Shares of Apollo Micro Systems fell more than 5 percent on Tuesday, extending losses from the previous session after the defence electronics company approved a fund-raising plan worth up to Rs 3,322 crore through a preferential allotment of equity shares and convertible warrants. The decline came as investors booked profits following the stock's strong rally in recent months.

The company's board approved the issuance of up to 2.28 crore equity shares to 55 investors at an issue price of Rs 416.60 per share, raising approximately Rs 951 crore. The proposed investors include Saint Capital Fund, which will receive 50 lakh equity shares, and Tata Mutual Fund, which has been allotted 12 lakh shares.

In addition, Apollo Micro Systems approved the issuance of up to 5.69 crore convertible warrants to 93 investors at Rs 416 per warrant, enabling the company to raise up to Rs 2,371 crore. Promoter family members Chanakya Reddy Baddam and Kanishka Reddy Baddam are among the proposed allottees and together will receive 2.61 crore warrants.

The company said the proposals are subject to shareholder approval at an Extraordinary General Meeting scheduled for August 4 through video conferencing. Shareholders holding shares as of July 28 will be eligible to participate in the voting process.

The fundraising announcement follows a period of strong gains in the company's share price, supported by optimism surrounding increased defence spending. Apollo Micro Systems had recently benefited from expectations that it could participate in upcoming defence procurement programmes after the Defence Acquisition Council approved acquisition proposals worth around Rs 52,000 crore for the armed forces.

Despite the recent correction, the stock has significantly outperformed the broader market so far this year, reflecting continued investor interest in India's defence manufacturing sector.