APOLLO Q2 FY27 Earnings Call: Reaffirms 45-50% FY27 Growth, Order Book At Rs. 1,765 Cr

APOLLO held its Q2 FY27 earnings call on October 24, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Record Quarter on Every Front, But Consolidated PAT Trails Standalone

• Q2 FY 2026-2027 consolidated revenue at all-time high Rs.388 crore — +72% YoY and +54% QoQ; EBITDA ex-other income Rs.111 crore (+88% YoY, +107% QoQ) at 29% margin (+200 bps YoY, +700 bps QoQ); PAT Rs.46 crore (+40% YoY, +83% QoQ).
• Q2 standalone was the "breakout quarter" — revenue Rs.306 crore (+36% YoY, +96% QoQ); EBITDA ex-other income Rs.108 crore (+82% YoY) at an all-time-high 35% margin (+900 bps YoY); PAT Rs.48 crore (+46% YoY, +73% QoQ).
• H1 FY 2026-2027 consolidated revenue Rs.639 crore (+78% YoY) vs Rs.359 crore in H1 FY26; EBITDA ex-other income Rs.165 crore (+65%); PAT Rs.71 crore (+50%); operating cash flow positive at Rs.22 crore; working capital days improved to 353 from 359 in FY26.
• H1 standalone revenue Rs.462 crore (+29% YoY) — EBITDA ex-other income Rs.156 crore (+56%) at 34% margin (+600 bps); PAT Rs.76 crore (+44%) at 16% PAT margin (+200 bps).
• Consolidated PAT (Rs.46 crore) came in below standalone PAT (Rs.48 crore) despite higher consolidated revenue — Goldman Sachs' Amit Dixit flagged weak subsidiary (IDL/Ideal) performance; management attributed part of it to Q2 being an off-season lean quarter for commercial explosives.
• Standalone effective tax rate spiked to ~51% in Q2 FY 2026-2027 — MD attributed it to income tax rules effective FY 2026-2027 shifting the applicable rate from 25% to 30% on the turnover threshold criterion (turnover test year cited as FY 2024-25); the analyst's reading that Apollo remains outside Section 115BAA was not contradicted.

Rs.1,765 Cr Book, Sole-Source Positions, and a Heavy Q3-Q4 Order Calendar

• Total order book Rs.1,765 crore as of Q2 FY 2026-2027 — standalone Apollo Micro accounts for a little less than Rs.1,300 crore, with the balance attributable to subsidiary IDL; Q1 FY 2026-2027 was ~Rs.1,700 crore, a modest sequential build that management said is not a concern as R&D and production orders arrive monthly.
• MIGM (heavyweight torpedo-related naval order): management expects the RFQ in November 2026 (Q3 FY 2026-2027) and the Indian Navy purchase order by January-February 2027 (Q4 FY 2026-2027), with a 20% advance payment provision to be availed via bank guarantee before 31 March 2027; all development and user trials are complete.
• Sole-source positions: Apollo is the only established supplier for 3 critical QR-SAM subsystems (including navigation and onboard computer) and will be the sole source for MIGM electronic processing systems and sensors; in 2-3 subsystems only one other vendor exists.
• Pinaka: the Indian Army is placing an order for another 2,000 rockets (negotiations and quote submission complete, order expected anytime); near-term demand framed at 4,000 rockets, roughly half export / half domestic; for the 120 km variant, MOD has not finalized DCPP production partners and Apollo is in the race.
• Varunastra torpedo flow-through: BDL recently received orders worth ~Rs.1,700 crore, of which management expects around Rs.100 crore-plus to flow to Apollo as subsystem orders (period unspecified); a separate urgent Indian Navy RFQ (via BDL) for ~30 torpedoes is expected in November 2026 with 9-month delivery, and the ~125-number volume order for the advanced submarine variant is expected in FY28.
• QRSAM split: the Ministry of Defence is planning to split the first lot of 1,000 missiles 50% to BDL and 50% for private industry; management expressed confidence Apollo will be among the private industries selected (period unspecified), with Premier handling propulsion and the Apollo Group the major portion of the weapon.
• Pralay remains at RFQ stage only — MoD has shortlisted 3-4 companies for complete-weapon manufacturing with Apollo among them, but the order is not yet finalized; management declined any order-book breakup by program.

45-50% FY27 Guidance Reaffirmed Despite 29% H1; H2 Execution Targeted Above Rs.700 Cr

• H1 FY 2026-2027 standalone revenue grew ~30%, below the maintained 45-50% full-year standalone guidance — CFO Sudarshan reaffirmed the company will "continue to keep up with the guidance" for FY 2026-2027; MD stated 35-45% growth will "definitely" be achieved in FY 2026-2027.
• H2 FY 2026-2027 execution target above ~Rs.700 crore — management said "anything 35 to 45%, definitely we'll be doing" of the order book, versus ~Rs.400 crore executed in H2 FY 2025-2026.
• Standalone order book expected to reach Rs.2,000+ crore by March 2027 (FY 2026-2027 year-end) excluding pending MIGM; management separately expects the total order book to reach Rs.4,500-5,000 crore by end of FY 2026-2027, contingent on the MIGM order being placed.
• Execution resilience if orders slip: CFO said even if the MIGM order slips by a month, momentum will continue on the strength of the existing order book, with Apollo as a tier 2/tier 3 supplier to larger system integrators; no specific program was flagged as the largest execution risk.
• New orders generally carry 18-month execution windows, while the MIGM order has about 2.5 years of execution time; a few hundred programs are underway including limited-series production orders of 50-100 units, with strategic programs (including those involving nuclear warheads) not disclosable.
• Management declined to give a consolidated bottom-line outlook for the next 12 to 24 months (FY 2027-2028 to FY 2028-2029) until the pending Premier acquisition (open offer) completes; a dedicated/joint call is planned after the acquisition process, due within a month (~Q3 FY 2026-2027).

Mix-Driven Margin Swings; Production-Order Cash Flow Only From FY29

• Q2 FY 2026-2027 EBITDA margin of 28.6% vs H1 ~25.8% (analyst-cited) — CFO said quarterly margins swing a few hundred bps with product mix and should not be construed as annuity-like, attributing Q2 to production orders executed versus development projects.
• No specific sustainable EBITDA margin guided for FY27/FY28 — management expects to maintain margin momentum in line with the top-line guidance already provided.
• Positive operating cash flow across all quarters expected fully from FY29 onwards — when anchoring orders become predominantly production orders (vs the current development-weighted mix), enabling advance payments and regular quarter-on-quarter cash flows; no FY27-specific cash flow target was given.
• Standalone gross margin at ~40% in Q2 FY 2026-2027 (all-time high) — attributed to execution of strong production orders during the quarter.
• R&D expenses at ~8% of revenue — the analyst flagged this as at the higher end among Indian companies, alongside competitive risk in torpedoes where an existing player is already present; the R&D structure spans ~11 heads of departments by technology domain under the MD and Director Technical Mr. Prasad.

Ideal Turnaround Underway; Premier Process Constrains Disclosure

• Ideal (IDL) turnaround communicated for the past 4 quarters — financials refined and expenditure reduced through Q2 FY 2026-2027; the plan is to transform it into a full-fledged defence energetics business and improve commercial explosives margins, with changes expected to take a couple more quarters (~Q4 FY 2026-2027) and further initiatives over the next 2-3 quarters (~Q1 FY 2027-2028).
• IDL commissioned the Bolukonda silo unit near Asansol in Q2 FY27 — spread over 8.5 acres with 9,000 MT of bulk explosive storage, deepening the silo network serving long-term orders from Coal India subsidiaries.
• CCI of India approved the Premier Explosives transaction in Q2 FY27, clearing the way for the open offer to public shareholders; management declined all Premier commentary — including on the 155mm shells program and FY28 order inflows — citing the SPA until the process completes.
• IDL expansion plans include starting some 15 types of manufacturing plants, with investment details to be released very soon and a big investment raise planned (period unspecified).
• Shaurya Astra associate company launched with 34% Apollo stake — started with Dr. Saraswat (former DRDO chairman); per management, Shaurya Astra will carry out development while Apollo takes up production, with IP held jointly; it targets range gaps where Pinaka currently exists only up to 120 km while the armed forces are looking for 300 km, 500 km, and 900 km systems.

12x Capacity Build, Rs.5,000 Cr Ambition, and a Global OEM Vision

• Production capacity being increased to almost 12x current levels, with the first phase of the expansion already started (completion period unspecified); new Unit 3 capacity goes live by March 2027 (FY 2026-2027), with Inur 3 Phase 1 already commenced.
• Rs.5,000 crore revenue guideline reiterated without a committed timeline (period unspecified) — MD said the company is "definitely" targeting Rs.5,000 crore with commensurate 20%-22% margins in the coming years, conditional on completion of the pending acquisition and consolidated functioning under one management group.
• Group-level aim of Rs.25,000 crore in 5 years confirmed by the MD — referencing his earlier media comments, "explicitly linking it to big expansion plans across the total group of companies"; the CFO did not commit to a timeline for when current capex would suffice for the Rs.25,000 crore ambition (period unspecified).
• Global OEM aspiration in the next 5 to 6 years (i.e., by ~FY 2032-2033) — CFO said Apollo "aspires to emerge as a global OEM in the next 5 to 6 years," preferring to partner with Indian industry players rather than compete with any private or public sector player.
• Government policy as the expansion backdrop (third-party context) — per management, "the government is pushing and encouraging private industry to build larger systems" because the larger quantities required cannot be catered to by government-owned/state-owned entities; the CFO noted the government has been continuously bullish toward new entrants.
• Land and entry barriers: the group is acquiring 2,000 more acres close to Hyderabad in addition to the 1,200 acres already held (acquisition period unspecified); the MD estimated at least 4-5 years for any new company to enter the defense business given quality standards and audit levels.
• Testing dependency risk being addressed — the company currently depends on third-party facilities and DRDO for critical qualification/testing with waits of weeks to months; in-house EMMC test, navigation and calibration systems are expected complete within the next 1 month (Q3 FY 2026-2027); a couple of DCPP engagements are expected to be announced within the next 15-20 days (Q3 FY 2026-2027).

Exports From FY 2027-2028; ReArm Europe Cited as Structural Opportunity

• Export orders targeted from FY 2027-2028 onwards — management has historically concentrated only on the domestic business and plans to pursue foreign assignments once the third unit's first phase (operational in Q2 FY 2026-2027) is fully operational; it is already in touch with multiple overseas companies.
• CFO framed India's defense sector as entering a "structural growth phase" — citing the government's push for indigenization and military modernization, Telangana's ambition to become a leading defense manufacturing destination, and rising global demand for Indian defense exports.
• EU ReArm Europe cited as reshaping global procurement and supply chains — per the CFO, opening "a real and a very high opportunity" for Indian companies to participate beyond the domestic market (third-party/industry context, not a company commitment).
• Transfer of technology for the semi-active laser homing system awarded to Apollo in Q2 FY27 — in the presence of Raksha Mantri Shri Rajnath Singh Ji; per management, it enables precision strikes on laser-designated targets and strengthens India's self-reliance in advanced defense capability.
• Naval systems orders moving on a fast track in FY 2026-2027 — apart from the delayed QRSAM case (attributed to MOD's split deliberation), management said all other orders are being released as per schedule.