Unimech Aerospace and Manufacturing Limited, founded in 2016, is an engineering solutions provider specializing in the aerospace, defense, energy, and semiconductor industries. The company offers critical components for various sectors, with a focus on precision-engineered products such as aero tooling, ground support equipment, electro-mechanical sub-assemblies, and other high-quality engineered parts. As the company prepares for its IPO in December 2024, investors are eager to understand whether this IPO is worth considering. This review will delve into Unimech Aerospace’s financials, strengths, risks, and growth prospects, helping you make an informed decision.
Unimech Aerospace IPO Overview
Bidding Dates:
- Open Date: 23rd December 2024
- Close Date: 26th December 2024
Price Range: ₹745 – ₹785
Lot Size: 19 Shares
Minimum Investment: ₹14,155
Issue Size: ₹500 Crores
Also Read: Unimech Aerospace IPO Details
Unimech Aerospace: A Brief Introduction
Unimech Aerospace is a leader in providing engineering solutions for the aerospace industry. The company’s portfolio includes a variety of complex products such as engine lifting and balancing beams, assembly tools, airframe assembly platforms, engine transportation stands, and high-precision components. With clients spanning across seven countries, including the USA, Germany, and the UK, Unimech’s operations extend globally. The company operates two manufacturing facilities in Bangalore, covering more than 120,000 sq ft and offering cutting-edge manufacturing capabilities in machining, assembly, testing, and fabrication.
Financial Highlights
Unimech Aerospace has demonstrated impressive growth in recent years, with a significant increase in both revenue and profit after tax (PAT). Between FY22 and FY24, the company’s revenue grew from ₹36.35 crore to ₹208.77 crore, while PAT surged from ₹3.39 crore to ₹58.13 crore, showcasing its ability to scale effectively.
- FY22 Revenue: ₹36.35 crore
- FY23 Revenue: ₹94.17 crore
- FY24 Revenue: ₹208.77 crore
- FY22 PAT: ₹3.39 crore
- FY23 PAT: ₹22.81 crore
- FY24 PAT: ₹58.13 crore
The company has shown robust operational efficiency, evidenced by its remarkable Return on Equity (ROE) of 53.53% and Return on Capital Employed (ROCE) of 54.36%, making it a solid performer in the niche aerospace sector.
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Unimech Aerospace IPO Objectives
The funds raised through the IPO will be utilized for several key purposes:
- Capital Expenditure: The company plans to use the funds for purchasing machinery and equipment to support its expansion.
- Working Capital Requirements: Proceeds will be allocated to meet the company’s ongoing working capital needs.
- Investment in Material Subsidiary (Innomech): A portion of the funds will be directed towards enhancing the capabilities of its material subsidiary, Innomech Aerospace Toolings Private Limited.
- General Corporate Purposes: The company will use the remaining funds for general business growth initiatives.
Strengths of Unimech Aerospace
- Strong Client Base: Unimech serves some of the largest global aerospace and airframe OEMs (Original Equipment Manufacturers). The company has been able to maintain a strong, repeat customer base due to its precision engineering capabilities and commitment to quality.
- Certifications and Global Compliance: The company’s manufacturing facilities are certified by AS 9100D for aerospace quality management, ISO 9001:2015 for quality systems, and ISO 45001:2018 for occupational health and safety. These certifications highlight the company’s adherence to global standards.
- Advanced Manufacturing Capabilities: Unimech’s manufacturing includes advanced machining techniques such as turning, milling, double-column milling, and electro-discharge machining. The company’s assembly center can handle large assemblies of up to 10 meters in size.
- Diverse Product Portfolio: Unimech offers a wide range of products, including aero-engine tooling, airframe tooling, and precision machined parts. This diverse portfolio allows the company to cater to various industry needs and expand its market reach.
- Global Reach: The company has a strong export presence, with 95.67% of its total revenue coming from international markets, particularly the US, Germany, and the UK.
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Risks and Concerns
- Revenue Dependency on Aerospace: A substantial portion of the company’s revenue comes from the aerospace sector, particularly aero-engine and airframe tooling. Any adverse developments in this sector could negatively impact operations.
- Client Concentration Risk: The company’s top 10 customers contribute a significant portion of its revenue. A loss of any major customer could severely impact financial stability.
- Exposure to Export Markets: With the majority of revenue coming from international markets, any unfavorable changes in foreign trade policies or geopolitical tensions could adversely affect the business.
- Legal Proceedings: Unimech is involved in ongoing legal proceedings, which may pose a risk to its future business prospects if any unfavorable rulings occur.
- Debt Levels: As of October 31, 2024, the company’s consolidated borrowings stood at ₹75.03 crore. If the company struggles to service this debt, its financial position could be compromised.
Key Performance Indicators
- Market Capitalization: ₹3992.27 crore
- ROE (Return on Equity): 53.53%
- ROCE (Return on Capital Employed): 54.36%
- Debt/Equity Ratio: 0.32
- PAT Margin: 27.85%
- Price to Book Value: 31.77
Unimech Aerospace IPO Subscription Details
- IPO Open Date: 23rd December 2024
- IPO Close Date: 26th December 2024
- Issue Size: ₹500 crore
- Price Range: ₹745 – ₹785
- Market Lot: 19 Shares
Unimech Aerospace IPO Review by Analysts
Several well-known financial analysts have reviewed the Unimech Aerospace IPO and provided their recommendations:
- BP Equities (BP Wealth): Subscribe
- Canara Bank Securities Ltd: Subscribe
- Dilip Davda: May Apply
- InCred Equities: Subscribe
- Marwadi Shares and Finance Ltd: Subscribe
- SBICAP Securities Limited: Subscribe
- SMC Global: Neutral
- Ventura Securities Limited: Subscribe
Out of 8 ratings, 6 analysts have given a “Subscribe” rating, while 1 analyst has rated it as “May Apply.” 75% of analysts have a positive outlook on the IPO.
Conclusion: Should You Invest in Unimech Aerospace IPO?
The Unimech Aerospace IPO presents a solid investment opportunity for long-term investors who are looking to tap into the growing aerospace and defense sector. With strong financial growth, a diversified product portfolio, and robust manufacturing capabilities, Unimech Aerospace is well-positioned to expand its market share.
However, potential investors should be cautious of the company’s reliance on the aerospace sector, key customers, and export markets, which could expose it to operational risks. The IPO is priced at a premium, and the financials appear strong, but investors should weigh the risks before making their decision.
For those looking for medium to long-term gains and who are willing to assume some level of risk associated with the aerospace sector, this IPO could be a good opportunity to explore. As always, conducting further due diligence and consulting a financial advisor is recommended before making any investment decisions.