value per share of Rs 37.
  • Its clocked a compounded annual growth rate of 54 percent and net profit rose 58 percent over in five years to March 2017.
  • Revenue and net profit for the half year ended September stood at Rs 109 crore and Rs 7 crore, respectively.
  • Its earnings before interest, tax and depreciation and amortisation margin has been in the range of 15-19 percent in the last three years.
  • In the last five years, the company’s debt and interest costs have risen.
Apollo Micro Systems’ IPO: All You Need To Know
  • The company didn’t declare any dividend in the last five financial years.

Peer Comparison

Apollo Micro Systems competes with listed Astra Microwave Products Ltd. and Centum Electronics Ltd. It’s bigger than both its rivals.

Apollo Micro Systems’ IPO: All You Need To Know

Its return ratios are superior than its rivals’. Centum Electronics reported losses in the first half.

Apollo Micro Systems’ IPO: All You Need To Know

Valuations

Earnings per share on an annualised basis for the year to March 2018 comes to Rs 6.9. At the upper end of the price band, its valuations will be 40 times its earnings, according to BloombergQuint’s calculations.

Apollo Micro Systems’ IPO: All You Need To Know

Shareholding Pattern

Promoters’ stake will come down to 64 percent after the listing.

Apollo Micro Systems’ IPO: All You Need To Know

Brokerage Take

Angel Broking has a ‘Subscribe’ recommendation on the issue.

Apollo Micro Systems has a strong financial record and return ratios compared to peers. Hence, considering the positive factors and growth in the defence industry, we recommend ‘SUBSCRIBE’ on the issue. 
Angel Broking