Multibagger stock to buy: Defence stock Apollo Micro Systems rises 60% in one month. More steam left?

Multibagger stock to buy: Apollo Micro Systems, a small-cap defence stock, has delivered stellar returns in May, surging over 60 per cent after a modest 4 per cent dip in April. The rally comes amid sustained bullish sentiment in the defence sector.

On Friday, May 30, the small-cap defence stock climbed nearly 3 per cent to hit its fresh 52-week high of ₹194, gaining 82 per cent over the last year. The stock has turned multibagger over the past three years, delivering returns of over 1,400 per cent.

Meanwhile, on May 28th, the company said it had received an export order valued at $13,366,500 (equivalent to approximately ₹113.81 crore) for the development of an avionic system.

"This project pertains to the development of an advanced avionics system intended for use in civil and military aircraft applications. However, due to the sensitive nature of the engagement, specific technical and program details are bound by a non-disclosure agreement (NDA) with the customer," the company said in an exchange filing.

Apollo Micro Systems Q4 results

On May 23, the company said its consolidated profit for Q4FY25 rose 17 per cent year-on-year (YoY) to ₹14 crore from ₹12 crore in the same quarter of the previous financial year.

Revenue from operations for the quarter under review rose 19.44 per cent YoY to ₹161.77 crore from ₹135.44 crore in Q4FY24.

On May 28th, the company's board recommended a final dividend of ₹0.25 per equity share of ₹1 each fully paid-up of the company for FY25, subject to the approval of the members at the forthcoming Annual General Meeting of the company.

Earnings before interest, tax, depreciation and amortisation (EBITDA) for the quarter ended March 2025 grew 25 per cent YoY to ₹35.99 crore, but were down 5 per cent QoQ. EBITDA margin improved to 22 per cent from 21 per cent YoY.

Can this defence stock rise more?

The company's growth outlook appears appealing at this juncture, making it a potentially attractive long-term investment choice.

Brokerage firm Anand Rathi Share and Stock Brokers pointed out that Apollo Micro Systems has signed various MoUs and completed an acquisition since last December.

“With successful MIGM mine trials conducted by authorities, the company expects RFQs (requests for quotation) imminently and anticipates order conversions within 30 days thereafter. Commercial orders for its software-defined homing system for heavyweight torpedoes are also expected soon,” Anand Rathi said.

"As several defence programs enter the production phase, management sees a strong pickup in order execution, driving revenue growth, margin expansion, and better working capital efficiencies," the brokerage firm added.

Anand Rathi underscored that the company reported 29 per cent, 35.3 per cent, and 53.4 per cent revenue, EBITDA, and PAT CAGR, respectively, over FY21-FY25.

Besides, its RoE and RoCE after tax have expanded 477bps and 215bps to 6 per cent and 6.7 per cent, respectively, mainly due to margin expansion, said Anand Rathi.

However, the stock's sharp rise in the recent past has stretched its valuations.

According to Trendlyne, an equity research platform, the stock's trailing-twelve-month price-to-earnings ratio of nearly 103 is above the industry median.

Technical experts expect a mean revision, but they emphasise that a pullback may trigger fresh upward movements.

According to Anshul Jain, the head of research at Lakshmishree Investments, Apollo Micro Systems broke out of an 85-day-long cup and handle pattern at ₹155 and swiftly hit its initial target of ₹189.

He said the stock is now extended from its 50-day EMA, making a mean reversion towards ₹170 likely.

"If the pullback unfolds with low volumes and compressed candles—indicating ideal quality—then the stock may resume its upward trajectory. In that case, bulls could eye the next leg of the rally towards ₹220," said Jain.

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Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.