MTAR Tech vs Apollo Micro Systems: Which multibagger defence stock to buy after 395% rally in 1 year

MTAR Tech vs Apollo Micro Systems

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Two stocks from the same sector turning into multibaggers in a year is uncommon. But in India’s booming defence space, MTAR Technologies and Apollo Micro Systems have managed to do exactly that. The rally has been nothing short of spectacular. MTAR Tech has surged a staggering 395% over the last one year, while Apollo Micro Systems has climbed nearly 185% during the same period, rewarding investors handsomely.The Nifty India Defence index is among the only five sectoral indices to have scaled a fresh 52-week high since the Iran war began, and both companies have played a key role in driving that outperformance. Analysts say defence stocks are no longer merely short-term geopolitical trades. Instead, markets are increasingly beginning to price in a deeper and longer structural transformation underway in India’s defence manufacturing ecosystem. So, which stock should you pick?“MTAR supplies critical components to Bloom Energy, whose fuel cell systems are now being used to power AI data centres. That connection triggered the sharp re-rating in the stock. Also, the management raised growth guidance sharply. Investors had every reason to stay invested,” Ravi Singh said.Motilal Oswal has maintained a ‘Buy’ rating on MTAR Technologies with a target price of Rs 8,000, a level the stock has already comfortably crossed after the recent rally. The brokerage highlighted that MTAR’s order book stood at around Rs 2,600 crore as of March 2026, supported by a strong pipeline across clean energy, aerospace and defence, nuclear and other product segments.The brokerage added that completion of first articles and the shift to volume production for new customers across segments are expected to drive the next phase of growth. Motilal Oswal believes these initiatives, along with operating leverage, could result in strong revenue growth and margin expansion in line with management guidance.It also noted that working capital concerns have eased significantly due to improved payment terms and capital advances, resulting in stronger operating cash flows. Management has indicated that measures are underway to sustain cash generation at current levels. Motilal Oswal expects MTAR Tech to deliver a CAGR of 67% in revenue, 86% in EBITDA and 105% in adjusted PAT over FY26-FY28. The brokerage said its target price is based on 60x FY28 EPS, translating into a PEG ratio of around 0.6x based on estimated FY26-28 EPS CAGR.MTAR Tech recently secured its first AI data centre export order from SLB worth around Rs 35 crore and sees a larger opportunity of nearly Rs 400-500 crore going forward. In the oil and gas segment, customer qualification and first articles have already been successfully completed, with one customer opportunity alone estimated at $35-40 million, while several additional customers are still under qualification. The company’s new oil and gas plant is expected to generate peak revenue of around Rs 450-500 crore.The company is also strengthening its presence in aerospace actuator assemblies, representing an opportunity of nearly Rs 130-150 crore, while AMCA structural programmes and nuclear refurbishment opportunities continue to provide multi-sector growth visibility ahead.After such a sharp rally, analysts believe investors should now become more cautious on valuations. Ravi Singh warned that MTAR Technologies is currently trading at an extremely stretched PE multiple of over 200x, reflecting very high expectations around its clean energy and AI data centre-linked growth story.From here, the upside may not disappear entirely, but future gains are likely to become slower and increasingly dependent on consistent quarterly earnings delivery. MTAR continues to enjoy a strong near-term narrative driven by its large order book and management’s 80% growth guidance for FY27, but the valuation leaves very little room for execution mistakes. Singh believes investors should now brace for relatively moderate returns compared to the extraordinary gains witnessed over the last year.Experts believe Apollo Micro Systems’ rally is not merely a reflection of the broader defence boom. The company fundamentally changed the nature of its business. Apollo developed limpet mines exclusively for the Indian Navy, entered rocket motor development and acquired an explosives company, transforming itself from a defence electronics vendor into a broader weapons systems player. Analysts say that strategic shift in identity is what truly re-rated the stock, far beyond quarterly earnings momentum or government spending tailwinds.HDFC Securities maintained its ‘Buy’ rating on Apollo Micro Systems and raised its target price to Rs 400, a level the stock crossed comfortably within less than two weeks. The brokerage expects Apollo Micro Systems to deliver a 50% revenue CAGR between FY26 and FY28, supported by its existing order book of Rs 1,430 crore, a strong weapons pipeline and fresh manufacturing licences.It added that two major orders, MIGM worth around Rs 2,000 crore and QRSAM, remain key monitorables going forward. The brokerage also highlighted that Apollo has secured a licence to manufacture arms of calibre above 12.7mm, significantly expanding its future order opportunity pipeline and strengthening long-term revenue visibility. Factoring in these growth drivers, the brokerage now expects a 62% PAT CAGR over FY26-FY28, sharply higher than its earlier estimate of 48% for the same period.Apollo Micro Systems, despite its strong growth outlook, is also trading at expensive valuations with a PE multiple of over 115x following the recent surge. Analysts warn that any slowdown in execution, fresh order inflows or margin expansion could trigger sharp corrections. Future returns will largely depend on whether the company can grow quickly enough to justify the aggressive valuations already assigned by the market.Going forward, analysts believe the easy money has already been made in both stocks. Further upside is likely to depend heavily on sustained execution and earnings delivery every quarter. MTAR Tech still enjoys a stronger near-term narrative because of its large order book and aggressive FY27 growth guidance, but the stock’s lofty valuation leaves little margin for disappointment.Apollo Micro Systems, however, may still have relatively more room to run. India’s defence manufacturing cycle remains firmly intact, supported by localisation initiatives, rising defence budgets and a healthy order pipeline. Still, after such a steep rally, phases of consolidation and volatility are almost inevitable. Ravi Singh believes the long-term structural story for both companies remains intact.Whether the rally sustains from here will depend less on sentiment and more on execution. Both MTAR Tech and Apollo Micro Systems operate in sectors with strong long-term tailwinds, backed by rising defence spending, localisation and expanding order pipelines. However, after the sharp re-rating in both stocks, valuations have become demanding, making consistent earnings growth, timely execution and fresh order inflows critical for sustaining investor confidence going ahead.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)