After the Hyderabad based defense hardware supplier, Apollo Micro System’s initial public offer received a blockbuster response and got subscribed by more than 248 times, analysts say that there’s a good chance for the issue to see significant listing gains. Apollo Micro Systems IPO to raise up to Rs 156 crore got a stellar response across categories. Such a marked oversubscription will also reduce the chances of getting an allotment of shares.

Even as the allottees and other investors alike maybe mulling as to whether buy, sell or hold the shares upon listing of the issue, analysts say that Apollo Micro Systems is a fundamentally strong company, and advice long-term investors to hold on to the shares. According to a report from Edelweiss Securities, the shares are tentatively slated to list on 23rd January 2018.

“We expect a very good listing gains of 40-50% for the issue. Apollo Micro Systems is a fundamentally strong company and we expect strong growth in defense sector going forward. Investors may want to book profits beyond 50% gains,” Amarjeet Maurya, Senior Equity Research Analyst- Mid Caps, Angel Broking told FE Online. The firm had given a subscribe rating to the issue.

“Apollo Micro Systems 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 had said in its IPO note.

“I expect around 30% listing gains. Any PE above 31 is not cheap. Get back to valuations. We would advise investors to exit beyond 40% listing gains,” Atish Matlawala, Senior Research Analyst at SSJ Finance told FE Online.  

“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,” SSJ Finance had said in its report.

Choice Broking, which had given a ‘Subscibe with Caution’ rating on the issue says that the stock is good for long-term investors. “Keep it for long-term, despite listing gains. It’s a good stock for long-term investors. A god issue fundamentally. We had a subscribe with caution rating given the concerns in working capital,” Rajnath Yadav of Choice Broking told in an interview to FE Online.

( First published on 16 January 2018 at http://www.financialexpress.com)