Apollo Micro Systems Ltd Reports Positive Quarterly Growth Amid Margin Pressures

Quarterly Financial Performance Highlights

Apollo Micro Systems Ltd recorded its highest quarterly net sales at ₹252.22 crores in the December 2025 quarter, marking a significant milestone in its revenue trajectory. This growth is complemented by a strong increase in profit after tax (PAT), which surged by 40.6% to ₹25.68 crores compared to the previous quarter. The company’s profit before tax (PBT) excluding other income also rose by a healthy 21.62% to ₹30.66 crores, underscoring operational efficiency gains.

These figures indicate that Apollo Micro Systems continues to capitalise on its market position within the Aerospace & Defense industry, leveraging demand dynamics and operational improvements to drive top-line and bottom-line expansion.

Margin and Debt Profile Analysis

Despite the encouraging revenue and profit growth, the company faces challenges on the cost front. Interest expenses for the nine-month period ending December 2025 increased sharply by 43.73% to ₹38.26 crores, reflecting higher borrowing costs or increased leverage. However, Apollo Micro Systems maintains a relatively conservative debt-equity ratio of 0.33 times at the half-year mark, which is among the lowest in its peer group, signalling prudent financial management.

The rise in interest costs has exerted some pressure on margins, tempering the overall profitability gains. Investors should monitor how the company manages its financing costs going forward, especially in a rising interest rate environment.

Financial Trend and Mojo Score Update

The company’s financial trend rating has moderated from very positive to positive over the past three months, with the financial performance score declining from 22 to 16. This shift reflects the mixed signals from strong revenue and profit growth offset by rising interest expenses and margin pressures. Apollo Micro Systems’ Mojo Score currently stands at 57.0, with a Mojo Grade downgraded from Buy to Hold as of 27 October 2025, indicating a more cautious stance by analysts.

Market capitalisation grade remains modest at 3, consistent with its classification as a small-cap stock within the Aerospace & Defense sector.

Stock Price Movement and Market Comparison

On 10 February 2026, Apollo Micro Systems closed at ₹250.15, up 3.88% from the previous close of ₹240.80. The stock traded within a range of ₹244.00 to ₹251.70 during the day. While the 52-week high stands at ₹354.65, the 52-week low was ₹101.05, indicating significant volatility over the past year.

Examining returns relative to the benchmark Sensex reveals a mixed picture. Over the past week, the stock gained 1.4%, lagging the Sensex’s 2.94% rise. However, over the one-month period, Apollo Micro Systems outperformed with a 1.54% gain versus the Sensex’s 0.59%. Year-to-date, the stock has declined 8.1%, underperforming the Sensex’s 1.36% fall.

Longer-term returns are impressive, with a one-year gain of 95.05% compared to the Sensex’s 7.97%, and a three-year return of 647.05% dwarfing the Sensex’s 38.25%. Over five years, the stock has surged 1992.43%, vastly outperforming the Sensex’s 63.78%. This exceptional long-term performance highlights Apollo Micro Systems’ strong growth trajectory and value creation for shareholders.

Industry and Sector Context

Operating within the Aerospace & Defense sector, Apollo Micro Systems benefits from increasing government and private sector investments in defence technology and aerospace innovation. The sector is characterised by high entry barriers, long product development cycles, and significant capital requirements, which Apollo has navigated effectively to build a competitive moat.

However, the sector also faces challenges such as geopolitical uncertainties, fluctuating raw material costs, and regulatory complexities. Apollo’s ability to sustain growth while managing costs and debt will be critical in maintaining its market position.

Outlook and Investor Considerations

Looking ahead, Apollo Micro Systems faces a balancing act between sustaining its revenue momentum and managing rising financing costs. The company’s low debt-equity ratio provides some cushion, but the sharp increase in interest expenses warrants close monitoring. Investors should watch for margin trends in upcoming quarters and any strategic initiatives to optimise capital structure.

The recent downgrade from Buy to Hold by MarketsMOJO reflects a more cautious outlook, suggesting that while the company’s fundamentals remain solid, valuation and margin pressures may limit near-term upside. Nonetheless, Apollo’s long-term growth story remains intact, supported by strong sector tailwinds and a track record of execution.

Given the stock’s historical outperformance relative to the Sensex, long-term investors may find value in maintaining exposure, while more risk-averse participants might await clearer margin stabilisation before increasing positions.

Summary

Apollo Micro Systems Ltd’s December 2025 quarter showcased robust revenue growth and profit expansion, with net sales reaching a record ₹252.22 crores and PAT rising 40.6%. However, rising interest costs and margin pressures have moderated the company’s financial trend to positive from very positive. The stock’s recent price action reflects mixed sentiment amid these dynamics, with a Mojo Grade downgraded to Hold. Long-term investors continue to benefit from the company’s strong sector positioning and historical returns, but cautious monitoring of margin and debt trends is advised.

Unlock special upgrade rates for a limited period. Start Saving Now →