Shares of Apollo Micro Systems hit a more than four-year high of Rs 321.85, rising 5% in intraday trade on the BSE on Wednesday in an already weak market. Shares of private aerospace and defence companies traded at their highest levels since February 2018. The S&P BSE Sensex was down 0.71% at 60,860 at 11:38 am.

The stock has outperformed the market over the past three months, with shares surging 75% compared with a 4.8% gain in the S&P BSE Sensex. Moreover, the stock has gained 170% over the past six months, compared with the benchmark index’s growth of 14%.

Shares of Apollo Micro Systems hit an all-time high of Rs 480 on its listing day on January 22, 2018. The company has allotted shares at an issue price of Rs 275 per share (offering a discount of Rs 12 per share to individual retail investors and eligible employees to bid in the employee booking section).

On December 5, 2022, Apollo Micro Systems issued a preferential allotment of 9.89 million warrants at the issue price, with an exercise price of Rs. Other non-sponsors/entities. The warrants are convertible or exchangeable for one share of capital within 18 months.

The company allotted 4.62 million warrants to Karunakar Reddy Baddam, the promoter and managing director of Apollo Micro Systems. The company allocated 1.9 million warrants to Mauritius-based Nexpact Limited and 1.2 million warrants to Maybank Securities Pte Ltd.

Apollo Microsystems is an electronics, electromechanical, engineering design, manufacturing and supply company. It is involved in designing, developing and selling high-performance, mission- and time-critical solutions for the Department of Defense, government-controlled public-sector enterprises and private-sector defence, space and homeland security.

The company is also involved in several indigenous missile programs, underwater electronic warfare, surface-to-air missiles, nuclear missile programs, surface-to-surface missile programs, indigenous submarine programs, long- and short-endurance drones, ships and space programs.

Management said demand for defence, avionics, naval combat systems, and homeland security is rising as national security becomes an important issue. The Indian government’s focus on ‘Make in India’ and building indigenous weapons systems domestically will help the company’s business growth.

India has an ambitious policy to shift from being the world’s largest importer of defence equipment to meeting most of its needs with domestic production. This may include joint ventures with foreign companies. The government is also focusing on arms exports and defence ground systems, which should benefit the company in the long run, Apollo Micro Systems said in its FY22 annual report.

Under the PLI (Production Linked Incentive) scheme for drones and drone components, incentives totalling Rs 120 crore were offered over three financial years, which is more than double the combined revenue of all domestic drone manufacturers in 2020-21. The company says this momentum will propel the defence industry, and thus the company, for decades to come.