Apollo Micro Systems Limited (APOLLO) October 26, 2026 Conference Transcript

Ladies and gentlemen, good day and welcome to Apollo Microsystems Q2-FI27 Earnings Conference Call, hosted by ICICI Securities Limited. As a reminder, all participants in line will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vikas Singh from ICICI Securities. Thank you, and over to you, sir.

Thank you, Anam. Good morning, everyone. A world welcome of Apollo Microsystem H1FI27 and Q2FI27, I-NX Conference 1. Before I introduce the management, I just would like to give a short disclaimer. However, this call may contain some forward-looking statements, which are completely based upon the belief, opinion, and expectation of the management. So, this statement should not take as a guarantee for the future performance. We would like to thank Apollo Microsystem Management for giving us the opportunity to host them. From the managing side, we have with us Mr. Karunakar Riddipadam, Managing Director, Good morning, everyone.

It's an exciting time in Indian defense, and we are glad to have you with us as we share where Apollo Microsystems stands today. We have delivered our strongest This is the greatest performance in our company's history, with record results for both September quarter and first half of FY27. This is a defining milestone built on sharp execution, rising scale, and growing customer confidence. The momentum is real, and we are only accelerating. I trust you have had the opportunity to review our financial results, shareholder letter, press release, share sheet, and investor presentation. This is our second investor interaction of FY27 and Q2 has been a quarter of landmark progress. Four developments define it. First, a regulatory milestone. The CCI of India has approved the premier explosive transaction clearing the way for the open offer to public shareholders. Second, a leap in indigenous precision guidance. In this, the distinguished presence of Honorable Raksha Mantri, Shri Rajna Singhji, the transfer of technology for the semi-active laser homing system was awarded to us. This technology allows munitions to find and strike laser-designated targets with precision and its strength, India's self-reliance in advanced defense capability. Third, a bold new chapter, Shauryastra Defense System. This new Apollo Group Company will design and develop complete weapon systems, long-range systems, and integrated defense platform for the nation. It is going to be led by promoter Dr. V.K. Saraswath, ex-scientific advisor Raksha Mantri, a celebrated architect of India's missile defense capabilities, and it takes us from building critical components to shaping the entire system. Fourth, scale on the ground. IDL has commissioned a Bolukunda silo unit near Asansol in spread over 18th of acres land with 9,000 metric tons of bulk explosive storage. It defends IDL's nationwide silo network and equips us to serve the long-term orders secured from Coal India subsidiaries. Technology, systems, portfolio, and infrastructure each advances a different front, and together they build the foundation for our next phase of growth. Powered by indigenous innovation, disciplined execution, and enduring value creation. Let us come to the numbers that created a history and reinforced a strong confidence in us to serve the nation. Let me now take you through our consolidated financial performance for half-yearly FY27, a record-breaking half-year performance. We delivered our highest ever half-year revenue, EBITDA and PAT. Revenue surged 78% YOY basis to a record 639 crores from 359 crores in H1 FY26. EBITDA, excluding other income, grew 65% to a record 165 crore from 100 crores. 60% to a record 71%, 71 crores from 48 crores. We maintained positive cash flow from operations of 22 crores during the period. Our working capital cycle also showed an improvement with working capital days and reducing to 353 days from 359 in FI26. H1 FI27 standalone performance is a record on every front including margins. We delivered our highest ever half-year revenue EBITDA and PAD. Revenue grew 29% year-on-year to a record 462 crore from 359 in the preceding year. EBITDA, excluding other income, outpaced top-line growth, rising 56% to a record 156 crore from 100 crore. PAT grew by 44% to a record 76 crore from 52 crore. EBITDA margin reached an all-time high of 34%, expanding by 600 basis points. PAT margin also hit an all-time high of 16%, expanding by 200 basis points. Coming to the quarterly performance of Q2 FI27 Consolidated, Revenue grew by 72% year-on-year basis and 54% QOQ, which reached all-time high of INR 388 crores in the quarter. EBITDA, excluding other income, grew by 88% YOY and 107% quarter-on-quarter, outpacing the top line and reached all-time high of 111 crores in the respective quarter. EBITDA margin, excluding other income, reached all-time high at 29%, expanded 200 basis points YOY and 700 basis points quarter-on-quarter. Pat also reached an all-time high ever to 46 crore, which grew by 40% YOY and 83% QOQ, outfacing the top line. Turning to the standalone business, Q2FI27 was a breakout quarter. Our top line hit an all-time high of 306 crores, growing 36% year-on-year and 96% sequentially. EBITDA excluding other income grew even faster. EBITDA excluding other income soared 82% year-on-year and 122% quarter-on-quarter to a record 108 crores. Profitability took a big step up with EBITDA margin reaching 35%, up 900 basis points year-on-year and 400 basis points sequentially. At the bottom line, we earned a record 48 crore in PAD, up 46% year-on-year and 73% sequentially. A number captures the pace of our scale-up in Q1 FI27. Our EBITDA excluding other income was 48 crore. In Q2 FI27, our PAD alone was 48 crore. What we earned at the operating level a quarter ago, we now delivered at the bottom line. That is the scale delivered with the discipline. Thank you very much, sir.

We will now begin the question and answer session. Anyone who wishes If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Amit Dixit from Goldman Sachs. Please go ahead. Hi.

Good morning, everyone, and congratulations for a good set of numbers. A couple of questions from my side. The first one is essentially if I look at the performance, and if I try to just subtract standalone from consolidated, looks like some of our subsidiaries in particular, let us say IDL or others, are not performing that well. So, if I look at the console, Pat, it is lower than standalone, while revenue, of course, is higher. I just wanted to understand the turnaround plan we have for these subsidiaries so that they can also contribute to the overall profitability like your standalone business. That is the first question.

Yeah, thanks, Amit. Good morning. Good morning. So, we have been vocal and we have been explaining earlier also, Ideal was a loss-making company going to thin margins. And we have refined its financials, you know, over a period of last few quarters, you know, reduced a lot of expenditure and other things. And a few more initiatives are being planned and a lot of transformation into, you know, entering into full-fledged analytics related to different requirements and also improving the margins in the commercial and industrial explosives, which Ideal is currently doing. It will take a couple of quarters, you know, more for us, you know, make all these, you know, what do you call changes that has to be brought into the company. This is something that we have told earlier also. For four quarters, you know, it will be a kind of a curve of, you know, changes that we would be incorporating. The new planned expansion, which we have done for silos, you know, is also an inching initiative towards that, actually. And a few more are offing in next year. But going down the line, you know, this is something that, you know, a lot of improvement, you know, you'll be able to, you know, see in the overall performance towards the ideal exposures.

Wonderful, sir. The second question essentially is that we are pursuing growth on all fronts across, you know, various products. There are multiple initiatives being taken. And now you have two subsidiaries and congratulations for CCI approval, by the way, for Premier. Now we have Premier, we have IDL, we have our standalone business, we have a host of products that we are developing. Just wanted to understand that this multi-pronged growth approach, what constraints you are facing today, and also how you are managing this multi-location, multi-pronged growth?

The discipline, the teams, you know, and the leadership team already well built as far as the current subsidiaries, you know, whatever we have acquired and we are about to acquire. And we continue to, you know, give the vision, strategy, and the direction for the, you know, leadership teams who have been maintaining these companies. And a few more, you know, acquisitions in the future that we would be doing, we will continue to maintain a similar kind of a structure where we will build the leadership team, we'll strengthen the team, we'll create layers, accountability, transparency. And obviously, you know, the vision is something that will be given, you know, from the, you know, company by our MD, Mr. Karna Kritigaru. That's how, you know, we'll have to do and we will continue to do the same.

That of automation also, we are now planning, and so that now they are sitting at one place, we are able to monitor all the locations and all the units.

Yes, sir, the question was more on the, I mean, of course, multi-location, but I said, I mean, there are a lot of products that we are developing. MIGM, for example, is one of them, then the torpedoes, et cetera. So these are very varied products, and there are, I mean, Torpedoes particularly, there is a company who is already into it. And these require a lot of technical excellence apart from the R&D efforts. R&D efforts, of course, I can see that your R&D expense is like at the higher end of Indian companies in general, 8%. So, if you could throw some light on that, you know, the product development initiatives, the kind of, you know, if we are doing hiring in a better manner or around organization structures, that would be great.

So, we have a multi-layer structure as far as the, you know, development teams are concerned. You know, on the topmost layer, MD and the director technical, Mr. Prasad, both handle it. Under them, you know, there are, you know, almost close to around 11, you know, head of the departments who handle different type of technologies, someone who handles the pyrotechnics, someone who handles controls, someone who handles RF, like that, you know, different head of the departments are there. Under them, there is a team leader, you know, who have almost close to little less than six to eight years kind of an experience who handle, and under them, you know, we have a layer of zero to four, zero to five years experience team. So, there is a multi-layered structure with which, you know, we do it. We hire teams from, you know, some of the local engineering institutes, you know, and some from the upcountry, you know, we hire, we groom them, and slowly we grow them to And then there is an architect team, you know, who handles the entire, what do you call the engineering point of view and other things. Okay, so this is a multi-layered structure with which, you know, we operate the entire R&D team. And, you know, the technology's point of view, you know, are generally common, you know, technologies will be there which are being used for different verticals, maybe for the naval defense and for the air defense. Also have, you know, some of the retired scientists, you know, from the DRDO and some domain, you know, expertise, you know, knowledge, you know, which is parted by exam forces, you know, you know, retired staff. So with which, you know, we take certain domain expertise and technological knowledge with the retired, you know, scientists from the DRDO like that. So, this is how, you know, we are able to maintain and sustain and develop and re-engineer the technologies which are developed and come out with the newer technologies based on the current rate requirements. That's how we are operating.

Understood, sir. Thank you so much and all the best. Thanks, Amit.

Thank you. The next question is from the line of Abhijit Singh from Systematics. Please go ahead.

Thank you for the opportunity. Am I audible?

Yes, yes.

Sir, first question is on the standalone business. What has contributed to almost all-time high gross margins there, around 40% gross margins in standalone? That is the first question.

Yeah, you can go ahead and ask all the questions. I will answer it once, sir.

The second question, sir, is on the path ahead for IDL exposure. What is the kind of capex we envisage in IDL, and what is the plan that we have for the next four, five quarters that you mentioned, you know, will be sort of in a transition period, then today you will be restructuring a lot of the business. And, sir, lastly, what is the status of the MIGM Are we expecting the RSV any time soon or when can we expect the order coming into our city? Do you have a three question?

Further plans for ideal is something that we will keep divulging as and when we start those activities. On this con-call, I would reserve the reply. And as far as this finance, this quarter growth is concerned, we have executed decently good production orders, which has driven the margin growth of this particular quarter. And MIGM, MD will answer the MIGM.

MIGM, we are in touch with headquarter, NAVIL headquarters, and we are expecting RFQ next The plan is, Indian Navi plan is, before January, February, they want to release the purchase order, so that, like, advance payment, they want to release before financial year end. So there is a provision in this order, 20% advance payment also, in the sanction, it is there.

Sir, just one follow-up on this. Do you think the trial can happen quickly in a 2-3 month period after RFP is issued? Between RFP and the final order, I am sure the trial could happen, the user evaluation trial, final one.

Purchase order we are expecting before February, so that no, I have to submit the BGN before 31st March, we have to avail the advance payment. So, MIGM trials already completed, user trials, everything we have already completed. No more trials, the straight-away production, the first lot will be subjecting, we have to do some critical trials, then after that series of production, it will be going out.

That's it for my entry, I'll get back into it. Okay, thank you.

Thank you. The next question is from the line of Penakin from HSBC. Please go ahead.

Thank you, sir, for the opportunity. Sir, can you give us some color on the potential export opportunities on the horizon over the next 12 to 24 months, and how do you see them progressing?

Yeah. See, like, last many, because now we were concentrating only domestic business only. Based on our capacity, we are not concentrated on export size, but our third unit is getting ready. First phase of third unit is now operational. Once it is a total operational, then we want to take a foreign assignment also. So, we are building a lot of spare capacity we are building. Compared to our present capacity to the expansion, once it is ready, it is going to be almost 12 times bigger than the present facility. So, we are in touch with many of the overseas companies, and I think maybe next to Financially Runwards, I am sure we will be doing good export, but us also will be taking and executing.

Got it, sir. And my second question is, sir, that do you see that, do you sense that there is a delay in the ordering process this year, while there was obviously a lot of expectations that order flow will increase across the board, but so far we have seen muted order flow, especially on the DART system. In your view, sir, what is driving this delay at the ordering level?

Yes, see, some of the cases, you know, government is now changing their strategy, you know, like, there is one case is there, QRSum is there. QRSum, now, the government, M.O.D. is supposed to place order on Baruch Electronics and BDL, they're saying. But, the, like, now the M.O.D. is planning to split the order, particularly, inside 1,000 numbers, inside 1,000 numbers, they want to split, actually, 50%, They want to place on BDL and 50% they want to call their private industry. That is also one dialogue is going on. And I think that is one reason one of the cases are getting delayed. But other things are going on as per the schedule that releasing orders. In our case, novel systems and all are going on and fast track only. In fact, we are expecting from Tarpido. Recently, our NASR order, you must have seen BDL has received our NASR order. And BDL is going to receive one more order also. Electrical heavyweight Tarpido order also is in process. They have already received RFQ, submitted quotation also. And any time, next one month time, they are expecting order also. Got it. Got it.

Thank you. Thank you very much.

Thank you. The next question is from the line of Amit Kumar from HDFC Securities. Please go ahead.

Good morning, sir.

Congratulations on a great set of numbers, and thanks for the opportunity.

I wanted to understand two points. One is on the shorter horizon. In this quarter, which specific orders, if you could please highlight, were executed, and in the next two quarters, how do you see from this 1,700 crore order book, I mean, some guidance on how much should be executed and which specific programs you are focusing on. This is one. And the second thing, on the longer-term order book trajectory, specifically for Apollo standalone, MIGM we understand. Apart from that, how do you see QRSAM and PINACA, these order inflows, how do you see them coming? And the third one would be on similar thing on Premier Explosives. How do you see the order inflows for Premiers in FI-28?

Yeah. So, Premier, Mr. Amit, thanks for joining. Premier, we do not want to, you know, comment as of now. Until the full process is over, then, you know, we will start, you know, giving our guidance and other things jointly. Right. But as the order book of Apollo point of view is concerned, the current order book, which is standing at around close to a little over 1,700 crores, this will grow to around 2,000 plus order crores by March, other than MIGM order, which is we are going to, you know, get. Yes, sir. Okay, so, MIGM, we are, it is for sure that the, you know, we are going to get MIGM order in this financial year. MD has already told, you know, by February, but not exceeding March is something, a guidance that we have been giving right from beginning. We are continuing the same stand as we are continuously in touch with the, you know, customer, you know, on a regular basis. And with regards to, you know, the, what do you call, PINACA and QSM, QSM MD has already told.

Yeah, PINACA, PINACA already in process, some 2,000 numbers, MOD is releasing orders on two, three companies. And we are expecting, already we have submitted, in fact, the RFQ also has come and we have submitted also for MILK, We are also in that race, actually. So, because most of the things in the QR7, most of the onboard systems, Apollo is doing, and the propulsion side, Premier is doing, if anybody wants to see the major portion of the weapon, Apollo Group 1 is doing, I am sure everybody wants to consider two private industries. I am sure that we also will be there in that race, this day.

Sure. Thank you, sir. Sir, I had one more question, which I had highlighted earlier, sir. Next two quarters, which programs you are basically focusing on, and if any numbers you could please give me.

Yes, during Indian Navy Adder, we have executed this last quarter, and now also we are doing related to Pinaka, also the execution is going on, and there is a strategic program, so I don't want to mention programs, so that program Adder also execution is going on. And also, we are, now we require related things also, we are in the process of executing. A lot of orders from the other companies also, like private industries also, we are now in the process of completing the production. Next two quarters, yes, we are, I think we have orders from various departments, some R&D related orders are there, production orders are there. Limited series, also we received from a number of programs that production also is going on. The next two months, I think, we'll be executing many of the production and R&D later. Program names, some of the programs, the strategic programs are there. We are not supposed to disclose the names, actually.

Okay, I understand. But at least on the numbers side, I mean, do we expect similar run rates? Say, we had done 400 crore approximately in H2 of last year. Do we see, say, close to 700 this year?

Yes, we are targeting, yes, definitely more than that, I think. Amit, what's the question? Can you repeat?

Sir, I wanted to know that out of 1,700 crore, how much do we expect to execute in H2? Some broader guideline would also be okay. Okay.

The growth momentum, what we have been demonstrating, you know, we will continue to, you know, keep the same momentum. That's how, you know, I would like to say.

Anything 35 to 45 percent, definitely we'll be doing.

Okay, okay, okay. That helps, sir. Thank you.

Yeah, those are the questions.

Thank you. The next question is from the line of Rao Thakur from NVFC Brokerage. Please go ahead.

Sir, we are India's premier defense company. Therefore, looking at the humongous opportunity in the defense sector, sir, when do you see our company hitting the big revenues of maybe, say, 5,000 crores and maybe some commensurate margins of 20% or 22%?

Yeah, coming years, definitely we are targeting. Once this activation completes and once the consolidation of the companies started functioning under one management group, I am sure they expected this thing is going to happen. That's all I can say.

Okay.

Thank you. The next question is from the line of Ronak Sangweef from NAFA Aspect Managers. Please go ahead.

Hello. Congratulations for the good numbers. Am I audible?

Yeah, yeah. Thank you. Thank you. Please.

Go ahead. So, like, the effective tax rate of this quarter-two is around 51% of the standalone. So, like, what makes this tax percentage too high?

See, as per the income tax rules, effective from this year, Wherever the turnover was 400% above during 20 to 20. 24-25. 24-25. It was a 25% rate of tax rate. Now it has been to 30%. That is the way the...

So, you hold taxes, okay, not the 115B. Okay, so then my next question is, Ram, like in the previous call, about 155mm shelves, You have said that Premier Explosives have provided some samples to Indian Army for which testing was in final stages. And once the order will be received, Premier Explosives will provide explosives and Apollo will provide fuses for it. So what is the status? Like did the samples got materialized into order and is Apollo ready to provide fuses for it?

The Premier thing, you know, like we want to comment only maybe after the completion of this equation. So, there is a SPA, as per the SPA, we are not supposed to discuss about that company.

Okay. Okay. Got it, sir. Thank you.

Thank you. The next question is from the line of Shreyan Ghatani from SG Securities. Please go ahead.

Hello. Congratulations, sir. So, I had just one question. So trying to understand when the government splits an order between two parties, for example, MIGM is between BDL and Apollo, and we provide subsystems. So do we provide, is it compulsory for BDL to have like a separate vendor for the subsystems, like a complete separation? Or is that like, you know, something that we'll be providing the subsystems and also making MIGM for us? And similarly for QRSAM, like the portion that BDL does and what is going to the private players, like is Apollo going to be involved in both or is that like a separation over there?

See, in case of MAGM, whatever electronic subsystems and other critical sensors and all, Apollo only is provided to DRDO. Okay. So, now also, the future production order also, Apollo only is going to provide electronic processing system and sensors and all, Apollo only is going to supply. There is no second source for that, only Apollo is this source. Okay. Okay. And in case of QRSUM, yes, one case, a couple of systems, Apollo only has established so far. And we are going to be properly, even nomination basis, I am expecting a couple of such systems. One or two systems, there are second vendor also is there. The order will be sharing between two companies.

Okay, okay. So, there's no restriction that the vendors have to be separate for like certain systems when it goes to two different parties. We can be a party to both, right?

Need not be. See, like during development, you know, like whoever supplies or subsystems, you know, they have to go with the same vendors, actually. So, since we have suppliers during development time, and anybody has to come to us only.

Got it. Okay. Okay. That's helpful. That's all I add. Thank you.

Thank you. The next question is from the line of Abhijit Singh from Systematics. Please go ahead.

Thank you for the follow-up, sir. So, just continuing with the previous participant question on the QR time scope that we have. So, we are saying broadly, even if there is a competition in certain subsystems or products, it is limited to maximum two or three players. In addition to Apollo, right? And in MIGM, we are the only supplier for the electronics part to the system integrator. Is that correct? Understanding?

Yes, sir. You have some, I think if I remember correct, three subsystems, three very critical systems, like one subsystem is navigation and onboard computer. We are the only people established so far, and two more other subsystems also, so far, Apollo Microsystems only has supplied with using our technology only, the trials, technical trials, user trials, and all happened. So, they have to stick on to the same company, in fact. And the future, they may be developing a couple of more vendors. See, the RDO policy, you know, they want to have minimum two vendors. So, their process is, if at all, if they are providing technology to second company, they have to observe the technology, They have to produce samples, they have to do the qualification test and all, and they have to use in a couple of trials they have to perform, then they will be considering second source, like that. It is like that, actually. So, present and present quantity, I think since there is no second vendor is developed so far, we are expecting a couple of systems, a nomination of the system, and two, three subsystems are there, two vendors are there. Apollo is there, one more vendor also is there.

And sir, on Pinaka, you mentioned that this is for the Pinaka long range, right? That you mentioned MIL as the order already, and we are also expecting some order.

So, that is for the long range. Pinaka has two various answers. One is 80-kilometer range. Another one is 120-kilometer range. 120-kilometer one, so far, everybody has not finalized DCPP partners. Production partners, they are not finalized. So, we are also in that range, actually. Okay, Pinaka, that 80-kilometer range one only, at present two.

So, there was one order that they got in FI25, so this is a follow-up for that, of that.

Yes, that order is the Herminia order, 2,000 numbers, these three companies have received, and the recent this thing also, our own requirement, Indian Army also is placing order for 2,000 numbers, that is also there. Already, negotiation, everything, RFQ, submission of code, Negotiation, everything is completed. So anytime, they'll be getting orders. In fact, they started a procurement also. E-mail has already sent the RFQ, we have submitted a code.

So overall 4,000 for Penaka, overall 4,000 rockets, right? Near-term demand. Half of that is export and half of that is Indian domestic demand, right? Correct, correct, yes. And so lastly, just on heavyweight topic, I think you mentioned that RFQ is out already. Are you expecting an order? Is that correct, or is that correct, or do you want to correct that?

RFQ is there for a small quantity. Around 30 numbers, RFQ has raised on urgent basis. So, Indian IV has, I think, raised RFQ to BDL. Okay. I think any time this November month, they are expecting an order for 30 numbers. That is only on fast track we have to do in fact. So, that order will be finalized during November month.

But the advanced heavyweight torpedo order, that is the volume order for that, the submarine torpedo, that is going to come in FI-28, right?

Yeah, yeah. See, these 30 numbers they want on an emergency basis. Within 9 months only, they are expecting, okay? And after that, they are going to place order for some 125 number requirement also is coming up. But this 30 number is on an emergency basis we have to supply. They will be giving only 9 months time.

Thank you for answering some of the questions.

Thank you. The next question is from the line of Angush Agrawal from Surge Capital. Please go ahead.

Yeah, thank you for taking my question. Supposedly, during the H1, our standard revenues have grown about 20% versus the guidance we have maintained is around 45-50%. So, do you expect H2 will cover for that or this year will be lower than what we had earlier added for the standard of business?

If we already gave a guidance, we will continue to, you know, keep up with the guidance that we have given.

See, one side, we are now, the capacity we have increased already, Inuit 3, Phase 1, we have already started, and we have already added bases there, and as I was talking to another participant also, like, what is the guidance? Anything 35 to 45% of growth, definitely we are going to meet.

Okay. Secondly, sir, this BDL has received around 1,700 crores of orders recently for, I think, a torpedo. Would it be possible for you to share how much of that will flow to us in terms of subsistence?

I think we have to work on Varanasta thing. You are talking about Varanasta thing?

Yeah, I think they recently got us in last month, about 1,700 crores.

Yes, the Varanasta thing we are expecting, I think, I don't know, 100 crores, 100 crores plus order we are expecting.

Thank you.

The next question is from the line of Gaurav Shukla from Finstow. Please go ahead.

Am I all right, sir?

Yes, sir.

Sir, congratulations for very good results, sir. Q2 EBITDA margin improved to 28.6%, while Q1 margin was approximately 25.8%. What drove the Q2 improvement and what sustainable EBITDA margin should we think in respect of FI27 and FI28?

I'm sorry, can you repeat the question?

Sir, as you see, the Q2 EBITDA margin improved to 28.6% and H1 margin was approximately 25.8%. What drove the Q2 improvement, and what sustainable EBITDA margin should we think for FI27 and FI28? That is my question.

See, actually, quarterly margins, you know, they keep varying. Sometimes, you know, a few hundred, you know, base points here and there, you know. So, but this is not like a kind of, you know, neither can be construed as a kind of an annuity performance, nor any other thing. The product mix generally varies from quarter to quarter, hence the margin also keeps varying. As far as the drive-in margin is concerned, I already, during my opening presentation, I already explained that there's some production orders, you know, that we have executed, you know, you know, with some development projects, you know, which has drive the margins actually, okay. But broadly, we can give a guidance that, you know, we will continue to, you know, maintain the, you know, good amount of momentum going forward for the further quarters as well, in line with the top-line momentum that we have already given a guidance.

Okay, sir. One question more, sir. What is the company's target for operating cash flow and FDF, free cash flow in FY27? When would we expect cash conversion improvement relative to reported PED?

Annual basis, operating cash flow, anchoring orders, majority will be the production orders, compared to the current orders, you know, in a combination where we are doing development projects more and production.

Okay, sir. One thing more, sir. As we have a 17-crore order book, sir, what is the exposure of QR, SAM, AQR, NG, Prelay, and other major programs? What is the exposure of BDAL in this order book?

Currently, we are not giving any break-up of the order book, sir. Actually, we would refrain...

Prelay and DAL, we have not received, no, sir. Finally, Prelay, we are there in, in fact, production, as a complete website production also, So, we are one of the companies participating. For production, everybody is not at a place order, okay? That is in RFK stage.

Okay, RFK, please. Keep it up. Thank you, sir, and all the best for very good direct and all the best for the future, sir. Thank you.

Thank you. The next question is from the line of Raj Rishi from BCPL. Please go ahead.

Mr. Rishi, you are not audible. Hello, Mr. Rishi.

The line for the current participant in the question queue seems to have disconnected. May we move to the next question? Sir, the next question is from the line of Ronak Sangvi from NAFA Asset Managers. Please go ahead.

Hello, thank you for the follow-up question, sir. My question was, how much of order book is of standalone, sir, out of 1,765? Why stand-alone order book is?

Less than 1,300 crores.

Less than 1,300 crores. Okay. Thank you, sir. The rest is of ideal, na?

Yeah.

Thank you, sir.

Thank you. The next question is from the line of Kaushik from Harath Petroleum Corporation Limited. Please go ahead.

Yeah, can you hear me? Yes. Yeah. Now, the defense secretary, Mr. Rajesh Singh, has constantly talked about opening up the missile production, especially for the private sector, and he also talked about, you know, how the conflicts which are happening, Ukraine, Russia, et cetera, and Iran and U.S., how Ukraine has a capacity for, you know, many times a missile production compared to, say, India. So how do you see Apollo microsystem in this context, sir?

Yeah, like, we are also shortlisted for the complete weapon manufacturing. And if you see, once the premier acquisition completes, we are going to place it in a different position, you know, like addressing complete ecosystem, producing a missile, the complete, like, electronics, mechanical, propulsion, rock and motors, all together, we are the only people going to have that facility, that kind of thing. So, many of the programs, we are participating in the ECPP, this thing, and what is coming in a different route now, some H9 programs, they are offering TOT actually, technology transfer. Once we receive technology, then we have to produce some samples, we have to show the performance. Based on that, they will be considering production orders.

Okay. And, sir, can I come in? Yeah, so how do you see the entry barrier in this, sir, both domestically and internationally?

See, entry barrier for the new companies coming into this business, one has to understand the quality standards of the defense, and overnight getting into this business is not that easy.

I would like to add, although the government in the last few years have been continuous, and quite bullish about. And the remark which you talked about, what DevSec has, you know, told, it is the ability of the new companies, you know, who would like to, you know, come into this, you know, business. Earlier, there was a huge entry barrier. But now, although there is an encouragement given by the government, it's their ability to sustain in this business as it will continue to be a lumpy business with one or two products, you know, trying to, you know, do it, sustain, And, you know, because, you know, again, to get a similar size of orders, you know, their ability to go offshore and market it and, you know, match the quality requirements of the international stance, this is all, you know, it's a very long-term bet and a long-term plan, not just by means of, you know, there is a push by the government. And this is something that, you know, we'll decide, you know, as the day stands, actually. And also to the question of what you have talked about, about the Ukraine having a mass listing, yes, more number of players are being encouraged, as the Arsenal requires very large quantities and ability to produce large quantities with the similar levels of the quality expected by the armed forces is something which is paramount at this point of time.

Right. Can I put in one more question? Yeah. Sir, the MD in a South Indian channel had talked about his aspirational target, not aspirational, actually, he talked about a target of overwhelming figure of 25,000 crore in five years.

So, it is like this. As a total group of companies, we are We are now planning for a big expansion in Ideal also. We are planning to start some 15 types of manufacturing plants and all. We are planning. That investment, this thing and all, we will be releasing very soon. We will be releasing and we are going to raise a big investment. And also, we are in the process of acquiring 2,000 more acres close to Hyderabad. We are already holding 1,200 acres. All these big plants that are based on all that big plants, I told that I am aiming to achieve so much of this thing. Now also, I am telling you, I am aiming for that kind of numbers, yes, definitely.

All the best, sir, and it will be great for all of us.

Thank you.

Thank you, sir. Thank you so much.

Thank you. Thank you, sir.

Thank you. The next question is from the line of Sagar Shetty from Veldivaya. Please go ahead.

Yeah, hi. Good afternoon, sir. I'm a congressman of the state of that number. So, actually, most of my questions have been answered. So, I have just one more question. It is regarding the order book regulation. We have seen a really good revenue execution in Q2, and at the same time, the sequential order book, the incremental order book, there has been only a minor jump. So going forward, how do we think, what are the key drivers that will help us achieve the revenue goal which we are targeting? And if you could also, you know, give us some visibility on how, like, apart from QRSAM and MIGM, like, what kind of orders do we have going forward as well? And, like, what is the executioner timeline for the team?

See, this is a big production. There are so many projects, you know, limited series, 50 number, 100 number kind of things. Many are there, actually. A few hundred programs are going on, okay? Okay. So, these programs are highlighted programs where everyone knows about QRSM, everyone knows about Akash, NG, and all. Everybody knows. Pindaka and all, people know. There are so many strategic programs are there where nuclear warhead and all will be there. We are not supposed to talk about such programs. So many programs are going on. Okay. Okay. So, not just FINAC and all, only 2-3 programs, only people knows public, knows general public, but several other programs also are going on.

What about the, like, why was there a lag in the, you know, sequence, incremental order book, right? Like, in the previous quarter, we had, like, 1,700, 700-hour bookstores of order book. Now, we have 1,755. So, what are the reasons we have?

See, address-wise, every month we are receiving some R&D address, production address and all, we are receiving. As I was telling, the growth point of view, if you ask me, anything 35 to 45 percent, this thing we are projecting. And address-wise, there is no problem. See, at present, we are having 1,700 course address we are having. But every month, we are adding address, okay? And I am sure by this financial year-end, anything, my, this thing, everything, MAJM out of the, I want to say, place, no, it is going to be anything, 4,000 to 5,000 kind of orders will be.

What would be the timeline going forward of new orders coming?

Anything, no, they will be having 18 months time, generally. MAJM, I think, will be having time, but I think it will turn up, yes.

Thank you so much. Thank you.

The next question is from the line of Jameet Jain from Wealth Mind Advisory Services, LLP. Please go ahead.

Yes, Ashu, you have given us a pipeline of 5,000 crores to be issued in the long term. So, when are you expecting this to be issued in H&M, any ballpark number?

Your voice is not clear. I think, see, like, one side, as I was telling you, the production capacity is increasing to almost 12 times. My first phase of this thing already started. And orders-wise, a lot of orders are in pipeline. Everyone knows that there are so many big programs like QSM you take, MIJM you take, MoodMine you take, and there are so many programs that are in pipeline. And many of the programs we are also participating in, like programs like Pralai, we are also one of the participants, you know, like complete weapon manufacturing. Thank you. More programs, I think very soon we are going to announce. I think we are going to hear next 15-20 days time. A couple of more DCPP, this thing, you know, finalize, going to finalize, and Apollo will be announced very soon.

And we said that the new capacity will come live and mass to open, but it's like, so what can the revenue can be done on the optimized capacity?

Your voice is not that clear.

This sound is coming.

Can you repeat your question? I was saying that the new capacity will come live and mass to open, but it's like, so what can the revenue can be done on the optimized capacity?

Sir, your voice is not clear. Can you please use your handset?

Hello, am I audible now?

Yes, sir, please go ahead.

Yes, I was saying that the new capacity unit 3 is going live by March 2027, as you said, and so what peak revenue can be expected from the optimized utilization?

So, the quantifiable peak revenue is not something, you know, how you have to understand, But the capacity size is increased largely and fairly by, you know, also equipping with multiple machinery by scale of machinery and by scale of the test equipment, we will be able to effectively reduce the overall cycle time of the production when large production orders are coming. Quantifiable point of view, we, you know, supply multiple types of systems for, you know, several hundreds of types of programs. And, you know, quantification is not something possible. But the revenues, whatever the scaled-up revenues which we are talking for next 5-6 years, I think for all that, you know, current type of business on the subsystem level, whatever we are doing, this, you know, facility is good to go, actually. And on a scaled-up, you know, level of, you know, something like, you know, larger systems like, you know, MIGM and other things, minus explosive, for that also, the integration and other things, this facility is good to go. That's how, you know, we wanted you to understand.

Yeah, one more important thing is the qualification testing and all. We are, at present, we are using third-party facility we are using, wherein we are losing a lot of time. Now we are going to have our own facility. Installation is going on. By next one month's time, we are going to have the complete EMMC test facility, complete navigation system and all. We have to do calibration and all. We have to do the calibration system also. Installation is going on. All that we are building in-house now. So, the production time will be reduced, actually. At present, what is happening, though, some of the very critical tests now, we are depending on DR-DUPA facility, where we are not getting any continuous versus we have to wait for weeks together, months together, sometime. A lot of change, you know, like we are going to see a lot of change near future.

Okay, sir. That's helpful. That's it for Michael.

Thank you. The next question is from the line of Dikshan from DB Wells. Please go ahead.

Thank you. What we need to understand is with the opportunities that we are seeing right now and with the integration of the explosive business we have already had, what kind of more acquisitions do we need to do to become better or at least at par with our inspiration? And that's point one. And point two is that we are now in the integrated side, or we are close to getting integrated with our sort of KPEX that we have done so far. How long do you think that this KPEX will be enough for us to scale to the ambition of 25,000 crores before we need another set of KPEX to start? And point three is that, what is the sort of importance of our explosives, new acquisitions that we have done? What is the sort of importance in sort of the integration that that will help us with, any particular product program that it will help us with?

Okay, the last question is quite a lengthy one. I think that is something that, you know, we can take one-on-one, not something that I cannot explain, you know, just, you know, over a few words. But broadly, coming back to your first question, we don't aspire, you know, to compete with anybody in the market, neither in the private nor in the, you know, public sector or something. We independently are growing strength by strength, brick by brick. We have grown ourselves from a grassroots level, building the core intelligence that forms either a weapon system or any other platform, you know, system. That is the strength with which, you know, we have grown. Now that a lot of push and encouragement is being given by the government, the private industry can start building a larger system, you know, because the larger quantities are also required, you know, which cannot be catered by the, you know, government-owned, state-owned entities, you know, that's how, you know, we also continue to aspire ourselves to start building a larger platforms, Keeping the, you know, existing capabilities and strengths that we have in building the intelligence systems, which form part of the, you know, the platforms. Okay. We are looking forward to, you know, emerge as a global OEM in next five to six years, rather than trying to compete with anybody in the industry. All the industry players and partners are in India. You know, we want to either partner, collaborate with them, and jointly work towards the sovereignty of the country in building a good system at a, you know, what do you call, you know, cost-competitive, you know, price for our armed forces. That is how, you know, we want you to understand. I want to set the tone by taking your question as a platform, and thank you for asking this question. As far as the energetics is concerned, this is a very strategic move that we have made, and we will continue to build and scale the size of the energetics in our, you know, subsidiary company, Ideal Explosives. They are already, you know, MDA has told, and we have been vocal earlier also, we have such large investments that we would continue to do in Ideal Explosives. This is something that we will continue to grow as the arsenal requirements are required in a very large quantities going forward, actually.

So, how long do you think that this current CapEx will last us before we start another cycle?

CapEx is something that, you know, what we are doing now, you know, for Apollo as a, you know, standalone in three phases, you know, we are doing. But incremental CapEx, we will keep continuing to do as the scale of the business keeps growing, you know, the CapEx is something, you know, There are two fundamental things with which, you know, we are, you know, running this business. All the while, for the last 15 years, we have been consistently investing on R&D. But as the policy change has, you know, started in an aggressive way by the government, we are encouraging the private industry, we have also started increasing the capex and infrastructure. Augmenting the infrastructure will be on a continuous basis as the scale of the business keeps growing. So will be the size of investment that we will do in R&D. That is how we want you to understand.

So one more question. Now that Ideal has started positively contributing to our consolidated business, What sort of guidance do you think you can give us one year down the line or two years down the line? Because we are also now integrating with the new business that we have an open offer for, and now that integration will also come in. So, what kind of consolidated outlook Do you have for the next 12 to 24 months?

On the bottom line, the overall thought process towards the energetics and the guidance related to the revenue of our entire energetics business is concerned. Once post, you know, acquisition is complete, you know, we will start giving effectively. Now we want to refrain from giving any idea because, you know, we want, you know, You know, the entire platform to be coming on one umbrella first, and then, you know, pan out a proper plan, you know, on a pan-India basis, and then, you know, we will give a better guidance to you from then onwards.

But, sir, my apologies for harping on this a little bit, but I know for a fact that you are a lot of aggressive, and we really appreciate that as your investors. And you will be looking for more acquisitions also. So, having some light, I completely understand you can't discuss that today, but having some light on the consolidated going forward would really help us, sir. That's just the request.

No, it's not very far away. I didn't memorize your name, sir.

Vishan, sir.

Vishan. Vishan, ji, I am not differing your question forever, actually. The acquisition process is due only a month. I am not asking you to wait for a quarter period of time to wait for this question to be answered. Let the acquisition process be complete. Once it's complete, then we will make one more proper call. Post-acquisition, we want to make a joint call and give an effective thought process, guidance. We are a very, very, very transparent company, and what is the vision of the company in the energetics line is something that we will be vocal about it. And coming back to the aggression, what you are, you know, you know, talking about, thank you for understanding that we have been aggressive. We are not doing anything great, nor is our thought process anything great. Exactly what the government wants the industry to be, we are just responding to it, that's all. The government wants the private industry to be aggressive, invest in R&D, invest in infrastructure, and build scaled-up systems. Only that we are doing.

Sir, we 100% admire your aggression, and thank you so much for the growth that you have been giving to the shareholders.

Thank you, Mr. Shant.

Thank you. A reminder to all the participants in the conference, please limit your question to one per participant. The next question is from the line of Rahul Gupta from ARIA Research. Please go ahead.

Hello. My question is that is the major anticipate order under QRSM or MIGM or PINACLE are delayed. So what alternative program or existing order can support the FI27 revenue guidance? And which program represents the largest execution risk today?

Thank you. Any, under any circumstances of a last mile that, you know, a month here and there MIGM order to be getting delayed, if that's the question which you are asking, still the, you know, momentum of the business is going to continue owing to the current order book that we are having and the orders that are already there with my customers, which I am only supposed to get, where I am the proprietary supplier for it, keeping that in view and the regular orders that we keep getting every year on, you know, for various programs. This is something that will continue, maintain to continue the momentum, sir.

Okay, and sir, my second question is, how much contribution from new order or old order?

In the sense, discussion, I'm going to say.

Okay, okay, sir. Thank you, sir.

Thank you.

Thank you. The next question is from the line of Abhishek Kamdar from Value Plus Advisors LLP. Please go ahead.

Hi, am I audible?

Yes, sir.

Congratulations on a great fact, and thanks for the opportunity. I just had a question around Shorya Astra, the new associate company. Just trying to understand the opportunity here, and how will the, you know, the IP and the commercial economics work over here?

I started with Dr. Saraswath Ji, former chairman DRDO and former NETRU member also. Keeping the interview, like wherever gaps are there, DRDO is doing so many programs, but certain programs DRDO is not doing. Dr. Saraswath Ji wants to take up certain programs, wherever gap is there, he wants to take up. Let us say we are having only Pinaka. We have only up to 120-kilometer range only we are having. Wherein the arm forces are looking for 300-kilometer kind of thing also, they are looking for. 500-kilometer, 900-kilometer kind of this thing also, they are looking for. So all that we want to address, in fact. You are asking about IP and all. We will be doing giant development. The development portion, development this thing will be doing by Shoharashtra, and production is going to take up by Apollo Microsystem. That is our understanding. IP will be holding, it's a giant, this thing. Apollo is holding 33% stake in that. And rest of the, at present, Mr. Saraswath is a few more people going to giant. 34, sorry, 34% Apollo is holding.

Right. So, are we looking, so, in the projects that we do under Shoryastra, are we looking to be a lead integrator and lead development of these long-range and new systems?

Complete weapon design, we have already started doing, okay? Complete weapon design, we will be doing our own.

Okay.

That is how we are images.

All right. Okay. Thank you and all the best.

When Sarasogi is there, then we will be doing, naturally, we will be doing our own design only. He is a highly experienced person, you know?

Okay. Thank you and all the best. Thank you.

Thank you. That was the last question for today. I now hand the conference over to the management for closing remarks.

Thank you so much. Before I conclude, a word on the bigger picture. India's defense sector is entering a structural growth rate. Strong tailwinds are covering, converging. The government's push for indigenization and military modernization. Telangana ambition to become a leading defense manufacturing destination and rising global demand for Indian defense exports. The EU, REAM, Europe are reshaping procurement and supply chains, opening a real and a very high opportunity for Indian companies to participate beyond the domestic market. Our view is simple. The winners will be those who design in India, manufacture in India, and earn the trust of customers worldwide. Apollo Microsystems is built for this moment. We develop mission-critical technology-driven solutions for the increasingly complex demands of modern defense platforms. Our principle is clear. Build for today's challenges, invest in tomorrow's capabilities, and create lasting value through disciplined execution. I thank the Ministry of Defense, Government of India, our customers, and our partners for their trust. To our investors and analysts, thank you for your engagement and constructive perspectives. We know confidence is earned through performance, transparency, and consistent delivery, and that is our commitment. We would welcome you to our facilities to see our manufacturing and development capabilities first-hand. Write to our investor relations team at investors.relations at the expanding technology. Requirements are deepening, and the opportunity for indigenous companies is innovation. Wishing you and your family a very happy Diwali in advance. Thank you, sir. On behalf of

ICIC Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.