Apollo Micro Systems, an electronic-related products manufacturer, has begun its initial public offering (IPO) today to raise about Rs 156 crore. This would be the first IPO in the year 2018.
 
The company, offering nearly 5,777,778 equity shares, will be open for subscription till January 12, 2018.
 
Price band for the IPO is fixed at lower end of Rs 270 per piece and upper band of Rs 275 per piece.
 
Retail investors and employees will get a discount of Rs 12 per share on the issue.
 
Book running lead managers (BLRM) for the issue are Aryaman Financial Services and Bigshare Services Private Limited.
 
50% of the equity shares are allotted to qualified institutional buyers (QIB), while 35% has been kept for retail individual investors, and remaining 15% for non-institutional investors (NII). Among the total, about 20,000 equity shares are kept aside for employees.
 
Apollo Micro Systems raised about Rs 46.6 crore from six anchor investors, allocating them about 16.96 lakh equity shares at the upper price band. The anchor investors were - National Westminster Bank Plc, Sundaram Mutual Fund and Jupiter South Asia.
 
Object of the issue is to meet additional working capital requirement along with general corporate purposes.
 
On the upper price band, Apollo Micro is fairly priced with EPS of Rs 13.54 in FY17 and P/E at 20.3x compared to the peers.
 
On stock exchanges, Apollo Micro will compete against Bharat Electronics, which has P/E of 28.04x, Astra Microwave Products with P/E of 17.99x, and Centrum Electronics with P/E of 27.55x.
 
Analysts at Axis Capital on Apollo Micro's business model said, “The huge repository of knowledge and technology base that the company has developed since inception is a strong base to outperform the competition and be abreast in the market.”
 
“This supports the company to constantly upgrade the technologies to meet present and futuristic requirements of their customers,” they added.
 
According to Dalal Street Journal, the company's revenue growth has declined on a YoY basis, but PAT is increasing consistently.
 
Apollo Micro's total revenue, which stood at Rs 37.5 crore, jumped to Rs 159.5 crore in FY16 and further to Rs 211.8 crore in FY17. In the first half of FY18, the company's revenue stood at Rs 109.5 crore, while PAT stood at Rs 7.1 crore.
 
“As compared to its peers, it has delivered highest returns and P/E-wise we see that the company is fairly priced. It has established its brand recognition in the ESDM sector. Its technological development has led the company to execute the orders faster,” said the Journal.
 
Explaining further, the report stated that Apollo Micro is planning to foray into non-defence sector to develop technology for railways.
 
“Make in India and Digital India initiatives will provide huge scope for defence electronics companies to grow and expand. Looking at these factors, investors can subscribe for the IPO for the long term,” the report added.
 
Axis Capital said, "The company is well positioned to address the growing requirements in Defence Electronics through Indigenous programmes in which they have been partners for past several years."
 
Here're key highlights of Apollo Micro Systems:
 

  • Incorporated on March 3, 1997 Apollo Micro Systems Limited is an Electronic, Electro-Mechanical, Engineering Designs, Manufacturing and Supplies Company.
  •  Apollo's customized solutions are developed using common hardware and software technology IP’s which can be re-configured to suit the end application and domain requirements of end customer.
  • The company offers custom built COTS (Commercially off-the shelf) solutions based on specific requirements to defence and space customers.
  • The company has its participation in several Indigenous Missile programmes, underwater electronic warfare, underwater missiles, surface to air missiles, nuclear missile programmes, surface to surface missile programmes, indigenous submarine programmes, unmanned aircraft vehicle (“UAV”)’s long and short endurance, ships, space programmes.