The Hyderabad-based defense hardware supplier, Apollo Micro Systems’ IPO to raise up to Rs 156 crore got subscribed by 66 times as on Friday afternoon, backed by strong demand across categories. The issue received bids for 27,35,67,030 shares as against the issue size of 41,44,955 implying subscription of 66 times as on Friday afternoon, data with the exchanges showed. Most notably, the non-institutional category registered a subscription of 210 times, an investors from the category bid for a total of 18.20 crore shares as against 8.6 lakh shares reserved for them.
As at the end of yesterday, the category had recorded the least demand and was subscribed 0.62 times. Retail investor category recorded the next highest demand at 29.47 times, as investors bid for 6.27 crore shares as against 21.09 lakh shares reserved for them. As at the end of second day of the issue on Thursday, the issue had been subscribed close to nine times.
The company has set a price band of Rs 270-275 for the issue, and looks to raise upto Rs 156 crore at the higher end of the band. The company looks to sell 56,72,727 equity shares (of which Employee reservation of upto 20,000 eq sh), in a fresh issue. Apollo Micro Systems will offer a Rs 12 discount to employees and retail investors. The issue, which opened on January 10th will remain open for today. The lot size is fixed at 50 shares and in multiples of 50 shares thereafter. The company will dilute 27.4% (at upper price band) of its post-offer paid-up equity share capital.
A few brokerages had advised investors to subscribe to the Apollo Micro Systems IPO, given the long-term fundamentals of the company. “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,” Angel Broking said.
Pointing to the strengths of the company, HDFC Securities says that Apollo Micro Systems has a proven track record in developing new technological systems and order execution; recurring orders from existing programs; strong R&D capabilities; qualified and experienced workforce & senior management. Notably, the company has registered strong numbers both on the top-line and bottom-line fronts CAGR of ~43% and ~52% respectively over FY2014-17, backed by healthy growth in order book and improvement in margin.