Unimech Aerospace 1QFY27 earnings surge as aero tooling and Hobel Bellows drive growth

Investment View and Valuation

Motilal Oswal Financial Services Ltd. reiterated its Buy rating on Unimech Aerospace in its August 4, 2026 1QFY27 results update, citing strong all-round operating performance and better-than-expected margins. The broker raised its target price to Rs 1,635, based on 50 times FY28E EPS, from the current market price of Rs 1,334. It increased its FY27E and FY28E earnings estimates by 32 per cent and 7 per cent respectively, primarily due to stronger margin expectations.

1QFY27 Financial Performance

Unimech Aerospace reported consolidated 1QFY27 revenue of Rs 1,076 million, EBITDA of Rs 393 million and adjusted PAT of Rs 279 million. Revenue, EBITDA and PAT increased 71 per cent, 98 per cent and 46 per cent year on year respectively.

Organic revenue grew about 35 per cent year on year, led mainly by aero tooling. The two-month consolidation of Hobel Bellows contributed Rs 220 million of revenue. Aero-tooling revenue was Rs 818 million, up 44 per cent year on year, while precision components revenue was Rs 258 million, up 310 per cent year on year. Aero tooling represented 76 per cent of 1QFY27 revenue and Hobel Bellows represented 21 per cent.

EBITDA margin was 36.5 per cent despite a 510 basis point year-on-year contraction in gross margin. Other income declined 36 per cent year on year and 50 per cent quarter on quarter as IPO proceeds were deployed for the Hobel Bellows acquisition. Despite the decline in other income, PAT margin remained about 26 per cent.

Growth Outlook and Execution

Management expects stronger upcoming quarters, supported by an order book of Rs 2,803 million, a healthy pipeline, expanding customer relationships and continued margin discipline. The company expects about 65 per cent gross margin and EBITDA margin above 35 per cent in FY27.

• Higher second-half execution is expected in Precision Components and Assembly, including nuclear orders.
• The nuclear order book is about Rs 800 million, with 50 per cent expected to be executed in 2HFY27 and the balance in FY28.
• Tooling demand visibility remains strong for the next few quarters.
• Management is comfortable with a 34–35 per cent EBITDA margin and 20 per cent return on capital employed over the next one to two years.
• Qualification programmes moving into serial production and improving capacity utilisation are expected to support performance.
• Blended asset turns are expected to reach two to three times in the coming years.

Strategic Developments

Unimech Aerospace has entered into a long-term supply agreement with FACC Operations GmbH, Austria, for precision-engineered aerospace components and flying parts. Management also cited an RFQ from a large semiconductor equipment OEM and advanced discussions with a Tier-1 aero-engine OEM.

Aerospace, semiconductor and energy are the company’s focus sectors. Qualification-led growth is intended to strengthen Unimech Aerospace’s position with global Tier-1 customers. Hobel Bellows has been integrated successfully and is targeting a 15–20 per cent revenue CAGR, with aerospace qualification expected in 4QFY27.

The Board approved an enabling resolution for a Rs 7,500 million QIP to meet the promoter minimum shareholding requirement of 75 per cent and preserve flexibility for future opportunities.

MOFSL Forecasts

MOFSL forecasts FY26–FY28E revenue, EBITDA and adjusted PAT CAGRs of 75 per cent, 87 per cent and 62 per cent respectively, with EBITDA margin near 36 per cent.

The broker expects FY28E return on equity to improve to about 16 per cent and pre-tax return on capital employed to about 18 per cent, from 9 per cent and 12 per cent respectively in FY26.

Key Risks

• A slow ramp-up in new businesses.
• Potential margin contraction.