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Apollo Micro Systems IPO Review: Should you invest?

Apollo Micro systems IPO Review: Should you invest?

The calendar year 2017 was the year dedicated to the IPOs, with as many as 153 IPOs hitting the market raising more than $11.6 billion. The BSE IPO index spiraled up by 1400 points since December 30 strengthening our belief in the fact that IPO stole the show in the year 2017. Now, here comes 2018 with a bang and an IPO of Apollo Micro Systems. Yes! The company is planning to launch its IPO in January 2018. Let’s study whether it will be able to fare well on the listing day or not.

Apollo Micro Systems Business Profile?

Incorporated in the year 1997, Apollo Microsystems is a Hyderabad based venture engaged in the business of electronic, engineering designs, manufacturing and supply. The company manufactures and supplies high end solutions for defense, space and security personnel. It offers specialized solutions for Ministry of Defense, government controlled public undertaking and private sectors. The company has participated in several missile programs, underwater electronic warfare, underwater missiles, surface to surface missile programs, submarine programs, ships and space programs. The promoter of the company IS Mr. Karunakar Reddy.

Objective of Apollo Micro IPO?

The main objectives of raising an IPO include to meet the additional working capital requirement of the company and to meet general corporate purposes. Here are the issue details of the IPO.

Details of the IPO

Apollo Micro Systems will enter the primary market in January 2018 with an aim to raise Rs 156 crore. The firm will sell the shares in a price band ranging from Rs 270- 275 per share. The firm will offer 19, 78,454 shares for sale. Here are the tabulated details for the same. The maximum shares offered for retail is 700. The lead manager of the company is Aryaman Financial Services Ltd.

  • Issue will open on- Jan 10,2018-Jan 12, 2018
  • Issue type- Book Built Issue IPO
  • Issue Size- Equity shares of Rs 10 aggregating upto Rs 156 crore
  • Face Value- Rs 10 per equity share
  • Issue Price- Rs 270 -275 per equity share
  • Market Lot-50 shares
  • Minimum Order-50 shares
  • Listing at-BSE,NSE

Financial Health of the company

Apollo Micro Systems Limited – Financials
Financials 2013/03 2014/03 2015/03 2016/03 2017/03 6 Month ended Sep-17
Total Revenues (Rs. in Lakhs) 3,745.8 7,288.1 10,876.3 15,953.1 21,179.9 10,947.4
Profit after tax (Rs. in Lakhs) 295.9 533.3 744.7 1,000.0 1,857.1 711.1
Profit %age 7.9% 7.3% 6.8% 6.3% 8.8% 6.5%
Revenue growth % (YoY) NA 95% 49% 47% 33% NA

The company has generated revenue of Rs 37.45 crore in March 2013 and Rs 211.79 crore for the year ended March 2017 and the company recorded profit of Rs 18.57 crore for the year ending March 2017 and the last 3 years weighted EPS was Rs 10.1.

Should the investors invest?

The company has a good track record and has proven its strengths many times in technology, R&D and quality control. Also, the company has posted a stable revenue growth rate in the last 5 years and its revenues are multiplied by 5.65 times and its profits have increased from 6.8% to 8.8%, thus giving us the opinion that this IPO is good for the investors. But there are some reasons why this IPO is labeled as risky.

Though the company has a strong foothold in its niche but its dependency on few public sector undertakings make it a risky IPO. Also, the company has outstanding litigations and negative cash flows in the past few years.  Some of the corporate records are also not traceable, so we advise the investors to invest this IPO at your own risk.

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