Multibagger stock: Choice Broking sees 35% upside in this defence share
Multibagger stock: Shares of Apollo Micro Systems Ltd is one of the multibagger stocks that Dalal Street has produced in 2023. This defence company that once offered designing sefvices to Indian Space and Research Organisation (ISRO) has delivered around 150 per cent return to its positional investors. But, Choice Broking still sees big upside in this defence stock. According to a recent Choice Broking report, Apollo Micro Systems shares are currently around ₹75 apiece levels and in long term it may go up to ₹103 per share levels, delivering more than 35 per cent return to its investors.
Fundamental triggers
On why Choice Broking in bullish on this multibagger stock, the brokerage said, “We initiate coverage on AMS driven by 1) its participation in most of the indigenous weapon programs, 2) commencement of production of these programs following successful trials, 3) capacity expansion to meet the rising demand from defense, 4) shift in the business model from a solution provider to a development-level solution provider, and 5) execution of various ToT agreements from DRDO.”
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Highlighting towards the missile dedicated product portfolio of Apollo Micro Systems, Choice Broking report said, “AMS has participated in 55-60 programs, catering to Missiles, Naval Torpedoes and Underwater Mines. With strong order execution visibility and capacity expansion, management expects to increase revenue to grow by 35-40% over FY24-25. The company’s product portfolio serves the Line Replaceable Units (LRUs) of defense systems in the fields of Missiles, Torpedoes, Submarines, Bombs, Artillery Systems, ATGMs, and Radar. Some of the programs include AGNI, PINAKA, AKASH-NG, VLSRSAM, VARUNASTRA, TAL, NIRBHAY, ATAGS, MIGM, and more.”
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Brokerage went on to add that the defence company is looking to increase its facility size from the current 55,000 square feet to 3.3 lakh square feet over the next 12 months, with a capex of ₹150 crore.
Stock to buy today
Giving buy tag to this multibagger stock, Choice Broking said, “We expect AMS’s Revenue/EBIDTA/PAT to grow at a CAGR of 38%/41%/68% over FY23-26. We assign a multiple of 35x on FY26E EPS, considering the high-growth phase, and arrive at the TP of ₹103 with an OUTPERFORM rating.”
In its brokerae report, Choice Broking has claimed that Apollo Micro Systems Ltd started its journey in 1985 by offering design services to ISRO.The company offers complete platform-level solutions, from the development stage to manufacturing, such as underwater mines. AMS also provides solutions for the railways, automotive, and homeland security markets. It is also recognized as a Collaborative R&D Partner by Bharat Electronics Limited. AMS offers Build to Specifications, Build to Print, and New Product Introduction Services.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decision.
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Updated: 30 Oct 2023, 01:39 PM IST
