Apollo Micro Systems Shows Strong Profit Growth Amid Valuation Concerns in Aerospace Sector

Apollo Micro Systems, a small-cap player in the Aerospace & Defense sector, has recently undergone an adjustment in its evaluation. This revision reflects a shift in the technical landscape surrounding the stock, with indicators suggesting a transition from a bullish to a mildly bullish stance.
The company's performance metrics reveal a robust trajectory, particularly in its quarterly results for Q1 FY25-26. Notably, the operating profit has expanded at an annual rate of 30.83%, while net profit has surged by 109.73%. This consistent performance is underscored by positive results over the last eight consecutive quarters, with PBT less other income for the quarter reaching Rs 24.42 crore, marking a growth of 115.72%. Additionally, the operating cash flow has reached its highest at Rs 11.83 crore.

Despite these positive indicators, the stock's valuation appears elevated, with a return on capital employed (ROCE) of 12.9 and an enterprise value to capital employed ratio of 11.2. Furthermore, 35.55% of promoter shares are pledged, which may exert additional pressure in volatile market conditions.

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