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00:00Let me bring on board Mr. Adepalli Krishnasai Kumar, who is the director at Apollo Microsystems

00:07to talk to us about the Q2 numbers.

00:09A steady set sir, you're on your way to a 50% top-line growth, is that how one should

00:15view it?

00:16Yeah, I think we already gave a guidance that we will be up by 40-45% in this financial

00:24year and we are on track.

00:27Mr. Kumar, you've guided for a 50% growth, but if we had to consider the first half,

00:33your performance has almost seen about a 70% growth.

00:35So, can we expect a revision for the guidelines that you've mentioned for, be it your top-line

00:40and your margins?

00:42Yeah, generally the Q3 and Q4 are the anchoring quarters, but we could somehow achieve Q2

00:51where this is one of the finest Q2 we have ever recorded till date.

00:57So I think like Q3 and Q4 continue to be an anchoring quarters, I think we should be outperforming

01:02over and above the guidance that we have given, both on the top-line as well as on the bottom-line

01:07as well.

01:08So, sir, as you continue to ramp up and growth has been extremely strong for you, how much

01:16of your revenue is recurring versus how much is based on order flows?

01:21Just give us that perspective.

01:25So obviously they are based on order flow, but you will have to understand that the sector

01:29in which we are and specifically the projects in which we are working, these are all the

01:35recurring projects only, which are mostly either repeat orders or in the programs where

01:40we already have a participation actually.

01:42So there is a clear guidance available to us from our customers, how the inflow of the

01:48orders would be for the subsequent financial years.

01:51So that's how broadly I have to say.

01:54So Mr. Kumar, if you had to look at your queue, the second quarter you had secured orders

02:01about Rs. 131 crore, which are yet to be executed.

02:04Firstly, if you can give us an execution timeline for these orders and for FY25, what is the

02:09whole scenario that we should be looking at for overall order inflows that can be expected

02:15for Apollo Microsystems?

02:17As the day stands, we have more than Rs. 450 crores worth order book, just orders on hand

02:24other than the orders which got finalized and yet to be recognized where we have to

02:29get official orders on hand.

02:32These fresh orders which we have received in Q2, typically you have to understand that

02:368 to 9 months are the delivery periods which would be there for these orders.

02:40And in some of the quarters, we get orders where the delivery schedules will be shorter

02:47schedules of 4-5 months.

02:49So broadly, I think we would be meeting the guidance and these specific to this Rs. 131

02:55crores, we will be executing in the next financial year.

03:00Mr. Kumar, but if you had to look at a margin picture for these, would these orders also

03:04have a 24% to 25% of margins?

03:06Because if you look at Q1, you had a comparatively higher margins which have come down in Q2

03:12if you had to compare just quarter on quarter basis.

03:14So for the whole year picture, what should be the average blended margins that one should

03:19be looking at?

03:20At beta level, there was a little pressure in the Q2 for execution of the projects right

03:26from Q1 onwards.

03:27So we had to procure some of the raw material at a higher cost and that's why there was

03:33a small dip in the EBITDA compared to the previous quarter and compared to previous

03:38H1.

03:40But we could leverage on the overall capacity that we already have and we could still maintain

03:46the PAT levels at much better place.

03:49What's the risk of that spilling over into H2 as well, as well as beyond that?

03:58That's a good question.

04:00Sometimes it so happens some of the projects would be flowing generally Q1 and Q2 are not

04:06a very brighter quarters, but Q3, Q4 will definitely be there.

04:11We have a proper scheduled orders that will be executed in Q3 and Q4.

04:16You will see that the EBITDAs will bounce back in Q3 and Q4 with the existing orders

04:22that we are having on hand, which the work is in progress actually.

04:26And how much in terms of what's the size of your book currently in terms of execution

04:32and how quickly can you execute that?

04:34How many years?

04:36Over 450 crores is the current order book presently on hand.

04:42It's a confirmed orders where already the production of it has already started.

04:47So as far as the top line, the guidance is already given.

04:51But at the same time, by end of this financial year, we will be expecting a very large order

04:59book in a couple of projects where approvals are being accorded by Ministry of Defense.

05:05The size of the ticket would be over and above 1000 crores, a single order.

05:10So we're just waiting for those projects to fit in probably by end of this financial year

05:14as a single ticket projects.

05:17Okay, very good.

05:18As a single ticket projects.

05:20Okay, Mr. Kumar, so for these projects that you'll be focusing on and the additional facilities

05:26that we have in development.

05:28So when are we expecting the commissioning of these facilities?

05:32And for the same, what are the CAPEX plans that you have envisioned for the next one

05:36to two years?

05:38So as we have already told in the market that 3.5 lakh square feet facility is getting ready.

05:45The phase one will be 2.5 lakh square feet facility and the phase two will be a little

05:50over a lakh square feet facility.

05:52This will be cumulatively, we will be having close to around 4.5 lakh square feet facility

05:59of design cum production in Hyderabad, which is one of the largest facilities for any mid-sized

06:07companies like us, specifically in the A&D sector.

06:11As you know, there's A&D sector in India, particularly is in a very, very transformative

06:17phase with a lot of, I meant to say modernization and a lot of push towards internet indigenization.

06:26At the same time, there's a huge amount of projects, which are actually getting into

06:32a production phase in next six months to next couple of years for which this facility, we

06:36have started a couple of years back.

06:40The overall investment that will go in this facility will be close to around 250 plus

06:44crores in next 18 months.

06:48And phase one of the project, 2.5 lakh square feet, we will start occupying from February

06:53onwards over a period of four months where the complete facility will be occupied there.

06:59Right.

07:00I want to try and understand more from a longer term perspective, how the trajectory goes.

07:06You're aiming for a thousand crore revenue.

07:08You're currently at 370 crore, aiming for a thousand crore revenue by FY 27.

07:14How comfortable are you with that?

07:15And can you maintain the kind of margins you're doing even at that revenue level or will it

07:20at all get better?

07:23So I would like to position like this.

07:26So primarily, the existing projects that we are doing are design come production and some

07:32of them are production orders and integration orders.

07:35And the percentage of the production orders, you know, year on year will be increasing

07:39for the next three, four years constantly.

07:41So every five to 10, 15% of jump in the production percentage that goes, the profitability also,

07:47you know, will be much better on an annuity basis as a balance sheet point of view.

07:54Coming to the top line, we already gave a guidance that, you know, we will be growing

07:58at a CAGR of, you know, 40 to 45% and maybe 50% and over and above that.

08:05For which, you know, large ticket orders are expected.

08:08We are expecting an AOM from Ministry of Defense for one of the NAVAL program, where the ticket

08:14size would be more than thousand crores a single project like that.

08:18We are expecting a couple of projects from the NAVAL defense itself.

08:21So similarly in the, you know, missile defense segment also, we are expecting six, seven

08:27programs, you know, very large cap programs, which are going to hit production.

08:32Overall 15 projects are there, which will hit production in the next, you know, 12 months

08:36out of the six and projects will be a very anchoring projects for us.

08:41Based on all these, you know, backup that we have in the funnel that we have and proven

08:45products that have already gone in trials and proven in trials.

08:48We are very confident that, you know, the growth trajectory, which we are, you know,

08:52giving as a guidance, we'll be able to maintain.

08:54And that's why too much of CapEx, you know, we are investing because the facility has

08:58to be ready.

08:59As you understand that, you know, we can't build the facility overnight.

09:02So we'll also be increasing our headcount.

09:04Currently, we are close to around 400 plus and in next couple of years, we are going

09:08to double the headcount as a group companies.

09:13Okay.

09:14Thank you so much.

09:15It's great getting perspective from you, sir, and wishing you all the very best for H2.

Apollo Micro Systems Aiming For Rs 1,000 Crore Revenue In Next Two Years | NDTV Profit

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