Skyrocketing success: This aerospace IPO gets fully subscribed within hours; have you boarded the flight?
Between FY22 and FY24, the company recorded a Compound Annual Growth Rate (CAGR) of around 140 per cent in revenue and 314 per cent in net profit.
About the issue
Unimech Aerospace and Manufacturing Ltd is preparing to launch its Initial Public Offering (IPO) for equity shares. Below are the issue details.
| IPO Details |
| IPO Opening Date |
December 23, 2024 |
| IPO Closing Date |
December 26, 2024 |
| Issue Type |
Book Built Issue IPO |
| Face Value |
Rs 5 per equity share |
| IPO Price |
Rs 745 to Rs 785 per equity share |
| Min Order Quantity |
19 shares |
| Listing At |
BSE, NSE |
| Total Issue |
63,69,424 shares of FV Rs 5* |
| (Aggregating up to Rs 500 Cr)* |
| Fresh Issue |
31,84,712 shares of FV Rs 5* |
| (Aggregating up to Rs 250 Cr)* |
| Offer for Sale |
31,84,712 shares of FV Rs 5* |
| (Aggregating up to Rs 250 Cr)* |
| QIB Shares Offered |
50% of the Offer |
| Retail Shares Offered |
35% of the Offer |
| NII (HNI) Shares Offered |
15% of the Offer |
| *At Upper Price Band |
|
Objects of the Issue
The offer encompasses both the fresh issue and the offer for sale. It's important to note that the company will not accrue any proceeds from the offer for sale. The company plans to allocate the net proceeds raised from the fresh issue for the following purposes:
1. Funding of capital expenditure for expansion through the purchase of machinery and equipment by the company.
2. Funding working capital requirements of the company.
3. Investment in the material subsidiary for: (i) purchase of machinery and equipment; (ii) funding its working capital requirements; and (iii) repayment/prepayment, in full or part, of certain borrowings availed by the material subsidiary.
4. General corporate purposes.
Promoter holding
Anil Kumar P, Ramakrishna Kamojhala, Mani P, Rajanikanth Balaraman and Preetham SV are the promoters of the company. The promoters currently hold a pre-issue shareholding stake of 88.60 per cent in the company.
DSIJ's 'Value Pick' service recommends long-term stocks based on Value Investing Philosophy. If this interests you, do download the service details here.
Company profile
The company is a specialized engineering solutions provider engaged in the manufacturing and supply of critical components, including aero tooling, ground support equipment, electro-mechanical sub-assemblies, and other precision-engineered parts for the aerospace, defence, energy, and semiconductor industries.
It caters to leading OEMs and their authorized licensees globally, supplying high-precision and critical components. The company’s prominent clients include some of the world’s top airframe and aero-engine OEMs and their approved licensees.
With advanced ‘build-to-print’ capabilities, the company manufactures products based on client designs. Additionally, its ‘build-to-specifications’ expertise enables it to assist clients in designing products tailored to specific requirements.
Between FY22 and the six months ending September 30, 2024, the company produced 2,999 SKUs in the tooling and precision complex sub-assemblies category and 760 SKUs in the precision-machined parts category, serving over 26 customers across seven countries.
Financials
| Rs (in crore) |
FY22 |
FY23 |
FY24 |
H1FY25 |
| Revenue |
37.08 |
94.93 |
214 |
127.58 |
| Profit Before Tax |
3.72 |
29.37 |
76.5 |
49.81 |
| Net Profit |
3.39 |
22.81 |
58.13 |
38.68 |
The company has consistently delivered robust growth in both revenue and profits over the past few years. Between FY22 and FY24, the company recorded a Compound Annual Growth Rate (CAGR) of around 140 per cent in revenue and 314 per cent in net profit.
When annualized, the figures from the H1FY25 indicate around 20 per cent revenue growth and a 33 per cent surge in net profit compared to FY24. As of September 30, 2024, the company held an order book worth Rs 80.75 crore with delivery timelines ranging between 4 to 16 weeks.
Valuation & Returns
| Company Name |
P/E |
P/B |
RoE (%)* |
| Unimech Aerospace & Manufacturing Ltd |
46 |
6 |
54 |
| Listed Peers |
| MTAR Technologies Ltd |
134 |
7 |
9 |
| Azad Engineering Ltd |
141 |
14 |
14 |
| Paras Defence & Space Technologies Ltd |
88 |
7 |
8 |
| Dynamatic Technologies Ltd |
60 |
8 |
20 |
| Data Patterns (India) Ltd |
76 |
10 |
15 |
*RoE: Based on FY24 data
The issue is priced with a P/BV ratio of 9.17 times, calculated using its Net Asset Value (NAV) of Rs 85.65 as of September 30, 2024. At the upper price cap, it is priced at a P/BV ratio of 6.24 times, considering its post-IPO NAV.
Considering the company's annualized FY25 earnings and fully diluted equity capital, the price-to-earnings (P/E) ratio stands at 46x. The company delivered an impressive return on equity (RoE) of 54 per cent and a return on capital employed (RoCE) of 54 per cent for FY24.
As a result, the company has significantly outperformed its listed peers in terms of both valuation and returns.
Outlook
The Asia Pacific + China region is set to experience the largest fleet expansion globally, with 11,925 aircraft projected to be added by 2042. This underscores the region's prominent position as a global aviation leader.
The company stands out as a key player in India's aerospace and defence sectors, excelling in GSTE (Ground Support and Test Equipment) and precision component manufacturing. Catering to leading global OEMs and their approved licensees, the company leverages its strong foothold in a high-barrier-to-entry industry.
With its established market presence, unique capabilities, robust vendor ecosystem, efficient sub-contractor management, and proven execution capabilities, the company is well-positioned for sustained growth. Its impressive financial track record further reinforces its potential. We recommend investors subscribe to the issue with a long-term investment horizon.