There are only a few instances when Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) get attracted to the same stock, in the same quarter. It is rarer when that stock is from the defence sector.
For instance, during the April-June 2025 quarter, while FIIs’ net equity purchase stood at only ₹3,197 crore, DIIs, including mutual funds’ net equity purchase, stood at ₹1,16,970 crore. During last month, July 2025, FIIs were in fact net sellers. They sold equities worth ₹17,740.6 crore. DIIs on the other hand were net buyers of equities worth ₹47,018.8 crore. (Source: SEBI, NSDL)
Like we said, it is not very often that FIIs and DIIs come together to invest in the same stock, but it has happened during the Q1FY26. In this most recent quarter both FIIs and DIIs invested heavily in one defence stock.
The name of the stock? Apollo Micro Systems Ltd.
So, what made them invest in this defence sector stock? Let’s try and find out.
Meet the Company on the Defence Radar
Apollo Micro Systems Ltd. (AMS) was incorporated in 1985, and in these 40 years of their journey, they have served the aerospace and defence sectors with over 700 on-board technologies. The company is a leading high-performance, mission-critical solutions technology provider for the defence sector.
AMS specializes in designing electronics, electromechanical products, and engineering designs. It also deals in the manufacturing and supply of advanced systems ranging from missile systems, to Naval systems, satellite and space systems, and others.
The technology solutions that AMS offers help in securing communications, air defence mechanisms, and underwater electronic warfare. It also offers tailor-made Commercial Off-the-shelf (COTS) solutions, which are crucial for both the aerospace and defence sectors.
Change in Shareholding Pattern
During Q1FY26, FIIs increased their holding in this company by 6.23% points, taking the overall holding to 7.16%.
DIIs, on the other hand, increased their stake by 1.24% points, taking the total holding to 1.61%.
Amongst aerospace and defence stocks, this is the only stock where both FIIs and DIIs invested the most during the quarter.
The Arsenal: Powering India’s Key Defence Programs
Apollo Micro Systems has a solid Missile Program. As per the company’s recent investor presentation, it is offering –
- Air-to-Surface Missiles such as Rudram-I, Rudram-II & IIA, and Rudram III
- Nuclear Missiles like AGNI
- Anti-Submarine Missiles like SMART
- Ballistic Missiles such as K4, and PRALAY
- Cruise Missiles include NIRBHAY and SLCM
- Anti-Ship Missiles include NASM and LRAHSM
- Surface-to-Air Missiles include AKASH, VLSRAM, NGRAM, SANT, and QRSAM
- Under Anti-tank missiles, it has HELINA, AMOGHA-2, NAG, and MPATGM
AMS also offers a wide range of Naval submarines, underwater mines, Torpedoes, and expendable decoys as per its latest company presentation. It includes -).
- Nuclear Submarines include ARIHANT and ARIDHAMAN
- Underwater Mines include MIGM and MOORED Mine
- Torpedoes include TAL, ALWT, and VARUNASTRA
Targeting High Growth: The Road Ahead for AMS
AMS is expecting to grow at a CAGR of 45% to 50% over the coming two years, FY26 and FY27, as per management comments. The growth is expected to be driven by the core businesses of the company.
The strong order book of the company is primarily the basis of solid growth expectations. The management expects the operating margins to improve during the first half of this fiscal FY26, driven by a solid product mix and operating leverage favoring the business. However, the capex plans are going to be moderate, which can limit the margin growth in the latter half of the fiscal and FY27.
A new weapon integration facility has been developed, and the civil work for its Phase 1 development has been completed; Phase 2 development has begun. Capex dedicated for Phase 1 was ₹150 crore, and for Phase 2, AMS has allocated ₹100 crore. Phase 1 will be operational by September FY26, while Phase 2 is expected to be functional by Q4FY26.
AMS has also secured its first export order worth ₹113.8 crore for developing an advanced Avionic System, which will serve both civil and defence aircraft platforms.
Decoding the Financial Firepower
Apart from solid growth prospects and, strong order book, the company also has solid financials. During the June quarter, its sales went up from ₹91 crore in Q1FY25 to ₹134 crore in Q1FY26, registering a 46.5% YoY growth. Its operating profit went up from ₹22 crore in Q1FY25 to ₹41 crore in Q1FY26, growing at 86.4% YoY.
The net profit of the company increased from ₹9 crore in Q1FY25 to ₹19 crore in Q1FY26, which is a whopping 126% YoY growth. Similarly, the Earnings per share (EPS) grew from ₹0.28 per share to ₹0.58 per share during the period.
Apollo Micro Systems 1-Year Share Price Chart
Valuation
The stock is currently trading at a Price Earnings ratio (PE) of 79.8x, which is higher than the industry median of 66.1x; its 10-year median PE is at 25.5x, which suggests a larger premium.. The Price Earnings to Growth (PEG) ratio of 1.39 is slightly above the industry median of 1.29.
Another defence Stock
Paras Defence and Space Technologies Ltd. is another stock from this sector that saw interest from both FIIs and DIIs during the quarter. The stake of FIIs went up by 1.61% points during the quarter in this stock, taking the total holding to 6.85%. The DIIs increased their stakes by just 0.4% point, taking the total holding to 1.94%.
The Investor’s Takeaway: Opportunity or Overheated?
Given the geopolitical situation around the world, it will be interesting to see whether FIIs and DIIs share the same interest in this defence stock in the future. The increasing defence spending can also add to the increasing investments apart from the Apollo Micro Systems’ solid growth opportunities, fundamentals, and prospects.
Disclaimer
We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Maumita Mitra is a seasoned writer specializing in demystifying the world of investment for a broad audience. She has a keen eye for detail and a knack for explaining complex financial concepts in the simplest manner possible.
Disclosure: The writer and her dependents do not hold the stocks discussed in this article.
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