Over the last year, the Nifty India Defence Index has delivered a return of about 20%. This return has been driven by all-around performance across companies, with Garden Reach Shipbuilder leading the rally with a 41% gain during the period, followed by Mazagon Dock (38%), Bharat Electronics (38%), and Bharat Dynamics (31%), among other names.
However, two companies have outperformed all of them, tripling investors’ investment during the same period on the back of positive developments, expansions, and aggressive guidance. So, what really fueled their rapid rise, and where do they stand today? Let’s explore…
#1 Apollo Micro Systems: A Company with Ambitions to be a Tier-I Manufacturer
Apollo Micro Systems is a leading technology provider of high-performance, mission-critical solutions primarily for the defence sector. Founded in 1985, Apollo specializes in electronic, electromechanical, and engineering design, as well as the manufacturing of advanced systems.
What Apollo Micro System Does
The company is known for building the “brain,” “nerves,” and “eyes” of missiles and other weapon systems, enabling them to make decisions mid-flight, sense and respond to targets, and track them. Without its internal intelligence, a missile would simply be a “flying shell.”
Within missile systems, Apollo is involved in 63% of the electronics and electromechanical activities across all missile programs undertaken by the Defence Research and Development Organisation (DRDO). Its work spans Air-to-Surface Missiles, Surface-to-Air Missiles (such as QRSAM), anti-radiation, tank, and ship missiles, Cruise Missiles, and Ballistic Missiles.
For QRSAM, Apollo supplies onboard computers, complete navigation systems, power distribution units, and critical actuation systems. In Naval systems, it has built a strong presence across all indigenously developed torpedo programs. This includes involvement in programs such as Varunastra, EHWT, including the P-75 submarine, and nuclear submarines like Arihant.
IDL Explosives Buyout Transforms Business Model
A key turning point came in May 2025, when Apollo acquired IDL Explosives in an all-cash deal worth ₹1.1 billion. This acquisition provides backward integration and entry into propellants and warheads, transforming Apollo into a fully integrated Tier 1 defence equipment manufacturer.
IDL, in FY24, reported a turnover of ₹6.2 billion, which is expected to more than double Apollo’s consolidated revenue base. Apollo had reported a revenue of ₹5.6 billion in FY25. In addition, there are multiple other alliances.
Strategic Partnerships across the Defence Ecosystem
During FY25, Apollo also strengthened its ecosystem through several strategic partnerships.
- It signed Memoranda of Understanding (MoUs) with Munitions India (MIL) for identified opportunities and with Tata Consulting (TCL) for defence products.
- It became an MoU Partner to Bharat Dynamics (BDL) for the joint development of naval platforms.
- The company also partnered with Garden Reach Shipbuilders (GRSE) for joint development and supply of advanced weapons and electronic systems.
- It is an approved collaborative R&D Partner for Bharat Electronics (BEL).
- Apollo entered a consortium agreement with Redon Systems to jointly manufacture systems for loitering munitions and allied systems.
- It also formed a strategic partnership with Troop Comforts for joint manufacturing, marketing, and development of advanced air defence systems.
Capacity Expansion and Innovation Push
To meet rising demand, it is also expanding its capacity. Phase two of its ongoing investment is scheduled to commence operations in Q2FY26. A Unit-3 facility at Hardware Park-II, Hyderabad, is under construction in a phased manner and is expected to be operational by December 2025.
This expansion aims to significantly boost production capacity, streamline operations, and solidify Apollo’s position as a Tier-I manufacturer. Apollo has also earmarked ₹1 billion for research and development (R&D) in FY26 to deepen the innovation pipeline.
R&D efforts in FY25 led to the successful development of Aerial Bombs, Underwater Acoustic Sensors, Critical Actuation Systems, and Secured Data links. The company is also developing its own full-fledged products, including short-range rockets, anti-submarine warfare rockets, underwater mines, limpet mines, and aerial bombs.
Of these, some are either qualified or in advanced stages of qualification. It is also developing delivery cargo drones tailored for the defense sector. A prototype of this was showcased at the recent Aero India show, with final models expected after internal testing.
Strong Financial Performance
From a financial perspective, the company’s revenue increased 47.3% year-over-year to ₹1.3 billion in Q1FY26, driven by strong execution of its order book. EBITDA grew by 83%, with margin expanding 600 basis points to 31%. Profit after tax (PAT) rose 110% to ₹190 million. EBITDA means earnings before interest, tax, depreciation, and amortization.
This was followed by a magnificent FY25 for Apollo. It was a transformational year, in which revenue increased by 51.2% to ₹5.6 billion, and PAT increased by 78% to ₹570 million. Its current order book is ₹7.3 billion, which provides revenue visibility of more than one year.
Guidance to Double Topline by FY27
Looking ahead, Apollo expects its revenue to grow at 45-50% annually in FY26 and FY27, driven solely by its core business, excluding any contribution from recent acquisitions. In fact, management hopes that the company will be the FY26 game-changer due to its participation in various programs related to underwater weapons, missile electronics, and aerial systems.
Margins are also expected to improve in the first half due to operational efficiencies and a favourable product mix. But they may moderate in the second half and FY27 due to ongoing investments. Apollo is eyeing big orders worth approximately ₹2 trillion for QRSAM and other defense programs, with tenders expected to be released within the next six months.
But, Apollo is the Costliest Defence Stock
Apollo share price has surged 202% in the last one year to ₹337. It is trading at a price-to-earnings multiple of 165x, which is well-above its 5-year median of (34.6x). At current valuations, it stands as the most expensive defence stock, likely pricing in all near-term triggers.
#2 Axiscades Technologies: Aiming to Grow its Topline by 9x by FY30
Axiscades is a leading, innovation-driven technology solutions and products company with a focus on aerospace, defence, and ESAI (Electronics, Semiconductor, and Artificial Intelligence). It supports aircraft manufacturers and their Tier 1 suppliers throughout the entire product life cycle. This includes everything from designing critical parts to maintaining aircraft in service.
The company also develops detailed 3D designs for aircraft components, including the fuselage, wings, and interiors. Within the defence sector, Axiscades designs, builds, and maintains mission-critical systems for the armed forces in India and abroad. Its expertise spans air defence engineering, real-time software, radar, surveillance systems, simulators, and training solutions.
Q1FY26 Performance Highlights Steady Growth
In Q1FY26, revenue rose 9% year-on-year to ₹2.4 billion. Its core segment (aerospace, defence, and ESAI) revenue grew by a strong 17% to ₹1.8 billion. However, overall performance was weighed down by the non-core businesses (heavy engineering, automotive, and energy), which declined 9% to ₹610 million, mainly due to weakness in the automotive sector.
EBITDA increased 9% to ₹340 million, with margins steady at 14%. Profit after tax, however, surged 23.5% to ₹210 million. The company’s order book (core), including forecast visibility, stands at ₹30 billion, of which ₹12.6 billion is executable in FY26 and ₹18.3 billion in FY27. This provides revenue visibility of about 3 years as per FY25 revenue of ₹10 billion.
Long-Term Vision Backed by Power 930 Strategy
Looking ahead, Axiscades’ vision is to be a product-driven, non-linear technology leader in aerospace, defence, and ESAI. The company aims to be among the top three players in India in its core domains and aspires to reach $1 billion in revenue by FY30. It plans to achieve this through its “Power 930” strategy, which focuses on leveraging intellectual property.
This is an ambitious agenda, but management is confident it is achievable through systematic planning and significant investments. In the medium term, Axiscades has set a target to deliver consistent 40% growth in core revenue and profits.
Expanding Scope in Defence and ESAI verticals
To achieve this, the company is broadening its services from design to value-added offerings, integrating AI, automation, and product lifecycle support. It has also onboarded new customers and is expanding into tooling for both flying and non-flying parts, which are expected to contribute from Q3 onwards.
The company is also expanding into exports to diversify its defence customer base, aligning with the Atmanirbhar Bharat initiative. This move aligns with the government’s defence export target of ₹400 billion by FY28.
Axiscades is well-positioned to capitalize on India’s growing defence modernization, with participation in key national missile and aerospace programs, including Akash, Pinaka, Astra, Sukhoi, and LCA platform upgrades.
It also aims to play a crucial role in counter-drone systems, radar, UAVs, and the defence offset ecosystem. The ESAI vertical is anticipated to outpace overall growth and become a ₹5 billion business by FY27, supported by rising semiconductor capital expenditure.
Axiscades has surged 200% in the last year and now trades at a P/E of 87.5x, which is well above its 10-year median of 28.1x.
Bottomline
Both companies have delivered multibagger returns on superior performance and aggressive guidance. While Apollo is targeting about 50% revenue growth over the next two years, Axiscades aims to increase its revenue nine-fold. The investors have taken note of this guidance and management optimism, which has propelled their share price by 200% over the last year. But, valuation already captures median-term growth, and any execution hiccups could trigger a knee-jerk reaction.
Disclaimer
Note: Throughout this article, we have relied on data from http://www.Screener.in and the company’s investor presentation. 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 educational purposes only.
Madhvendra has been deeply immersed in the equity markets for over seven years, combining his passion for investing with his expertise in financial writing. With a knack for simplifying complex concepts, he enjoys sharing his honest perspectives on startups, listed Indian companies, and macroeconomic trends.
A dedicated reader and storyteller, Madhvendra thrives on uncovering insights that inspire his audience to deepen their understanding of the financial world.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
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