Apollo Micro Systems (APOLLO) Q2 FY27 Profit Lags Revenue Surge as Tax Rate Spikes
Apollo Micro's Q2 revenue jumped 72%, but a sharp rise in the tax rate held profit growth to 54%, highlighting a key tension in its defence ramp-up.
Apollo Micro Systems posted a 72% surge in Q2 FY27 revenue, driven by defence order execution. However, a jump in the effective tax rate to over 50% capped profit growth at 54%, revealing a profitability squeeze beyond operations.
For a defence electronics firm riding India’s self-reliance wave, the test is converting booming orders into clean earnings. Apollo Micro Systems delivered a top-line surge in the September quarter, but a sharp tax spike kept the bottom line from keeping pace.
Revenue soared 72% year-on-year to ₹388.15 crore, a 55% jump from the June quarter. Profit after tax grew a solid 53.7% to ₹46.15 crore. Yet the net profit margin slipped to 11.9%, down 140 basis points from a year ago.
Revenue (₹ Cr)
Profit (₹ Cr)
Net Margin (%)
| Metric | CurrentQ2 FY27 | PreviousQ1 FY27 | Same quarter LYQ2 FY26 |
|---|---|---|---|
| Revenue (₹ Cr) | 388.15YoY +72% | 251.29 | 225.26 |
| Profit (₹ Cr) | 46.15YoY +54% | 25.22 | 30.03 |
| Net Margin (%) | 11.9YoY -11% | 10.0 | 13.3 |
The operating story was strong. According to Alpha Tribe, the operating margin expanded by 430 basis points to 22.9%, showing genuine leverage as revenue scaled. The gap between that and the final net margin points squarely at taxes.
Why Profit Growth Lagged Behind
The effective tax rate for the quarter jumped to 50.1%, according to analysis from Stockwatch.live, up from 30.4% a year ago. This extraordinary charge consumed nearly half the pre-tax profit, explaining why net profit growth of 54% fell short of the 72% revenue surge. The company’s filing offered no explanation for the higher tax outgo.
The Growth Engine and Its Fuel
The revenue surge was powered by execution on a swelling order book. The company, along with its subsidiary IDL Explosives, secured fresh defence orders worth ₹189.57 crore in September, as reported by ETDefence. A Transfer of Technology for a Semi-Active Laser Homing System also strengthens its indigenous portfolio.
Management has guided for 40-45% revenue growth this year, as noted in the Q1 concall. The consolidated order book stood at ₹1,704 crore at the start of the fiscal, per Multibagg.ai, providing clear near-term visibility.
The Subsidiary Question Mark
Growth comes with complexity. The statutory auditor flagged an 'Emphasis of Matter' regarding certain subsidiaries, including IDL Explosives, which have negative net worth and are incurring cash losses, as reported by Whalesbook. While the parent provides support, turning these units around is a key execution challenge alongside top-line growth.
Key Points
- Revenue surged 72% YoY to ₹388 crore, demonstrating strong execution on defence orders.
- Net profit grew 54% but was held back by a tax rate that spiked to over 50%.
- Operating margins expanded significantly, confirming underlying business strength.
- Auditor concerns over loss-making subsidiaries add a layer of risk to the growth story.
- A robust order pipeline supports continued revenue momentum into the next quarters.
Hexa Perspective
The quarter confirms Apollo Micro is successfully riding the defence procurement wave, with operating leverage kicking in. The tax spike appears to be a one-period drag, but its persistence would undermine earnings quality. The larger tension is between the parent's strong performance and the struggling subsidiaries it must now integrate and turn around. Investors are paying a premium for growth—the stock trades at a P/E of 57.6, above the industry average—betting that management can navigate these complexities and convert its massive order book into sustained, high-quality profit.
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