Apollo Micro Systems IPO opens today for subscription and has already raised INR46.6 crore (INR466 million) by selling shares to anchor investors. Among the buyers are National Westminster Bank Plc, Sundaram Mutual Fund, and Jupiter South Asia. Priced in the range of INR270-275 per share, the IPO aims to raise INR156 crore. Since the IPO is quite small, not many brokerage houses have come up with research on it. Nevertheless, those who looked into its financial performance and prospects have come up with positive views. Here is a snapshot of Apollo Micro Systems IPO recommendations by brokerage houses and analysts.
Angel Broking finds the maker of electronic and electro-mechanical parts for defence, space and homeland security is priced attractively when compared to its peers. “In terms of valuations, the pre-issue P/E works out to 29x 1HFY2018 annualized earnings (at the upper end of the issue price band), which is lower compared to its peers like Astra Microwave (trading at 36.2x its 1HFY2018 annualized earnings). Further, AMSL has strong financial record and return ratios compared to Astra Microwave. Hence, considering the above positive factors, growth in the defence industry we recommend SUBSCRIBE on the issue,” said the brokerage house’s analyst Amarjeet Maurya.
Another positive word came from Choice Broking which has a Subscribe with Caution rating on the IPO. “On valuation front, AMSL is demanding a P/E valuation of 32.9x as compared to peer average of 28.7x. We are of the view that the business is fairly priced, leaving limited space for further upside. Defense investment theme is long term in nature. Given the strong sector outlook, we believe that the stock would provide returns in medium to long term. However, the key concern linked to the sector is the highly stretched working capital cycle. Thus considering the above observations, we assign a ‘Subscribe with Caution’ rating for the issue,” noted the brokerage house.
SSJ Finance is among the research houses with positive Apollo Micro Systems IPO recommendations. “AMSL has reported a CAGR of 54.2% and 58.3% on revenue and net profit fronts respectively over FY2013-2017. On its upper band of price of Rs 275, the issue is priced at PE ratio of 27.1x of its H1FY2018 annualised EPS of Rs 10.2. We believe that the IPO is fairly priced leaving a room for upside. Hence, we recommend to Subscribe the IPO,” said the broker’s research note.
As we mentioned earlier, this is a fairly small offer (could even take the crown of the smallest IPO in 2018) so not every brokerage house has come up with a report. So far, Apollo Micro Systems IPO recommendations are positive. Feel free to visit our discussion page here and IPO Central’s analysis of the offer here.