Apollo Micro Sys (APOLLO)

FairStock Score: 29/100 — RISKY

Score breakdown: P/E: 0/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Sales growth of nearly 70% shows strong demand in the aerospace and defense segment.
• Debt/equity of 0.33 and Piotroski F-Score of 7/9 indicate manageable balance-sheet risk.
• Promoter holding of 51.98% aligns owner interest and long-term commitment.
• ROCE of 13.98% is respectable given the capital-intensive nature of the defense sector.

Concerns

• P/E of 95.14 and P/B of 18.86 leave almost no margin of safety.
• Profit growth of 40.64% trails sales growth of 69.97%, pointing to margin compression.
• ROE of 10.20% is mediocre relative to the rich valuation; book value is only ₹15.42.
• Dividend yield of 0.11% and annualized earnings yield of roughly 1.1% offer little support.

AI Analysis

At ₹290.80, Apollo Micro Systems is priced at 95.14 times earnings and 18.86 times book value. That is not a Graham price; it is a promise that the future will be dramatically better than the present. The company does have growth: sales rose 69.97% and profit grew 40.64%, but profit is not keeping pace with sales. For a business earning only 10.20% return on equity and 13.98% ROCE, paying nearly ₹19 for every ₹1 of book value leaves no margin of safety. The dividend yield of 0.11% means the investor receives almost no cash while waiting for growth. The balance sheet is okay — debt/equity of 0.33 and a Piotroski score of 7/9 suggest financial health — but a good score does not justify a P/E of 95. The latest quarter shows sales of ₹252 Cr and net profit of ₹23 Cr, implying annualized earnings near ₹92 Cr against a ₹8,496 Cr market cap. That is an earnings yield of roughly 1.1%, far below a risk-free fixed deposit. The promoter holding of 51.98% is reassuring, and aerospace and defense has genuine tailwinds in India, but I cannot make the numbers work. Growth stocks can be wonderful businesses and terrible investments at the wrong price. Here, the growth is real, but the price already discounts perfection. If margins do not expand and growth slows, the downside is severe. I would need a much lower entry price or concrete evidence that ROE rises toward 20% before I would consider owning it. This is a fast grower, but at this valuation it is a speculation, not an investment.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer