Aequs IPO: Playing the Aerospace Precision Manufacturing Upswing: Should You Subscribe?

At a Glance Table

(Source Chittorgarh.in)

Company and its Business Operations

Aequs Limited, incorporated in 2000 as Mechanical Training Academy and subsequently renamed multiple times before adopting its current name in 2014 and becoming a public company in May 2025, is a diversified contract manufacturing platform focused on precision-engineered components for global Aerospace and consumer OEMs. It operates three vertically integrated manufacturing ecosystems in Belagavi, Hubballi, and Koppal SEZ clusters in Karnataka, plus facilities in France and the United States. Key subsidiaries span aero-structures, plastics, toys, and consumer products, supported by joint ventures for surface treatment and forging. Milestones include international acquisitions, cluster build-out, and large program wins with Airbus and other global OEMs.

Industry Outlook

The RHP cites a Frost & Sullivan report highlighting strong growth in global aerospace and precision engineering, driven by aircraft fleet expansion, supply-chain diversification and outsourcing to cost-competitive hubs like India. India’s aerospace and precision-engineered components (PEC) market is projected to expand at a healthy CAGR, supported by rising Defence and civil aviation spend and government push for “Make in India”. The report indicates a large global TAM for aerospace PEC, with India’s share rising as OEMs seek vertically integrated, low-cost clusters. Consumer precision manufacturing (electronics, toys, cookware) adds a sizeable, faster-growing TAM with mid-teens to high-teens CAGR potential.

Objects of the Issue

• Repayment or prepayment of certain borrowings of Aequs Limited: Rs 23.47 crore.
• Repayment or prepayment of certain borrowings of two wholly owned subsidiaries via on-lending: Rs 395.77 crore.
• Capex for machinery and equipment at Aequs Limited: Rs 67.45 crore.
• Capex for machinery and equipment at ASMIPL: Rs 60.58 crore.
• Inorganic growth, acquisitions and general corporate purposes: balance.

SWOT Analysis

• Strengths – Vertically integrated aerospace manufacturing ecosystems in a single SEZ cluster, offering machining, forging, surface treatment and assemblies to global OEMs like Airbus, Boeing and Safran. Diversified revenue across aerospace and consumer segments and geographies (US, Europe, India, Asia).​​
• Weaknesses – Loss-making with FY25 PAT of about Rs -102.35 crore and high leverage (total borrowings Rs 785.05 crore versus net worth Rs 707.53 crore), exposing the balance sheet.​
• Opportunities – Rising aircraft build rates, global supply-chain diversification to India, and scaling consumer electronics, toys and cookware manufacturing from existing clusters.​​
• Threats – Cyclicality in aerospace, customer concentration, FX risk from export-heavy mix, and execution risk in managing multi-location, capex-heavy operations. The company is heavily dependent on its ten largest customer groups, which comprise a significant portion of the revenue from operations. Also five largest customer contributed 73 per cent of FY25’s revenue.

Financial Performance Tables (Figure in Rs crore) (Source – Company RHP)

(a) Profit & Loss

 (b) Balance Sheet

(c) Operating Cash Flow

Peer Comparison

(Note – Market Price is December 1, 2025)

Outlook & Relative Valuation

Aequs presents a unique, scaled opportunity in India’s aerospace supply-chain localisation, with one of the largest aerospace precision portfolios in the country and strong, established relationships with key players such as Airbus, Boeing, Safran, and Collins. Over the long term, the rising build rates for A320/B737 families, the ongoing de-risking of supply chains away from China, and increased indigenisation in both defence and civil programmes are expected to drive healthy volume growth.

However, FY25 witnessed a 4 per cent dip in revenue, while the net loss sharply widened to approximately Rs 102.35 crore. The company’s leverage remains high, with debt nearing Rs 785.05 crore, and its interest coverage is modest.

At the upper price band of Rs 124, the implied post-issue P/E remains negative, reflecting the loss-making status. While EV/EBITDA appears reasonable compared to global aerospace precision peers, it is priced at a premium relative to some domestic engineering names. ROE and ROCE remain subdued and will be heavily dependent on the ramp-up in utilisation across Aequs’ clusters in Belagavi, Hubballi, and Koppal. However, the company is priced significantly lower than its peers on a Price-to-Book basis (~5.6x compared to peers at 7x).

Recommendation

Aequs offers a rare and strategically important entry point into the aerospace and defence supply chain. While the company boasts a differentiated, high-barrier aerospace franchise and a robust SEZ-based ecosystem, it remains loss-making with negative return ratios. The majority of the IPO proceeds will be used to reduce debt rather than for expansion purposes.

Given the high risks involved, particularly due to leverage, lumpy earnings, customer concentration, and recent loss expansion, we recommend High Risk investors who are comfortable with the cyclicality and execution risks inherent in this space. Conservative investors should avoid it for now and wait for clearer signs of sustainable profitability and a successful deleveraging post-issue before committing to this investment.