Apollo Micro System shares rise 37% in two days; What's pushing the stock higher?

Shares of Apollo Micro Systems Ltd extended its gains on Wednesday and rose another 15 per cent during the session to hit new highs after the company shares some business updates with the bourses. The stock was locked in the upper circuit limit in the previous trading session on Tuesday.

Apollo Micro Systems has to announce the appointment of MP3 International as its official representative for the Middle East market. This strategic collaboration is established through a letter of authorization (LoA), paving the way for enhanced market reach and deeper engagement with clients in the region, said the company in an exchange filing.

MP3 International is a subsidiary of Grade One Group, a prominent part of Abu Dhabi Government-owned Edge Group, an entity specializing in Defense Products in the UAE. GradeOne Group specializes in providing military hardware, equipment, pyrotechnics, ammunition, and supplies, to the various military sectors.

"Apollo Micro Systems has also proposed to establish a new Composites manufacturing facility and intends to seek the board's approval for a substantial investment of Rs 50 Million to turn this vision into reality," added the company in an exchange filing.

Following the announcements, Apollo Micro Systems shares surged another 15 per cent to Rs 105.40 on Wednesday, hitting new highs and commanding a market capitalization of or more than Rs 2,350 crore. The scrip had settled at Rs 91.53 on the previous trading session. The scrip had gained more than 37 per cent in the last two trading sessions.

Incorporated in 1985, Apollo Micro Systems expanded into the design and development of systems and subsystems for electronic hardware and software for DRDO, DPSUs, and others. The Hyderabad-based company offers complete platform-level solutions, from the development stage to manufacturing, such as underwater mines, railways, automotive, and homeland security markets.

Domestic brokerage firm Choice Broking recently initiated coverage on the stock. It expects AMS's Revenue, EBITDA and PAT to grow at a CAGR of 38 per cent, 41 per cent and 68 per cent, respectively over FY23-26. "We assign a multiple of 35 times on FY26E EPS, considering the high-growth phase, and arrive at the target price of Rs 103 with an 'outperform' rating," it said.

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