Apollo Micro Systems Ltd Management Discussions

Economic Overview

Global Economic Review 1

The global economy remained resilient in CY 2025, growing at 3.4% despite shifting geopolitical dynamics and evolving trade conditions. Although the macroeconomic environment saw policy adjustments, steady global trade activity and strong growth in technology-led exports helped sustain overall momentum and offset weaker performance in certain sectors. Developments in the Middle East led to more cautious market sentiment and pushed crude oil prices higher, raising inflationary concerns and prompting companies worldwide to revise their margin expectations. Geopolitical tensions have driven measurable shifts in economic priorities, with governments allocating more resources toward defence. While private consumption and broader capital investment have moderated, public sector defence spending has remained steady to support national security needs.

Emerging Markets and Developing Economies (EMDEs) were a key driver of global growth, expanding by 4.4% in CY 2025 on the back of strong domestic demand, rising industrial production, and stable exports. Advanced economies, meanwhile, stabilised with steady growth of 1.9% for the year.

Global headline inflation remained contained at 4.1% in CY 2025, with advanced economies at 2.5% and EMDEs at 5.2%. Despite periodic disruptions from supply chain realignments and trade shifts, global trade volumes remained largely stable as sourcing networks adapted to changing geopolitical conditions.

Outlook

The global economy is projected to witness stable but measured growth ahead. Global GDP growth is projected at 3.1% in CY 2026 and 3.2% in CY 2027, reflecting a gradual slowdown as financial conditions and geopolitical factors continue to evolve. EMDEs are expected to maintain stronger momentum, with growth projected at 3.9% in CY 2026 and 4.2% in CY 2027, supported by strong domestic consumption, growing infrastructure investment and favourable policy frameworks. While global inflation may fluctuate in the near term due to supply-side factors, price trends are expected to stabilise gradually over the medium term. Inflation trends remain closely tied to trade conditions, geopolitical developments, commodity prices and fiscal policy, indicating the increased importance of resilient global supply chains.

Indian Economic Overview 2

IndiaseconomysustainedstronggrowthinFY2026,supported by healthy domestic demand, stable macroeconomic fundamentals and continued public investment. Real GDP growth stood at 7.7% for the year, keeping India among the fastest-growing major economies globally, driven by continued momentum in consumption and investment activity.

1 https://www.imf.org/en/publications/weo/issues/2026/04/14/world-economic-outlook-april-2026 2 https://rbidocs.rbi.org.in/rdocs/Bulletin/PDFs/MAY2026601335EA80D74C2E8E6395683F8D9199.PDF

Inflation stabilised further during the year, moderating to 3.7%, as domestic fuel prices held steady despite changing global energy conditions. Near the end of the fiscal, the impact of the West Asia crisis impacted energy prices, increasing inflationary pressures. Indias external financing improved, supported by strong growth in gross and net FDI inflows, with the country continuing to attract significant new greenfield investment.

The Union Budget FY 2026-27 has planned an 11.5% increase in capital expenditure, including funds transferred to state governments, reflecting the governments strong commitment to infrastructure and strategic assets. While the macro environment points to continued government spending in strategic sectors, risks remain from elevated energy prices and supply chain disruptions linked to the West Asia conflict.

Outlook

The Indian economy is projected to grow by 6.6% in

FY 2026-27, on the back of domestic consumption, investment, structural reforms and public infrastructure spending. CPI inflation is estimated at 4.6%, reflecting the impact of West Asia-related energy price increases and the possibility of below-normal monsoons.

The Union Budget FY 2026-27 outlines a six-point investment strategy focused on manufacturing, traditional industries, MSMEs, infrastructure, energy security, and urban economic zones, backed by higher central capital expenditure and a 22.1% rise in effective capital expenditure. Externally, Indias gross inward FDI rose 18.1% to $88.3 billion in FY 2025-26, led by the technology, financial services, and manufacturing sectors. This growth comes alongside ongoing trade negotiations with the UK, EU, and US, as well as a broader alignment between rising global defence spending and Indias focus on domestic defence manufacturing. Indias strong macroeconomic fundamentals, expanding infrastructure, digital transformation, policy reforms and improving manufacturing competitiveness are expected to support medium-term growth and economic resilience amid a changing global environment.

Global Defence Sector 3

2025 marked a critical year for global defence. New conflicts emerged with expanded frontiers of engagement. In a year of economic geofragmentation and focus on structural sovereignty, countries took steps to reinforce their defensive posture.

Global military spending reached $2,887 billion in 2025, a 2.9% increase in real terms from 2024. The global military burden, which is the military spending as a share of gross domestic product (GDP) remained 2.5%.

Ongoing conflicts, geopolitical instability and widespread rearmament drives supported the elevated military spending. Notably, while domestic spending declined slightly in the US, military expenditures across the rest of the world rose by 9.2%.

The US

The US remained the worlds largest military spender at $954 billion in 2025, despite slight overall decline. As financial military assistance for Ukraine was removed, the nation focused inwards, investing heavily in conventional and nuclear capabilities. This realignment supports the new National Security Strategy. Looking ahead, US military spending approved by Congress for 2026 will surpass $1 trillion, marking a substantial increase from 2025.

Europe

Europe emerged as the primary driver of global military spending in 2025. Europes military spending witnessed its fastest growth since 1953, expanding by 14% to reach US$ 864 billion. The continent is making significant strides in defensive self-reliance amid increasing pressure from the US to improve burden sharing within the NATO alliance. As the war between Russia and Ukraine entered its fourth year, both nations continued to increase their military spending. To support long-term defence infrastructure, the EU announced several flagship projects to be completed by 2028, including

The European Drone Defence Initiative

The Eastern Flank Watch

The European Air Shield

The European Space Shield

Asia, Oceania and the Middle East

Asia and Oceania spent $681 billion on their military in 2025. Spending increased by 8.1% over 2024, marking the regions largest increase since 2009. Growth was supported by key US allies, including Australia, Japan and the Philippines, scaling up their budgets amid long-standing regional tensions and growing uncertainty around future US support.

Middle Eastern defence spending reached $218 billion, a marginal 0.1% increase over 2024. Besides Israel, most major regional powers expanded their defence budgets as tensions in the region remained elevated.

Growth Drivers

Intensifying Military Conflicts

Ongoing regional wars, particularly in Eastern Europe

(Russia-Ukraine) and threats in the Middle East and North

Africa, have necessitated increased spending on combat capability and ammunition stocks.

Tensions regarding Chinas military capabilities and growing influence is driving high expenditures in the Indo-Pacific region, particularly by India and Japan. The number of interstate armed conflicts doubled from three in 2024 to six in 2025. Heightened geopolitical tensions, coupled with states long-term military spending targets is expected to drive this growth in the near-term.

European Rearmament and NATO Commitments

The European Unions flagship initiative, the ReArm Europe Plan, directs up to €800 billion into the defence sector. 4 NATO members are further aggressively increasing budgets to meet or exceed the 2% GDP target, leading to the fastest growth in European spending since the end of the Cold War. The momentum is supported by the necessity to secure technological sovereignty in a volatile geopolitical environment and to revive Europes manufacturing sector.

Technological Escalation

Massive investments are being directed towards advanced technologies, including artificial intelligence (AI), unmanned platforms/drones, cyber warfare capabilities and space-based defence systems.

Defence Self-Reliance

Nations are shifting away from international supply chains, focusing on strengthening domestic defence-industrial bases to ensure security of supply and support local technology, exemplified by Indias Make in India initiatives.

Indias Defence Sector

Indias defence production reached an unprecedented peak of ~1.78 lakh crore, reflecting strong momentum with a

15.6% Y-o-Y growth. 5 Driven by national security imperatives

and ongoing regional border dynamics, the armed forces are undergoing rapid modernisation while systematically reducing import dependency. Reflecting this strategic shift, defence exports reached a record 38,424 crore in FY 2025-26, marking a 62.66% year-on-year growth. Defence Public Sector Undertakings (DPSUs) led the export momentum with a 151% annual growth in exports to

21,071 crore. This was complemented by contribution from the private sector growing by 14% annually to contribute

17,353 crore, reflecting a broader global acceptance of domestic platforms and the sectors deepening integration into international supply chains. Beyond serving as a reliable partner for systems and sub-systems, the country is now successfully exporting defence equipment to over

80 nations as of FY 2025-26. 6

The Defence Decade

Indigenous defence production has expanded nearly fourfold from 43,746 crore in FY 2013-14 to 1.78 lakh crore in FY 2025-26. Over the last decade, the Indian defence sector has undergone a structural shift, transitioning from a buyer to a builder. Operation Sindoor emblemised Indias paradigm shift towards calibrated and decisive response to terror attacks. Post the operation, enhanced efforts towards modernisation of forces resulted in the revision of the capital outlay earmarked for Defence Services in the budget estimates from 1.80 lakh crore to 1.86 lakh crore in the revised estimates. Defence exports have now reached a record 38,424 crore in 2025-26, with exports reaching over 80 countries.

The previous decade focused on laying the foundation of Atmanirbharta and the next decade is geared towards vertical velocity. This era aims at realising Amrit Kaal, ensuring that India marks its centenary in 2047 as a shaper of the global order.

The Union Budget for FY2026-27 has earmarked an outlay of ~7.85 lakh crore (US$ 88.7 billion). The allocation towards the Defence Ministry was the highest across all the ministries and accounts. Accounting for 14.7% of the total central government expenditure, the budget highlights the nations impetus towards becoming a global defence manufacturing hub, aligning with the Atmanirbhar Bharat initiative. 7

Growth Drivers

Atmanirbhar Bharat Supported by Indias Defence Budget

The decade-long policy push for self-reliance has materially transformed the structure of Indias defence industrial base. The government has set a target of 3 lakh crore in defence production by 2029, reflecting confidence that the trajectory established by the Atmanirbhar Bharat programme is sustainable and scalable

Indigenous defence production rose from 46,429 crore in FY 2014-15 to 1.78 lakh crore in FY 2025-26.

India is gradually transitioning from a major importer to a defence manufacturing nation nearly 65% of defence equipment is now produced domestically, compared with an import dependence of 65 70% earlier. The draft Defence Acquisition Procedure (DAP) 2026 proposes simpler acquisition categories and stronger support for indigenous design and development, and recommends higher indigenous content requirements of up to 60%, further strengthening domestic manufacturing capabilities.

Growing Export Demand

Indias defence export base has broadened significantly in product mix and geographic reach. Defence exports surged from 686 crore in FY 2013-14 to a record 38,424 crore in FY 2025-26, and the Government has set a target of 50,000 crore in defence exports by 2029. The defence exporter base has expanded to 145 firms, reflecting wider industrial participation. Exports now extend to over 80 countries, spanning missiles, radar systems, naval platforms and munitions. The private sector accounted for 45% of export value in FY2026, highlighting the growing role of non-DPSU manufacturers in Indias external defence trade.

Make in India, Make for the World

Global geopolitical fragmentation has accelerated the reorientation of defence supply chains away from concentration in a small number of supplier nations. India is positioned to benefit from this structural shift, with its growing manufacturing base, competitive costs, and neutral geopolitical posture making it an increasingly credible alternative source for a range of defence platform components and sub-systems.

Military Modernisation

Under the Budget FY2026-27, 1.85 lakh crore has been earmarked for capital acquisition, including projects that will equip the Armed Forces with next-generation fighter aircraft, advanced weapons, Unmanned Aerial Vehicles, ships and submarines etc. The modernisation impetus aims to enhance future capabilities through acquisition of advanced technologies and force multipliers.

Indias Explosives and Energetics Market

India is among the largest producers and consumers of industrial explosives globally, with demand anchored in coal and mineral production and the continuing build-out of national infrastructure. Coal India Limited and Singareni Collieries, together with private miners, quarrying and road and irrigation projects, generate sustained demand for bulk and cartridge explosives, while institutional and export channels provide additional avenues of growth. Rising overburden removal at opencast mines and the Governments focus on domestic coal output provide medium-term visibility for industrial explosives volumes. In parallel, defence energetics high explosives such as TNT, RDX, HMX and PETN, propellants, warheads, fuzes and allied Safety and Arming mechanisms has emerged as a strategic priority under Atmanirbhar Bharat. The Positive Indigenisation Lists place a wide range of munitions and their sub-assemblies under import embargo, while global ammunition restocking and Indias export ambitions expand the addressable market for domestically manufactured energetic materials.

The Group is directly positioned in this opportunity following the 100% acquisition of IDL Explosives Limited through Apollo Defence Industries Private Limited, completed on 15 November 2025. IDL brings established manufacturing units across Indias key mining belts, long-standing relationships with Coal India subsidiaries and institutional customers, and a growing dealer and export franchise. Combined with the industrial licence secured for the manufacture of high explosives, including TNT and RDX, and the Companys existing strengths in fuzes and weapon electronics, the acquisition enables forward integration from electronics into complete energetic systems.

Indias Space Sector

Indias space economy has grown to an estimated $8.4 billion, supported by a commercial launch track record and an expanding domestic startup ecosystem now comprising companies operating across launch vehicles, satellites, propulsion systems and space-grade electronics. Nearly 400 foreign satellites have been launched by India since 2014, earning a revenue of $233 million, reflecting the countrys growing presence in the global space launch market. 8

Indias Space Wins in FY2025-26

Fifteen space missions were conducted in FY2025-26, including three Gaganyaan crew module missions and the launch of four earth observation satellites and one communication satellite. A fleet of 19 communication satellites currently operate over India, providing voice, data and broadband services across the country. 10

The joint NASA-ISRO Synthetic Aperture Radar (NISAR) satellite was successfully placed in orbit aboard GSLV-F16 from Satish Dhawan Space Centre, the first satellite developed jointly by the two agencies.

ISRO successfully executed Mission LVM3-M5, which placed CMS-03, Indias heaviest communication satellite, into Geosynchronous Transfer Orbit. This mission further achieved the first-ever in-space restart of the indigenously developed C25 cryogenic upper stage.

India plans to deploy 52 surveillance satellites by 2030 to support the Army, Navy and Air Force with real-time situational awareness, border monitoring and operational coordination. Private sector manufacturers are expected to build half of the total constellation, showcasing the growing capabilities of the nations space manufacturing ecosystem. In the coming decade, India is positioned to expand its market share from ~2% to ~8% through policy reforms, private participation and growing mission-grade services adoption in the country. 10

Growth Drivers

Space Startups

India has transformed its space ecosystem from being government-led to a robust national ecosystem with increasing role of space start-ups. Between 2014 to 2026, the number of space start-ups in the country have grown from just 1 to 400. Investment in Indian space start-ups has exceeded $500 million, with nearly $150 million attracted in 2025 alone. 11

Increased Budget Outlay

The Department of Space has been allocated an outlay of 13,705.63 crore for the FY 2026-27 to support Indias

Space Vision 2047 through key programmes such as the

Gaganyaan Mission, Bharatiya Antariksh Station (BAS) and the Next Generation Launch Vehicle (NGLV). 12

Economic Proposition

Indias space missions have consistently demonstrated the ability to deliver economically efficient solutions, attracting investment from across the world. The nation has already launched over 400 foreign satellites, indicating the growing interest from foreign businesses.

Space Astronomy

India has steadily reinforced its global standing in advanced space science through pioneering astronomy and in-orbit technology demonstrations. AstroSat, the nations premier multi-wavelength space observatory, marked a decade of successful operations in September 2025, yielding numerous landmark scientific breakthroughs. This capability was further elevated by the launch of XPoSat, which deepened Indias expertise in X-ray astronomy. Today, both platforms continue to function as proposal-driven observatories, serving the global scientific and research community.

Further, India has achieved a major technological breakthrough, as it became only the fourth nation after US, Russia and China to demonstrate the capability of successful docking and undocking in space.

Technology Development Fund (TDF)

The TDF is a Ministry of Defence instrument, developed to extend financial and technical support to public and private enterprises, with particular emphasis on startups and MSMEs, for the development of critical defence technologies. The scheme provides grants of up to 50 crore per project. To date, several technologies have been successfully developed under TDF, and two project systems have been flown in space as part of PSLV missions. As of June 2026, 80 projects with a total cost of 334 crore are under implementation.

Chandrayaan Mission

After the success of Chandrayaan-3, making India the first country to achieve a soft landing near the Moons south pole in 2023, the nations lunar ambitions have continued to expand with further missions planned in the coming years. The Chandrayaan-4 is scheduled for 2027 with an objective of collecting lunar samples and returning them to Earth. Further ahead, the Chandrayaan-5 mission will explore water and other volatile materials near the lunar south pole.

GAGAN

GAGAN (GPS Aided GEO Augmented Navigation) is an indigenous Satellite-Based Augmentation System co-developed by ISRO and the Airports Authority of India. The platform enhances GPS accuracy and provides vital integrity information for safer aircraft navigation. Globally certified, GAGAN facilitates precise satellite-based landings and supports operations across sectors beyond commercial aviation. By strengthening sovereign navigation infrastructure, it is driving Indias strategic push toward technological self-reliance and global prominence in satellite navigation.

National Space Station

The Bharatiya Antariksh Station (BAS), a key pillar of

Space Vision 2047, is Indias planned five-module space station in Low Earth Orbit engineered for long-duration human spaceflight and advanced scientific research. In September 2024, the Union Cabinet formally approved the development and launch of its first module, BAS-01, by 2028 as part of the expanded Gaganyaan program. The platform is set to enable vital research across life sciences, medicine, and pioneering technologies, while supporting the nations long-term deep-space exploration goals.

Mission DefSpace

Mission DefSpace operates under the iDEX framework to promote indigenous development of dual-use technologies for Indias defence-space ecosystem. The programme has introduced 75 Defence Space Challenges across five domains, including launch systems, satellite systems, communication and payload systems, ground systems and software systems. This has enabled startups, MSMEs and research institutions to co-develop technologies aligned with the operational requirements of the Defence Space Agency and the Indian armed forces. Mission DefSpace represents a deliberate effort to mobilise private sector capability in a domain that had previously been the exclusive preserve of government agencies.

Private Sector Incentivisation

Strategic government initiatives continue to support the private sectors contribution to the space ecosystem. Notable programmes include the liberalised Foreign Direct

Investment policy, the IN-SPACe Seed Fund Scheme and the Pre-incubation Entrepreneurship Programme, alongside the pivotal rollout of the 1,000 crore Venture Capital Fund and the 500 crore Technology Adoption Fund. 13

Opportunities and Threats

Opportunities

Sustained growth in Indias defence budget and capital acquisition outlay, with the Government targeting 3 lakh crore of defence production and 50,000 crore of exports by 2029; deepening indigenisation through the Positive Indigenisation Lists, the DcPP framework and DAP reforms, which channel procurement towards domestic manufacturers; the Companys entry into explosives and energetics through IDL Explosives, opening adjacent revenue pools in both industrial and defence markets; growing export opportunities as global supply chains diversify and Indias credibility as a defence supplier strengthens; and expanding demand for space-grade electronics and dual-use technologies under Mission DefSpace and related programmes.

Threats

Dependence on government procurement cycles, where order finalisation and execution timelines can be long and uneven; intensifying competition from established DPSUs and new private sector entrants; volatility in raw material, component and energy prices, which can compress margins; rapid technology evolution requiring continuous R&D investment to avoid obsolescence; cybersecurity and data-protection risks inherent to defence programmes; and geopolitical developments that may disrupt supply chains or alter procurement priorities.

Company Overview

The Next Chapter of Integration

Apollo Micro Systems Limited is a pioneer in defence technology, specialising in the design, development and manufacture of advanced electronic, electro-mechanical and engineering systems for Indias Armed Forces. With multi-domain, multi-disciplinary capabilities and robust infrastructure, the Company is equipped to build cutting-edge defence technologies and produce them at scale for national strategic needs. AMS holds a valid Defence Industrial

Licence, is certified to AS9100 Rev D (Aerospace Quality Management), and has delivered mission-critical systems to the DRDO and the Indian Armed Forces, backed by a 41-year track record of indigenous design and delivery. Established in Hyderabad in 1985, the Company has developed more than 700 technologies, with a particular focus on weapon electronics for ground, missile and naval defence applications.

Our Strategic Attributes

Safety an institutionalised process-safety and quality culture across electronics manufacturing and, following the IDL Explosives acquisition, the manufacture and handling of explosives.

Fully Integrated Company capabilities spanning design, development, testing and scale manufacturing across missile systems, satellite and space technology, naval systems, aircraft electronics and homeland security.

R&D a 41-year indigenous engineering base with more than 700 technologies developed and over 150 active defence programmes, continually strengthened with futuristic technologies.

Strong Order Book a healthy order pipeline across DRDO, DPSU and Armed Forces programmes, with solutions qualified for production-phase supply under the DcPP framework.

Diversified and Sustainable Revenue presence across the land, air and sea domains, together with industrial explosives and a growing export franchise, reducing dependence on any single programme or customer. Recognising that defence and space applications demand reliability under extreme conditions, AMS applies advanced engineering practices to ensure its systems perform without failure during critical operations. The Company has a proven track record of supplying integrated defence solutions, covering small systems to complete platforms including explosives.

Beyond hardware, AMS delivers integrated solutions for secure communications, underwater electronic warfare, and air defence, providing clients with dependable, mission-ready capabilities tailored to their operational needs. The Company also produces Commercial Off-the- Shelf (COTS) solutions customised for the defence and space sectors.

AMS is currently involved in over 150 indigenous defence programmes, with its solutions qualified for inclusion in the production-phase supply chain under the Development cum Production Partner (DcPP) framework. The Company is an approved vendor for the DRDO and the DPSU. The Company currently operates two facilities in Hyderabad (Mallapur and Adibatla) and is building a new 350,000 sq. ft. integrated facility at Hardware Park-II. The new unit will significantly expand capacity to manufacture critical components including fuzes, mines and inertial navigation systems.

FY 2025-26 Milestones

Completed the Integration of IDL Explosives Limited the 100% acquisition through Apollo Defence Industries Private Limited was completed on 15 November 2025, and IDL has been integrated into the Groups operations, financial reporting and safety framework.

Greenfield Expansion advancing a major greenfield expansion project in Telangana, including the new 600,000 sq. ft. integrated facility at Hardware Park-II, to boost manufacturing output.

Strategic Acquisition executed a 100% acquisition of IDL Explosives Limited, marking the Groups entry into the explosives and energetics value chain.

First Export Order successfully received the Companys first-ever export order.

Mutual Partnerships entered a tripartite alliance with the Indian Navy and IIT Madras (Chennai), and signed a Memorandum of Understanding with Garden Reach Shipbuilders & Engineers (GRSE).

Licences Awarded obtained an industrial licence for the manufacture of high explosives, including TNT and RDX, through the IDL Explosives subsidiary, and secured a comprehensive DPIIT licence covering UAVs, INS systems, radars, torpedoes, underwater mines, ATGMs, decoys, chaffs and flares, aerial bombs, rockets, missiles and loitering munitions.

Latest Technologies received Transfer of Technology for advanced electro-optical tracking systems, strengthening next-generation capability integration.

Directed Energy Weapon received Transfer of Technology for Directed Energy Weapons (DEWs), including laser-based variants.

VMCDS vehicle-mounted counter-drone systems are advancing, with field trials scheduled for FY 2026-27.

Segment-wise Performance

The Company operates in a single reportable segment, namely electromechanical components and systems and allied components and services, and accordingly segment-wise disclosure under Ind AS 108 is not applicable. On a consolidated basis, the Groups operations additionally include the manufacture of industrial explosives through IDL Explosives Limited, consolidated with effect from 15 November 2025.

Financial Performance

Revenue from operations achieved during FY2026 was 76,485.32 lakhs, as against 56,206.92 lakhs in the previous year, registering 36.08% year-on-year growth. On a consolidated basis, revenue from operations for

FY 2025-26 stood at 90,432.38 lakhs, which includes

IDL Explosives Limited, consolidated with effect from 15 November 2025.

Profit before tax (PBT) was recorded at 17,462.69 lakhs against 8,380.43 lakhs during the previous year. Profit after tax (PAT) for the year stood at 12,057.89 lakhs against 5,724.16 lakhs in the previous year. EBITDA grew by 73.50% YoY to 23,122.03 lakhs in FY2026, compared to 13,326.72 lakhs in FY25.

EBITDA margin for FY26 stood at 30.23%, improved by 6.52 bps on a YoY basis. Total borrowings of AMS as of March 31, 2026 stood at 48,504.50 as compared to 29,069.20 lakhs as on March 31, 2025.

AMSs interest cost in FY26 increased by 8.67% from 3,710.46 lakhs in FY25 to 3,414.35 lakhs.

As on 31st March, 2026, the Companys Equity Capital stood at 3,572.92 lakhs compared to 3,064.90 lakhs as of 31st March, 2025. The Companys tangible asset as of 31st March, 2026, stood at 27,091.52lakhs vis-a-vis 17,583.65 lakhs as on 31st March, 2025, an increase of 54.07% Cash and cash equivalents as of 31st March, 2026 stood at 20,24.62 lakhs as compared to 21.58 lakhs as on 31st March, 2025, an increase of 9,283.22%.

Summary of Profit and Loss ( in lakhs)

Metric	FY26	FY25	% Change
Revenue	76,485.32	56,206.92	36.08
Gross profit	26,759.20	16,510.31	62.08
Total opex	11,030.22	8,534.71	29.24
EBIDTA	23,122.03	13,326.72	73.50
Depreciation	1,948.88	1,531.94	27.22
EBIT	21,173.15	11,794.78	79.51
Finance cost	3,710.46	3,414.35	8.67
Profit before Tax	17,462.69	8,380.43	108.37
(PBT)
Profit after Tax (PAT)	12,057.89	5,724.16	110.65

Summary of Balance Sheet ( in lakhs)

Metric	FY26	FY25
Equity and Liabilities
Equity Share Capital	3,572.92	3,064.90
Other Equity	1,28,660.44	57,797.00
Non-current Liabilities	17,990.86	8,448.50
Current Liabilities	79,199.44	56,913.36
Total Equity and Liabilities	2,29,423.66	1,26,223.76
Assets
Non-current Assets	34,309.00	3,358.86
Fixed Assets	44,710.38	23,956.14
Current Assets	1,50,404.28	98,908.76
Total Assets	2,29,423.66	1,26,223.76

Key Financial Ratios

The table below outlines key financial ratios, with detailed explanations provided for any significant changes (i.e., a change of 25% or more compared to the previous financial year).

Key Ratio Profitability Ratios	FY26	FY25	Reason for Change
Gross Profit Margin	34.99%	29.37%	Due to increase in profits margin during the year
EBITDA Margin	30.23%	23.71%	Operating leverage on 36.1% revenue growth and a lower net material cost ratio
EBIT Margin	27.68%	20.98%	Higher EBITDA with a moderate increase in depreciation
Key Ratio	FY26	FY25	Reason for Change
Operating Profit Margin (%)	25.42	20.26%	Due to increase in profits margin during the year
Profit Before Tax Margin	22.83%	14.91%	Margin expansion and contained finance costs
Profit After Tax Margin (%)	15.76%	10.18%	Higher profit before tax with a broadly stable effective tax rate
Return Ratios
Return on Equity (RoE)	12.49	10.15	Due to increase in profit during the year
Return on Capital Employed	0.14	0.17	Due to increase in total during the year
(ROCE)
Return on Net Worth (RONW)	9.12	9.41	Due to increase in total share capital and other equity
Leverage & Coverage Ratios
Net debt-to- equity ratio	0.73	1.07	Due to increase in equity during the year
Interest coverage ratio	5.71	3.45	EBIT growth of 79.5% outpaced the increase in finance costs
Efficiency & Liquidity Ratios
Inventory turnover ratio	0.73	0.77	Due to increase in inventories during the year
Debtors turnover ratio	2.21	2.37	Due to increase in receivables during the year
Current ratio	1.90	1.74	Due to increase in currents assets during the year

Significant Changes in Key Financial Ratios

This table highlights key financial ratios that have changed by 25% or more in FY26 compared to the previous financial year.

Key Financial Ratio	FY26	FY25	% Change
Debt service	5.95	7.28	(18.27)
coverage ratio
Return on equity ratio	12.49	10.15	23.06
Trade receivable	2.21	2.37	(6.77)
turnover ratio
Net profit ratio	15.76	10.18	54.80

Outlook

The Companys strategic focus centres on ascending the value chain to emerge as a global Original Equipment Manufacturer (OEM), providing comprehensive, highly reliable solutions. By capitalising on domestic capabilities and aligning with national defence programmes, the Company intends to broaden its reach within the Indian market. Concurrently, it plans to expand its international presence by supplying sophisticated, export-ready systems.

The Companys strategic goals include entry into major heavy defence domains including armament electronics, fire control systems, battle tanks, infantry combat vehicles and artillery platforms. Vehicle-mounted counter-drone systems are already advancing, with field trials scheduled for the FY2026-27.

Risk Management

The Company operates within a complex and dynamic regulatory landscape that presents various challenges. To navigate this, it employs a structured risk management framework. This involves active collaboration between senior management and all department heads to identify potential internal and external risks that could impact our strategic objectives. Key areas of focus include regulatory changes, market competition, technological advancements, cybersecurity, macroeconomic and political shifts, and ESG considerations. To guarantee its ongoing effectiveness and safeguard stakeholder interests, the executive leadership reviews the overarching risk management policy annually.

Key risks monitored under this framework include:

Order and customer concentration order-book concentration and dependence on government customers, mitigated through diversification across programmes, platforms and, increasingly, exports;

Execution and technology programme execution and technology risk on complex, qualification-driven systems, addressed through stage-gated development, rigorous testing and a 41-year indigenous engineering base;

Raw material and supply chain input cost volatility across electronic components, metals and energetic raw materials, managed through long-term vendor arrangements and pass-through pricing where available;

Working capital elevated working capital intensity typical of defence contracts, addressed through milestone-linked billing and disciplined receivables management;

Regulatory and licensing licensing and compliance obligations, which have widened with the addition of explosives manufacturing under the Explosives Act, 1884 and allied rules, met through dedicated compliance functions and statutory audits; and

Cyber security protection of classified programme data and operational technology, reinforced through access controls, network segregation and periodic security assessments.

Human Resources

The Company considers its workforce to be the foundation of its success, placing high value on employee well-being, continuous development, and security. AMS remains committed to nurturing a safe, inclusive and supportive workplace that promotes diversity and supports personal growth. The Companys achievements are deeply rooted in its ability to attract, develop, and retain top talent, reinforced by continuous training initiatives and a collaborative team culture. To uphold a secure work environment, robust health, safety and sensitivity programs are enforced across all corporate offices and manufacturing facilities. As of 31st March, 2026, our workforce consisted of over 434 employees. Industrial relations remained cordial and productive throughout the year.

Health and Safety

The Company maintains robust health and safety protocols, strengthened through consistent training and awareness campaigns for all personnel. It proactively works to detect and mitigate potential occupational hazards across all operational touchpoints. By embedding extensive safety measures within both its corporate offices and manufacturing sites, the Company continuously identifies and resolves risks while enhancing the overall safety performance.

Following the acquisition of IDL Explosives Limited, the Groups safety framework extends to the manufacture, storage and transportation of explosives, which are governed by stringent licensing and process-safety requirements under the Explosives Act, 1884 and the ExplosivesRules,2008.IDLsplantsoperateinstitutionalised safety management systems, including permit-to-work controls, regular mock drills, statutory inspections and safety audits, and the units long safety track record and industry recognition further strengthen the Groups overall safety culture.

Internal Control Systems

To uphold operational integrity, the Company utilises an internal control framework tailored to the scale and complexity of its operations, under the oversight of the Board of Directors. The primary goals of these controls are to protect corporate assets, guarantee the accuracy of financial and operational data, ensure strict legal compliance and enforce company policies. An independent internal audit team, which reports directly to the Chairman of the Audit Committee, routinely evaluates these systems. Based on their assessments, management executes necessary corrective measures to continuously strengthen the overall control environment.

Cautionary Statement

This Management Discussion and Analysis (MD&A) section contains forward-looking statements about the Companys future prospects. These statements involve both known and unknown risks and uncertainties that could significantly impact actual results. Additionally, the Company faces unforeseen and ever-evolving risks in its operating environment. The assumptions in the report are based on internal and external information, forming the foundation for specific facts and figures. However, it is essential to recognise that these assumptions may evolve over time, leading to corresponding adjustments in estimates. These forward-looking statements reflect the Companys current intentions, beliefs, or expectations and are relevant as of their original date. Please note that the Company is not obligated to revise or update these forward-looking statements, regardless of any new information, future events, or changing circumstances.