Apollo Micro Systems Limited (APOLLO) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Apollo Microsystems Q1 FY27 earnings conference call hosted by ICICI Securities Limited. As a reminder, all participant clients 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 and then zero on your touch-down phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vikash Singh with ICICI Securities Limited. Thank you, and over to you, sir.

Thank you. Good evening, everyone. A warm welcome to Q1FI27 Apollo Microsystems, sir. Thank you for joining on this Saturday. Before we start the call, I just like to give a short disclaimer. Regarding the forward-looking statement, which we are completely based on our belief, opinion, and expectation of the management. These statements should not guarantee a future performance because it involves many unforeseen risk and uncertainty. From the IPI security, we'd like to also thank management for giving us the opportunity to host them. From the management side, we have Mr. Karuna Sipaja, manager director, Mr. Krishna Sai Kumar Adebendai, over time director, and Mr. Sudarshan Chilu Vedu, CFO. Without taking any more time, I'll hand over to our management for their opening remarks. Over to you, sir.

Thank you so much, ICC Securities, and also to all our shareholders. Good evening, everyone. Thank you for being with us today. It's always a privilege to engage with our valued investors and provide updates on our performance, strategy, and future outlook. I am pleased to share that we have closed the best June quarter in our history, delivering highest standalone revenue of 156 crores, EBITDA other income of around 48 crores at of 28 crores, along with highest ever EBITDA and part margins of 31% and 18% respectively. These results reflect the strength of our execution, the discipline of our operations, and our continued focus on indigenization and building and Aatma Nirbhar Bharat. We are encouraged by this momentum and remain firmly focused on delivering sustainable growth and long term value. I trust you have had the opportunity to review our financial results. Shareholder letter, press release, tear sheet, and investor presentation. This marks our first interaction of fiscal year 2027. We begin the year with a milestone that reinforces our commitment to innovation, technology leadership, and shared growth. We have entered into a definitive agreement to acquire 41.33% promoter stake in Premier Explosives Limited for approximately 1550 crores through an all-cash transaction, marking a significant step in strengthening our presence across the defense manufacturing ecosystem. With this acquisition, we have a presence across the entire missile and guided weapon value chain. Another significant milestone was the successful handover of our indigenously designed and developed safety and detonation device to the Indian Navy, marking an important step in translating our in-house technology into operational defense capability. With 100% indigenous content, the SDD strengthens our potential across MRO and future weapons and missile programs while offering significant cost savings and reducing import dependence. We are also making a meaningful progress in autonomous underwater capabilities. We have received a Make-2 prototype sanction order from Indian Navy for the development of SAVIER anti-submarine warfare system, our semi-submersible autonomous vessel designed for intelligence operations and reconnaissance. The program strengthens our position in an autonomous maritime system and opens the door to next-generation capabilities in underwater surveillance, intelligence, and anti-submarine warfare. Finally, we are also encouraged by the Indian Air Force as a prime development agency for IFREC program under the MEC2 category of DAP 2020. We see this as a strong recognition of our indigenous design and development capability and an important opportunity to contribute to the advanced fashion capabilities for the Indian Air Force. This system is primarily a conversion system of a dumb bomb into a precision range extension as well as a precision, you know, a guided bomb. Taken together, these developments demonstrate the growing breadth of our capabilities across the Indian Air Force, Navy, with a strong entry into autonomous technology under make-2 category. As we expand into indigenous products development, autonomous systems, and precision defense technologies, we are building a broader technological portfolio that enables us to serve a larger role in India's journey towards a stronger and more self-reliant defense ecosystem. Before moving to our Q1 FI27 performance, I would like to highlight that in the defense industry, year-on-year performance is a more meaningful measure than quarter-to-quarter performance. Given the long procurement cycles and milestone-based execution of defense contracts, revenue recognition can be uneven across quarters. Therefore, quarterly fluctuations should be viewed in context and may not necessarily reflect the underlying business momentum. At a consolidated level, our top line for Q1 FY27 stood at 251 crores, registering a strong year-on-year growth of 88% compared to 154 crores in Q1 FY26. EBITDA, excluding other income, grew significantly by 31% to 54 crores in Q1 FI 27 as against 41 crores in FI 26 first quarter. A similar growth trajectory was reflected in PAT, which increased by 43% to 25 crores in Q1 FI 27 compared to 18 crores in Q1 FI 26. At the standalone level, we delivered 17% YOY growth in revenue, reaching 156 crores in Q1 FI 27, compared to 134 crores in Q1 FI 26. At outpaced, top line increased by 43% to 28 crores, compared with 19 crores in the same quarter last year. This is our highest ever pad for a June quarter with a recorded pad margin of 18%. I would now like to briefly update you on our order book position. As of August 8th, our standalone order book stood at 1,224 crores, while our consolidated order book stood at 1,704 crores, which includes an order book of 480 crores at Ideal Exposives Limited, reflecting a healthy and robust order across the group. Thank you for your continued trust and support. We now look forward to addressing your questions.

Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then 1 on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and then 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. Again, to register for a question, please press star and 1. Your first question comes from the line of Amit Dixit with Goldman Sachs. Please go ahead.

Yeah, hi. Good evening, everyone, and thanks for the opportunity. First of all, congratulations for a good set of numbers and some of the great achievements in the quarter. And so two questions from my side. The first one is essentially the premier explosives. So the acquisition, of course, I understand that it adds new dimensions in our journey and capabilities. So just wanted your thoughts on how we are going to take it forward, what kind of synergies we see. Of course, you mentioned the complete missile system is now, you know, we can do it, but how we are looking to further, you know, I would say increase the capabilities and the shared capabilities, basically, of Premier and Apollo. That is my first question.

Okay, well, you'll ask the next question as well, Amit.

Yeah, sure, sure. The next question is that there have been some orders from HAL in the recent times. For instance, they have given orders for AESA components of Uttam radar to Astra Microwave. There have been orders to BDL. So, we also expect some orders from HAL or the related agency for stages from AC1A, and the B part is that what are your, you know, expectations about the other part of QRSA order?

Thanks, Amit. Thanks for joining the call.

So, I explained about this acquisition of a premier this thing, and I will explain about QSM and that things, okay?

Yeah, yeah, yeah. So, thank you, Amit. So, primarily, see, as you rightly understood and also pointed out the point that, you know, the acquisition of the premier is primarily for, as a part of our, you know, backward integration as well as forward integration for us. As we have been quite vocal all the time and, you know, that, you know, we have a very strong presence in the weapon system electronics. And we are part of every indigenous weapon of the country, and we are also parallel developing our own independent rockets, both guided as well as unguided rockets, for which the weapon system electronics, right from the, you know, fuse part to seeker part to up to actuations of the fin, the entire range of, you know, technologicals which form part of a weapon, we are already having a very strong presence, actually. So, as far as the propulsion systems are concerned, you know, Premier is very strong, and they are both for the space application as well as for the weapon applications as well, and this partnership would enable us to, you know, towards a journey of making a complete weapon by ourselves without having any interdependency with any other, you know, company. At the same time, you know, it will also, it is also going to bring us a lot of synergy in terms of, you know, becoming a prime OEM for the weapons that we are in-house developing. So that was the core, this thing, not only specifically in terms of the missile programs, but various other ammunition programs, you know, where we are very strong in fuses and we are very strong in the engineering and other aspects. This is something, you know, this, you know, partnership by virtue of, you know, acquiring the holding in the premier would make us an integrated defense platform company as far as the weapon arms and ammunition point of view is concerned. With regards to the QR SAM, you know, Mr. Karnakritigaru, our MD, would, you know, throw a light on that. Sir, over to you. Yeah, yeah.

Good evening. QR SAM is in the process of, Barazza Electronics is going to take the order any time. In fact, the bidding and negotiation part is completed. Once BEL is going to take order, then missile portion order comes to BDL. Detail order value is something around, I'm expecting 11,000 to 12,000 cores kind of thing. And the first stage, actually, they're releasing for only 1,000 numbers to awesome this thing. So each missile, one core plus component will be there. We are doing, one is a complete guidance system, onboard computer and all we are doing. And also front-end rear activation system also, we are doing almost five subsystems for awesome we are doing. More than one core component will be there in QR7. In case of HAL, HAL we are doing not big orders. I think some 150 core order only we are doing right now. We are expecting another 150 core order. We are expecting from HAL. And LCA mark 1, mark 2, we are doing a number of systems. Mark 1, rather this thing is only a couple of systems, two systems only impact our participation is there.

Yeah, that's all.

No, sir. Great. Thank you so much for the elaborate answer. Maybe I'll understand offline the cipher on the on the premier and ideal. Thank you.

Thank you. Thank you. The next question comes from the line of Shreyans Gathani with SG Securities. Please go ahead.

Hi, good afternoon, sir. Good evening. I had a couple of questions. So, the first one was on the IDL transformation. So, we still see losses there. So, if you give some, if you can give some plan on, you know, what we plan to do and any developments that have happened during the quarter on that besides the Cold India, which was already announced. So that was the first question. The second one was in the MIGM order. So now that we've got the DAC approval. So just if you give some, if you could give some timelines and, you know, order value that we are expecting and how that order is going to progress over time since we are pretty much going to get.

Yeah, sure. Thank you. So, regarding IDL, you know, the Q4 last financial year, it was an EBITDA positive. And this financial year, you know, Q1, it is bad positive, but, you know, the profitability was very less. So, this time, you know, after the Coal India ban is lifted, we have only participated in a select, you know, circles of the Coal India, where we felt that, you know, we could do justice as far as the shrinking margin business is concerned in the bulk explosives. is there are some volumetric, you know, it is primarily a volumetric game, and the same volumes are little less, and the various other accessories which the erstwhile, you know, parent of IDL used to manufacture, which was the JOCL, that manufacturing process in IDL will start eventually in next, you know, couple of quarters, which will give a, you know, added benefit to the bulk explosives supply, which will improve the margins going forward on the balance sheet point of view. But broadly, you know, the various cost, you know, measures, you know, and the overhead measures related to post-acquisition of Ideal into Apollos, this thing, you know, has already been taken up well, and we could significantly reduce, you know, the multiple overheads associated with it, and going forward also, we are going to take a few more measures. This is an acquisition of a loss-making company you are all aware of, and the process of restructuring is going on. We have already told that it will take at least three to four quarters for us to bring up to this thing. That's what we are doing, and it's something which is going to be positive, fully positive from the next financial year. That is what I would like to talk about ideal, and a lot of new…

MGM, shall I answer MGM?

No, sir. Ideal, I'm completing. MGM, you take, sir. So, regarding the, you know, there are new compounds that will further be manufactured, for which licenses are already obtained in it, and we are in the process of augmenting the infrastructure, you know, after this, you know, I mean to say... After Apollo has taken over it, actually, and the process is going on, and as and when the new plans get started, the revenue mix also is going to change, and that is going to change the overall numbers of it, is what we can assure to the markets. Regarding MIGM, Mr. Reddy, sir, you know, we'll take it up. Sir, over to you.

Yeah, MIGM, IGU, no, like that, Apollo has come. We are expecting next month, we are expecting a call from Indian Navy. In fact, we are already discussing. Before floating the inquiry, they will be discussing with Apollo and BDL. After that, they are going to float the inquiry. Maybe anything next month end, they are going to float the inquiry. Like, we are expecting by December or January, we are expecting the purchase item. And I think, as you know, the total budget is a 3,500-quote kind of thing, and it is good that they are also accepting 20% advance payment also is there in this. This is a very good encouragement to our company, definitely. We are expecting MIGM 70% added. In fact, we are expecting some 3,500-quote deal.

Got it, sir. That is very helpful. Sir, the 3,800 crore will be spread across a period of time, right? I would have seen.

Yes, they are expecting three years time, the 1,000 number they are expecting.

Okay, okay. So, just one follow-up on the IDL. So, just so our, when we acquired our initial, like our goal was to have integration into the defense space. So, you know, we've not able to, like we've not done that yet, just wanted to get some color on when we'll be able to, you know, get sort of integration into our defense business.

Yeah, we will be doing, you know, consolidation on this IDL and Premier, all these things, you know, like we will be coming out with, see, we are planning for a number of production plans. We are, in fact, planning in IDL and, in fact, Premier also. Premier said we are, we want to go for more and more integration facilities we want to set up. So, I think next two, three months time, we will be coming out with our plan, actually. So, now the plan is changed, you know, before our plan was different. Now, after the completion of the steamer acquisition, we are going to come out with our future plans.

Okay, okay. So, that will be very helpful to know if you could, you know, share offline or whenever, be very interested to know that.

Definitely, definitely.

Thank you so much. That's all from my end. All the best.

Thank you. The next question comes from Deepak Sharma, an individual investor. Please go ahead.

Hi, good evening, Apollo and team. I have two questions. The first one, any forward-looking guidance in terms of revenue and EBITDA margin on consolidated and stand-alone basis for the next two or three years? And secondly, can you please quantify the order book size expecting from the QRSAM and MIGM and in how much time frame that order book will be converted into the revenues? Thank you.

MIGM production will start from next financial year because we are expecting this order in this financial year. Sir, I am right, right?

Yeah, you are correct. MIGM, even if you are some also, the execution starts from the next financial year, in fact, yes.

Yeah. So, regarding the guidance, we have been giving guidance earlier. We continue to stand by the same guidance as far as the growth is concerned. You know, somewhere in between 40 to 45 percent is the continued growth that we will continue to demonstrate, you know, in this financial year onwards. For the next financial year, we will give you a separate guidance at the end of this financial

So, here I want to mention one point that we are coming out with the unit 3. It's a huge facility that we are building now. In fact, we have already started production. Maybe the final production as a complete production activity, I think before March 27th, we are going to start. Once the total capacity we are going to utilize, then our future plans will be different. I think it will come out only once the total facility is operational. We are also looking for some export opportunities. So, then I think anything, December, after December, only we are able to come out with a new definition.

Sir, actually, I'm asking about the habitat margin guidance. Can you please?

Sai, Sai, can you say habitat margin?

Sir, we are not giving EBITDA guidance any time, sir, you know, but, you know, the momentum will continue to be the same, but the top line, as far as the EBITDA levels are concerned, you know, but the top line guidance is something that we have given, actually.

Yeah, definitely better than the present listing. I can say better than the present listing.

Okay, just 40-45% new CAGR, console basis or the standalone basis?

The console basis as well as standalone boards are actually, the revenues in my subsidiary also are growing actually, and as well as the revenue in the Apollo is also growing. So, it's a console, you know, would also be similar actually.

Okay. Okay. Thank you. Good luck.

Thank you. Your next question comes from Hiral Nandu and from Kalpavruksh Capital. Please go ahead.

Hello. Congratulations for the good Q&A results. A couple of questions have been already asked by the party. I just want to understand one or two points. One is on when we have a premier explosive also Thank you. So, what could be the change in the current product revenue? Say, for example, if we are selling a product at 100 or 1000, so with the premier synergy, what could be the difference in the revenue size and the margin? Or it will be an independent. And I am understanding if the backward and forward integration, so what's the profile changes?

You meant to say as well as numbers in the console basis or as well as the numbers in the standalone, what is that question about?

So, as a product, I am saying more of a product side, or a revenue for the per product, when we say individual product, we were selling without Premier, and what we will be selling post with Premier.

Understood. Here, one point is, so far we were depending on, for explosive requirement, depending on email and other explosive companies, once after acquisition of Premier, now we will be having our own explosive, this thing, like MIGM is there. Without premena, I have to depend on third party this thing. Once after activation, I will be having my own specialty. So the production activity will be moving very fast compared to previous plants. That is one of the things I want to clap with you. Try other things you can find in Kali.

Yeah, yeah. So, that's on a broader aspect, you know, and to a very specific point of view, you know, I want to tell that the current consumption of explosive and propellants in our current business is very minuscule. But going forward from the next financial year, you know, the orders related to MIGM and, you know, other class of, you know, rockets are going to increase. As the consumption starts, you know, we will be able to give a more clarity in terms of the margin point of view, but definitely, you know, in terms of compared to the outsourcing as how MD sir has already told, you know, there will be improvement because it is an in-house, you know, production for us actually, although on an, you know, arm's length basis, you know, so overall, you know. Margin levels point of view, on an outsourced basis compared to what is in-house, there will be an improvement. But as a comparative level, I will not be able to tell because in the current financial year and the previous financial year, the consumption of explosive and propellant is very minuscule compared to what is going to be for the next financial year.

Exactly, exactly. And that's what the question came for, is that the product profile will also change. So current product profile would be, say, Thank you.

No, no. By acquisition, the product profile is not changing, actually. The scope of the product is actually changing, actually. That's how you have to look at it.

Exactly, exactly. Yes, got it. Secondly, just one more question on the premier site. This open offer and all is expected to complete by 15th of September or more?

Now, it's in the regulator's hand, you know, it's very tough to comment. As in, when it comes, we will have to tell, actually. I cannot give you a guidance on that particular thing.

And if I consider the total amount of fund raised for the open offer and for the acquisition of 41%, so it may sum up around 2,500, 2,600, and fund what we raise is around 3,300.

Yes.

So, any other plan of acquisition or it will be more for a working capital or other purpose?

Already we have given a breakup of it actually, then out of which the proceeds 2500 is going for the, you know, acquisition around 500 crores, you know, is actually going for the, you know, working capital, you know, debt and some for the general corporate purposes.

Got it. Sure. Thank you and all the best. Look forward for the cotton growth. Thank you.

Thank you. Our next question comes from the line of Ronak Singhri with Napa Asset Managers. Please go ahead.

Hello.

Yeah.

Yeah. Yeah. So congratulations for the good set of numbers. Last quarter, you mentioned that there's a huge demand.

Of artillery shells in Europe for which you are going to start something. So, I think it is for fuses or something else. If it is, then what stage we are in.

Yeah, artillery, you know, Premier already doing testing, particularly 155mm, you know, in fact, Premier has provided some samples to Indian Army, they are testing, and I think some continuous orders were expected by Premier, and when we take the order, like other things, like fuse and other things, you know, like Apollo will be doing, and the ammunition portion will be handled by Premier, like that.

Okay.

So, now the Premier has given samples for the shells or the complete? Complete.

The filled shells provided to Indian Army. Okay.

Okay. Thank you, sir. That's it from my side.

Thank you, Sipran.

Thank you. The next question comes from Amit Kumar with HDFC Securities. Please go ahead.

Good evening, sir. Congratulations on the great quarter as well as acquisition of Premier. My question is, I want to kindly if you can highlight the order book trajectory for next three years, including Premier. So right now we are at 1,700 product control level. Where do we go in three years, including the QR SAM orders which will be coming to Apollo as well as Premier, and if you could please provide some backup.

So, Premier is in the CCI mode, actually, you know, we are not expected to comment anything about, you know, their futuristic order book and all like. As far as we are concerned, you know, the current order book is suited around 1,700. And, you know, by end of this financial year, you know, we are expecting a single order more than 2,500, 3,000 crores, which will cumulatively, you know, you know, bring our order book to 3,000 crores. 3,500 to 4,000 crores on a consolidated basis. Okay. So this is the guidance, you know, that we can give based on the new AON that has already been recorded. It is already there in the news, actually. So beyond that, for the premier, you know, we are not in a position to give any update as of now.

We are expecting QRSum is one case, and Akash and Sanji also some thousand numbers already have cleared. And the other one is the 2,000 number, Pinnaka also mode is going to place the order on 2-3 vendors, and Pinnaka also is there. I'm talking about bulk products, not small things, I'm not quoting here. So all these things, like we are expecting this financial year, CRSM and MIGM, we are expecting this financial year before the financial year, and partly we are also expecting Pinnaka orders also, we are expecting.

Okay, so helpful. So in this QR time and Pinaka, if you can quantify a little bit, even approximate figure would be helpful.

Pinaka 2000 number, the Army is negotiating. Already, the negotiation is completed. I think any time, any time, these two, three companies are going to take the address. And our component size is something like 85 lakhs for each Pinaka we are supplying. So QRSUM already clarified, more than one core component goes into QRSUM. Even Akashanji also same value, like QRSUM. More than one core component goes into Akashanji also. Each Akashanji and QRSUM, each thousand number, MWD is now looking for it.

Okay.

Thank you.

Thank you. The next question comes from the line of Samir, an individual investor. Please go ahead. Sameer, your line is unmuted. Please proceed with your question. Samir, if you have muted the line from your end, I would request you to unmute and please proceed with your question. Since there is no response from the line of parent participant, we'll move on to our next question. Our next question comes from the line of Ashit Khotif with Almonds Global Securities Limited. Please go ahead.

Yeah, good evening, sir. Thanks for the opportunity. I just wanted to ask, was, hello, can you hear me? Yeah, yeah, very much. Yeah, yeah. Sir, I wanted to understand, are we planning to kind of merge our explosive business with Premier, or is it going to be that whatever is there in Apollo will remain with Apollo and Premier will remain as a separate entity?

At present, we are going to operate separately on this.

So, Apollo, what it has acquired of IDL, it will not get much with, I mean, for synergy and ease of operation?

Sir, it is future, sir. You know, it is not appropriate to comment at this point of time. We'll definitely keep you posted once premium requisition is complete over few quarters, you know, we will be definitely be vocal on it. Okay.

Thank you.

I'll come again in line. Definitely, sir.

Thank you. Your next question comes from the line of Balaji, an individual investor. Please go ahead. Very good evening, sir.

Good evening.

Thank you for this opportunity. Congratulations on your premier explosive acquisition. And there is no patience because you are doing a very fantastic job, Karnaka Registrar and Cypress. Hope, in Hyderabad, the recent last one week, LORUS and ETH, in terms of market cap, they showed 2 lakh crores market cap and 1 lakh crore market cap. In future, I am hoping Apollo might also do the best of numbers. Thank you, sir.

Thank you. Thank you for your wish, sir. Thank you.

Thank you so much, Bharati.

Thank you. Your next question comes from the line of Meet Gada with Sanghvi Family Office. Please go ahead.

Sir, hi, team. Hope I'm all good.

Yes, sir.

Yes, sir. So, congratulations on the successful fundraise and best Q1 performance. Sir, actually, I wanted to understand that what is the strategy on this autonomous weapons and platforms as we are doing smart bombs, you know, kamikaze boards, ASW surveillance, etc. And what kind of order visibility or engagements are happening for the same with the forces?

Sai, I will answer regarding the smart bomb. In fact, we are already working with Pinaka. It's a surface-to-surface. We are also at the same time working with one program called Thara. It is A2 surface, A2 air kind of thing. This smart bomb also, what they are looking for is want to make it smart with guidance and all, with range extension. So we are familiar with this technology. I am sure very, very soon we are going to establish this technology. And once the Air Force is satisfied with the performance, I am sure the good number requirement is there. Air Force is having thousands of inventories they are holding, under the modernization scheme, you know, like they want to make, you know, like they want to convert it into smart bombs actually. That is a big requirement is there. That is kindly answer, Sai.

Yeah, yeah. So, primarily, you know, as you all are aware that, you know, future is autonomy, both land, air, and sea, and, you know, there are certain, you know, elements related to the autonomy, you know, which we have already developed as part of the DIDO programs. So, the current autonomy-related semi-submersible, you know, surveillance vehicle, PSO, which we have received from the Indian Navy, is a next-generation ISR, you know, requirement from Indian Navy, for which multiple build blocks, you know, we have already developed and, you know, proven for some of the programs, existing programs, you know. And going forward, we'll also be building a swarm of autonomous USVs, actually. A new program is coming up for which the activity has already started in the company. So going forward in the autonomy area, this financial year and the next financial year, companies will be heavily investing on the autonomy segment in land, air, as well as in the sea. Out of which, you know, now that there is a PSO sanction order and a firm definite, you know, commitments coming out from the armed forces, we will accelerate our internal, you know... Development activity as well. In terms of the size of the orders, it is actually very humongous. I am not really, really commenting it anything now, but I would like to say that, you know, even if players, two or three players, you know, get into the fray and prove their, you know, metal and out of it also, you know, still everyone would continue to enjoy a few thousands of crore worth orders actually.

So, this program will be integrated with your Premiere, IDN, and Apollo all together, or it is pure Apollo and part of...

It is pure Apollo. Pure Apollo.

Understood. And sir, I just wanted to understand, like, from the company who leads the integration part, you know, when we have Premier and IDL per se, and what kind of, you know, are you hiring any consultants or, you know, what kind of activities you are thinking, you know, to go about in the future?

See, actually, you know, nowadays the technology is getting disruptive, and if you see, you know... The thought process with which we are going, wherever we have a capability, we are building further, you know, catapulting on the capability by investing further on the R&D on it. Wherever we do not have a capability, we are partnering and, you know, making an alliance with appropriate industries or an academy, you know, in terms of, you know, getting into, strategically getting into that particular technology with the existing build blocks that the company already has. So, yeah, we do have significant, you know, advisors who are scientists retired from the DRDO. At the same time, we have also partnered with some of the academy, you know, for some of the deep research requirements and other things, you know, product building, production, manufacturing, and existing build blocks of IP, both in terms of hardware and software, something which we already have, which are already proven. So, that's the strategy, you know, with which we are, you know, going ahead.

So, lastly, in terms of the capabilities which you are trying to build, what are the missing links in the overall chain? Like, can we expect any further acquisitions considering the funds we have right now? Any thoughts on that front?

There are a lot, you know, you will start getting to hear from us, you know, from time to time. Please keep a watch on this talk.

Yeah, next couple of months, I think we are going to hear the...

Sorry, sir, if you want to say something.

Sir, there are two, three companies we are planning to apply. I think maybe this is not the right time to continue. Like once we sign invoice to this company, then we are going to announce the thing.

Okay, sir. Thank you, sir. That's your comment, sir.

Thank you. Thank you. The next question comes from Samir, an individual investor. Please go ahead.

Hello. Good evening, sir. Can you hear me all right?

Yeah, yeah. Go ahead, please.

Yeah. I wanted to understand what is the percentage of R&D, percentage of the revenue? That is my first question. And second question is how much export we are doing and how is the margin on export as compared to the domestic orders?

These are the questions, Mr. Samir?

Yes, yes, sir.

So, currently the export revenue is nil. There's no question of, again, a margin point of view is concerned. And in terms of the R&D, the average spent on R&D is around 6% to 8% traditionally for the last 3-4 years. As far as the last financial year is concerned, let me just look at the number. Last financial year, we have spent close to around 27.63 crores on R&D over a revenue of around 760 odd crores, Which is translating to something like around... Four percent. Yeah, around four percent.

Sure. And in terms of the export, are we expecting some export orders?

Yeah, once our unit 3 is ready, operationally ready, then we are going to accept some export orders also.

Sure. Thank you very much.

Thank you.

Thank you. The next question comes from Vinay Kumar, the goal, and individual investors. Please go ahead.

No, it is 18% actually, it's not 4%.

Yeah, I don't know, that's what I'm remembering. It's more actually compared to previous years.

All right, we have our next question coming from the line of Dipanshu Bhatia with FinWiz. Please go ahead.

Hello, am I audible, sir? Yeah, yeah, please. Yeah, so we had some make-through for entry drone in July 24th, right? Their financial error is what? Hello?

No, no, actually, the figure for the R&D for the entire financial year we told wrongly, actually. I'll tell you the right figure before the end of this call, okay? Yeah, please continue with the question.

So, we have a make-to order for NT-drone in July 24th. So, it had, I think, 75 weeks for trial or something. So, are we going into production and where is it now?

No, it is yet to go for trials, actually. We are getting ready for the trials.

Okay, trials. So, is there, once the trials are successful, is there a pre-commitment for the orders, or once after the trial, we have to figure out the orders or something?

No, generally, there is no pre-commitment, actually. After that, there is a lot of opportunity and requirement is there. Once the trials are complete, you know, then, you know, the orders will flow in.

I mean, and I think you also mentioned that TAM of this opportunity. Once the trial is completed, what's the TAM for domestic and export? Any idea of the size of opportunity in future?

The price is very high. Time is continuously, dynamically changing, actually. So, I will be able to give you a guidance around December ending quarter on the opportunity size that it could culminate into. But currently, it is scheduled for trials in the next few months down the line. Once the trials are complete, I will get some more clarity and visibility, then definitely I will share it with you.

Thank you.

Thank you. The next question comes from the line of Jaikant Kasturi with Bandhan AMC Alternates. Please go ahead.

Hello. Yeah. Good evening, everyone. So am I audible?

Yeah.

Yeah. So, congratulations on a good set of numbers. In terms of order execution for the rest of the financial year, what are the major orders? Do you see it? And if you can put in terms of numbers, how do you see it going forward? You already mentioned in terms of where do you see in terms of the order book? And so, probably for the next year, how do you see it in major orders you're expecting? And if you can talk something with regards to, I don't understand with regards to Project Kursha, it's the long term. So, where do you see in terms of your capabilities and in terms of the addressable size is possible, yeah.

So, Kusha MD, sir, will answer. But I will tell you the current order book is spread across this financial year and partly it will also spill over to the next financial year. You know, in terms of, you know, what orders, you know, we are not, you know, making any disclosures of that, you know, what orders are getting executed. But as in terms of the order book is already, you know, answered to you that we are expecting a very large orders coming out of. QRSAM, as well as in the MIGM and other things in this financial year, which will culminate into a sizable orders, you know, by end of this financial year. So, regarding KUSHA, MD, sir, will take the call.

Yeah, KUSHA, 150-kilometer range one, already recently tested. You must have seen that news. In fact, we are expecting appreciation letter from Prime Minister of Peace very soon. And our contribution in Kusha is very high, almost seven very critical subsystems Apollo is supplied, and a very critical activation system, the front and rear activation system, and many of other onboard systems also we have supplied. And converting it, I don't know, it may take two, three years' time, I think, definitely. It is going in a fast-tracking, in fact. This is one version testing is completed, and two more versions, like 150 km testing is completed. 250 and 500 km one, I think, next few months, we are going to do the trials.

Sir, if you can also talk about in terms of now that you are there in the explosive side, so in terms of all the platforms for the drones, any thought process going forward, and now that you have gone into this autonomous surface vehicle, swarm vehicles, which you are planning, so if there is any, are you talking to any partners or you are planning to go ahead with yourself, how do you see it?

Sir, I didn't get your question, sir, actually.

No, I was talking about in terms of the platforms for your aerial drones, that's your unmet aerial vehicles. So, how do you see it? Any plans with that? Your surface vessels and also getting into swarm vessels. So, any plans going by yourself or you're planning to partner with them?

Certain things we are doing by ourselves, sir, we have built capability and, you know, some of them, you know, the products are almost ready, actually, and some of them, they are on the board, engineering board levels, and in some cases, you know, you know, where we need a, you know, capability to be bring up, you know, we are also talking to few players who have a mature technology with them, both domestic as well as international.

And the aerial bombs, we have already established. One kg, two, 25 kg, nine variants already testing were completed. And we received acceptance also recently. The other thing, drones and all, we are going to have time with some of the companies.

Yeah, that's all my say, sir. Thank you. Definitely would love to come down to Hyderabad and definitely see your facilities.

Any time you please come. Thank you.

Thank you. The next question comes from the line of Vinay Kumar, the Golu, an individual investor. Please go ahead.

Hi. Good afternoon, Karnakar Ji and Sai Ji. In the last one month, we have seen two or three press releases from yourself, very detailed ones. Thank you for them. On the ASW, IPREK, and SDD. I just would like to understand, I think among the three, SDD, I think the pilot you have mentioned is complete. What is the situation with the other two? What were the rough timelines for the pilots? And once the pilots are done, what kind of, I know you have mentioned some large opportunity sizes in your press releases. But what is that we can really expect from these three, like, say, ASW, IPREK, and SDT, over the, like, say, medium term, three years down the line, what kind of things that Apollo can see? And the second question related to that is, how is the Premier's experience or whatever we call as the acquisition, is there any synergy of Premier in any of these three? I would think maybe IPRAK, but I would love to hear from you. Thank you.

IPRAK is only a conversion system primarily now, to start with and to a certain extent. And for the semi-submersible system, there is no explosive or a propulsion requirement is there. SDD, indeed, there will be, but it's a very, very, you know, minuscule. It's only a small portion. So, as far as the premier or ideal point of view, energetics point of view is concerned. In terms of the TAM of these things, you know, it's already something which we have, you know, given very much in detail in the press release. And in terms of the completion, you know, of these two PSOs of under MAKE2, the expectation of the, you know, customer is to, you know, complete in a span of 18 months, which may... We, you know, completed within that period or maybe a spillover or maybe a little ahead or something like that. Post which, you know, we can start expecting an order in a year's time from there, actually. So, that's the rough, you know, timelines that, you know, we can give you about that.

So, we can expect sometime late 29 is what you're roughly saying. Late 29.

Next to the financial aid, we are expecting. As per the NNNB, this thing, next to the financial aid, we are expecting.

Thank you. We take our next question coming from the line of Pratik, an individual investor. Please go ahead.

Yeah, hi. Good evening, sir. First of all, I want to ask a sign, sir. I hope your left hand is doing okay. I saw in the presentation in one of the images that you have from engineering the left hand.

Thanks, Pradeek. It's good, yeah. Small adventure at airport, I have just fallen, actually. So, addiction to mobile, you know, all of you should not watch mobile when you are actually walking. Is a disclaimer and, you know, warning for all of us. Thank you so much for, you know, asking. It's fine now. It's recovering.

Okay. Good to know, sir. Sir, firstly, I want to ask about on the exports front, can you please help me understand the entire process? As in, do we get direct orders from different countries, or is it through DRDO, HAL, and institutions like these?

I'm going to pay direct orders only, yeah, you can clarify, yeah.

Yeah. So, we are expecting some direct opportunities from various countries. You know, obviously, we will be, you know, supplying to friendly countries subjected to again approval from the ministry for specific export of the specific item. Okay. So, every product that we would, we get an opportunity, you know, end of the day, ministry has to give a clearance, you know, whether we can export or not. And it is irrespective of the country for that specific product, again, you know, and for that specific country, the approvals will begin. That's the process. As far as the process is concerned, we have, you know, already started, you know, I mean, submitting our offers for various mature product line, you know, for different customers. And, you know, as good as any other procurement cycle is concerned, the defense procurement can do. So is the case with the export opportunities as well. As MD has already, you know, you know, pointed that, you know, certain opportunities related to various systems where we have to, you know, produce in mass, we were going a little slow till first time our unit tree gets, you know, commissioned fully, which we are expecting in next couple of quarters to be fully ready and, you know, start occupying them, then we will get more aggressive. But at the same time, you know, we are going with a steady pace, talking and engaging with the customers on a continual basis. And showcasing the product line. In some of the cases, you know, we have started submitting offers also. You know, we are constantly doing this. This financial year, you know, we are likely to get some meaningfully good breakthrough orders is what I can broadly say, but I will not be able to give a firm commitment and guidance. But for next financial year, for sure, there will be a sizable orders, you know, which will be pulled in terms of the export opportunities is what, you know, the current guidance I can confidently give.

So, will that export opportunity add to the overall revenue guidance that you have given, or are you including that?

Excluding.

It is excluding. Okay. And my second question is with respect to the promoter pledge part. So, as I can see, I think the promoter pledge part has come down in the June quarter. Are we still on track to bringing it down to zero by this financial year?

I think next one year, I think we'll reduce, I think. It is going to take another one year to close all the pledge part.

So, I assume by Q1 of FY28?

Yeah, yeah, definitely. That is what I'm planning, yes.

Okay, okay. Thanks. Thanks, Anastra. Thank you.

Thank you. Our next question comes from the line of Aarif Gopda, an individual investor. Please go ahead.

Hello.

Yeah, please. Go ahead.

Yeah, my question is regarding our the 500 kg smart bomb A4 snake 2 program. So, will that be the first thing we are going to merge with the premium explosive?

It has nothing to do with the premium explosive. It has nothing to do with the premium explosive.

Here, the only guidance portion will be adding. I think for range extension and all, we are going to take premium this thing. Support.

Oh, okay. Okay, okay.

Thank you.

Thank you. Thank you. We take our next question from Karthik, an individual investor. Please go ahead.

Good evening, sir. Hope I am audible. I just want to know the status of the mold mines and the limpet mines. I know we have received the AON for the mold mines. Can you please elaborate on it, sir?

Yeah, move to mind, come back to us, already we have completed. Any time this month, we are going to hand over to Indian Navy. In fact, we are expecting any time to call from Indian Navy. We are going to have a celebration. That is one part. Moving to mind, also, I think, I'm sure next two weeks time, we are going to announce, I think we are going to sign, as a GCP partner, this thing, we are going to have the contract.

So, can we expect any orders in this financial year?

Mood mine orders, we are expecting next final year only, not this year. We are yet to complete the technical trials. Once we complete the technical trials, then the order flow will be done. What is the status of this? Limped mine, we have already completed. Limped mine, we have completed. And limped mine, we have maybe start getting orders, maybe fourth quarter, maybe we are expecting orders. And more to mind, next financial year only, we are expecting. Okay, thank you. Thank you so much.

Thank you, sir. Thank you. Our next question comes from the line of Sir Brahmanian, an individual investor. Please go ahead.

Thank you, sir. I just have one question. Are we expecting any further fundraise during this financial year or the next financial year, sir?

We'll reach out to you, sir. You know, currently, you know, there is nothing that, you know, we're just trying to consolidate the current preferential round, you know, once the exchange approval comes and all like. I'm not in a position to, you know, comment anything on that. It's quite futuristic. But I just want to give a heads up and make an understanding to investors that, you know, we are. It's getting quite agile and dynamic. Please keep a watch on this talk. A lot of disclosures keeps coming from time to time.

Okay. Fair enough. Thank you so much. Good luck.

Thank you.

Thank you. As there are no further questions, I now hand the conference over to the management for closing comments.

Thanks so much, Isaac. Thank you so much, lovely investors. You know, you'll spend your time on... Saturday, a beacon of 6 o'clock in the evening. Thank you so much once again. Before I make a conclusion, I would like to take a moment to acknowledge and continue support and confidence. of the M.O.D. and the Government of India in Indian Defense Manufacturing Ecosystems. India's defense sector is at an important inflection point. The focus on indigenization, advanced technology, and self-reliance is creating a strong foundation for the country to develop critical defense capabilities within India. We believe this transformation presents a significant opportunity for Indian defense companies to innovate, scale, and contribute meaningfully to the nation's security. At Apollo Microsystems, we are proud to be part of this journey. Our focus remains on developing machine-critical technology-driven solutions that enhance the capabilities and operational readiness of our armed forces. We will continue to invest in technology, build indigenous capabilities, and respond to the evolving requirements of modern warfare. At this point of time, you know, something which I have forgotten, I have wanted to also share that last year revenue stood at 764 crores, and the investment in R&D at 72.53 crores, which translates to close to 9.5% in R&D. The numbers that we slipped out, you know, in telling, you know, to a prior question by one of our investors. I will continue further. For us, defense is more than a business opportunity. It is a responsibility to the nation. We remain committed to supporting our armed forces with the technology and solutions. They need to remain prepared for every challenge. I would also like to thank our investors and analysts for their continued trust, participation, and valuable feedback. Your confidence, strength, strength, strength, and strength. Sentence are resolved to keep raising the bar and creating sustainable long-term value. We look forward to welcoming you to our facilities where you can experience our capabilities and initiatives firsthand. Should you have any further questions or feedback, our Investor Relations team will be happy to engage with you at investors.relations at apollo-micro.com. Thank you once again for your time, trust, and continued support. We look forward to reconnecting with you during our Q2 update. Having a great weekend ahead. Jai Hind.

Thank you. Thank you, all the members of the management. On behalf of ICICI Securities Limited, that concludes this conference. Thank you, everyone, for joining us, and you may now disconnect your lines. Thank you.