APOLLO MICRO SYSTEMS LIMITED IPO Price Band : ` 270 ` 275. our recommendation SuBScriBe

Transcription

1 APOLLO MICRO SYSTEMS LIMITED IPO Price Band : ` 270 ` 275 our recommendation SuBScriBe

2 THE OFFER Issue Open : 10 Jan 2018 to 12 Jan 2018»» Issue Type: Book Built Issue IPO»» Issue Size: Fresh Issue aggregating up to ` Cr»» Face Value: ` 10 Per Equity Share»» Issue Price: ` ` 275 Per Equity Share»» Market Lot: 50 Shares»» Minimum Order Quantity: 50 Shares»» Listing At: NSE, BSE Discount to Retail Investors & Employees:- A discount of Rs 12 per equity share is offered to Retail Investors & Employee.

3 CAPITAL STRUCTURE The share capital of Company, is set forth below:- Authorized Share Capital :- (Amount in` except share data) 2,70,00,000 Equity Aggregate value 27,00,00,000 Issued, subscribed and paid up capital before the Issue :- 1,50,00,000 Equity Aggregate value 15,00,00,000 Present Issue:- Fresh Issue aggregating up to ` Cr

4 OBJECT OF THE OFFER The objects of the issue are: To meet additional working capital requirement of the Company. General corporate purposes

5 COMPANY OVERVIEW Apollo Micro Systems designs, develops and sells high-performance, mission and time critical solutions to defense, space and home land security for Ministry of Defense, government-controlled public sector undertakings and private sector corporate. It offers custom-built COTS (commercially off-the shelf) solutions based on specific requirements to defense and space customers. These systems are exclusively developed for a programme and hence such systems do not have any competition. The classification of verticals and solutions offered by the company are as follows: Defense Avionic Systems : These offer solutions for avionic applications, such as PCM encoder and decoder, Gimbal payload electronics, spread spectrum modem which are integrated in aircrafts or UAVs.

6 Continue Defense Aerospace Systems : These offer on-board weapon system electronics solutions and ground checkout and launcher controller systems for missile system requirements. Defense Naval Systems : These systems offer on-board weapon system electronics and ground support systems for underwater missiles (torpedoes), anti-torpedo decoys and jammers, submarines and ships. Satellite Space Systems : These offer ground checkout systems and earth station acquisition systems for space applications. Homeland Security & Telematics: These offers telematic and integrated surveillance systems like GPS-based vehicle tracking system, integrated surveillance systems consisting of CCTV and boom barriers and ore mining companies. Transportation : It provides solutions related to telematics, data handling systems and automotive electronics and for Indian railways

7 ROAD MAP AHEAD Company objectives are to expand their market share and aim to accomplish this through the following strategies: Focus on R&D to develop complete systems to enhance the long-term prospects of Company. Improving productivity and competitiveness. Leverage Build To Print opportunity. Expand business and geographical footprint through selective acquisitions. Continue to grow overall market share by leveraging presence in existing business verticals.

8 STRENGTHS Recurring orders from existing programs. Strong R&D Capabilities. Quality control. Qualified and experienced workforce and senior management. Proven track record in developing new technological systems and order execution

9 FINANCIAL PERFORMANCE Total Revenues stood cr, cr, cr, and cr, in six months period ended September 30, 2017, Fiscal 2017, Fiscal 2016 and Fiscal 2015 respectively. PAT was 7.11cr, 18.57cr, 10.00cr, 7.44cr in six months period ended September 30, 2017, Fiscal 2017, Fiscal 2016 and Fiscal 2015 respectively. The Company's Order Book is 97.50cr excluding GST, as of November 25, 2017.

10 SNAPSHOT - CONSOLIDATED

11 INDUSTRY OVERVIEW India has one of the fastest growing global defense markets and the country spends USD 40 billion annually (1.62% of GDP in FY17) on the sector. Defense expenditure is expected to continue to grow, primarily due to the country s ageing military hardware and technology which is in dire need of replacing, and demands for defense against domestic insurgencies and hostility from neighboring countries. Current outlook on the defense spending by Government of India: India meets its current defense requirements mostly by the way of imports. India spends around 31.5% of its total defense budget on imports, which accounts to around 60% of total defense equipment. The Finance Minister (FM) in the union budget has allocated ` 2.74 trillion, as against ` 2.58 trillion in , with 6% rise, to the Ministry of Defense (MoD). Compared to the previous budget.

12 Continue The initiative aims to make India a preferred manufacturing destination comprising of 25 sectors that includes ESDM, automobiles, chemicals, IT, aviation, design manufacturing, renewable energy and several other sectors that rely heavily on electronics, expanding the opportunities to create employment, purchasing power, expenditure and supply.

13 RISK FOR THE BUSINESS Business is significantly dependent on various Public Sector Undertakings and Government entities for their projects and could be materially affected if there are adverse changes in the policies of such Government entities. Company work with government clients exposes to additional risks inherent in the government contracting environment. Companies revenue depends to a large extent on a limited number of customers, and revenue could decline if company lose a major customer.

14 Continue Intense competition in the market for Defense ESDM sector could affect pricing and have a material adverse effect on business, financial condition and results of operations. Company may incur penalties in respect of non compliance with the provisions of the Companies Act, 2013 Political, economic or other factors beyond control may have an adverse impact on business, results of operations and prospects.

15 VALUATION Company designs, develops and sells high-performance, mission and time critical solutions to defense, thus enjoying competitive advantage amongst peers. Going forward, defense expenditure would continue to grow, primarily due to the country s ageing military hardware and technology which is in dire need of replacing. Taking into consideration, the current market opportunities in defense and Government of India s initiative, Make in India aims to boost the nation s domestic manufacturing sector as well as to create market by targeting exports, the issue seems to be fairly priced. We recommend to SUBSCRIBE the IPO.

16 DISCLAIMERS This Research Report (hereinafter called report) has been prepared and presented by RUDRA SHARES & STOCK BROKERS LIMITED, which does not constitute any offer or advice to sell or does solicitation to buy any securities. The information presented in this report, are for the intended recipients only. Further, the intended recipients are advised to exercise restraint in placing any dependence on this report, as the sender, Rudra Shares & Stock Brokers Limited, neither guarantees the accuracy of any information contained herein nor assumes any responsibility in relation to losses arising from the errors of fact, opinion or the dependence placed on the same. Despite the information in this document has been previewed on the basis of publicly available information, internal data, personal views of the research analyst(s)and other reliable sources, believed to be true, we do not represent it as accurate, complete or exhaustive. It should not be relied on as such, as this document is for general guidance only. Besides this, the research analyst(s) are bound by stringent internal regulations and legal and statutory requirements of the Securities and Exchange Board of India( SEBI) and the analysts' compensation was, is, or will be not directly or indirectly related with the other companies and/or entities of Rudra Shares & Stock Brokers Ltd and have no bearing whatsoever on any recommendation, that they have given in the research report Rudra Shares & Stock Brokers Ltd or any of its affiliates/group companies shall not be in any way responsible for any such loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Rudra Shares & Stock Brokers Ltd has not independently verified all the information, which has been obtained by the company for analysis purpose, from publicly available media or other sources believed to be reliable. Accordingly, we neither testify nor make any representation or warranty, express or implied, of the accuracy, contents or data contained within this document. Rudra Share & Stock Brokers Ltd and its affiliates are engaged in investment advisory, stock broking, retail & HNI and other financial services. Details of affiliates are available on our website i.e. We hereby declare, that the information herein may change any time due to the volatile market conditions, therefore, it is advised to use own discretion and judgment while entering into any transactions, whatsoever. Individuals employed as research analyst by Rudra Shares & Stock Brokers Ltd or their associates are not allowed to deal or trade in securities, within thirty days before and five days after the publication of a research report as prescribed under SEBI Research Analyst Regulations. Subject to the restrictions mentioned in above paragraph, we and our affiliates, officers, directors, employees and their relative may: (a) from time to time, have long or short positions acting as a principal in, and buy or sell the securities or derivatives thereof, of Company mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or profits.

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