Unimech Aerospace and Manufacturing Ltd

Unimech Aerospace and Manufacturing Limited excel in delivering high-precision engineering solutions, focusing on complex tooling, assemblies, and components tailored for the aerospace, defence, energy, and semiconductor sectors. It partners with leading global OEMs and their authorised licensees.

Specialising in “high-mix, low-volume” production, Unimech Aerospace manufactured 2,980 unique SKUs between 2022 and 2024. It adheres to stringent AS9100D and BS EN ISO 9001:2015 standards, providing bespoke solutions to over 26 customers across seven countries.

With expertise in “build-to-print” and “build-to-specifications” approaches, the company transforms client designs or requirements into precise 3D models using state-of-the-art software, ensuring customised manufacturing solutions supported by advanced engineering capabilities.

Peer Comparison

• MTAR Technologies Limited
• Azad Engineering Limited
• Paras Defence & Space Technologies
• Dynamic Technologies Limited
• Data Patterns (India) Limited

SWOT Analysis of Unimech Aerospace and Manufacturing Limited

Strengths and Opportunities	Weaknesses and Threats
Established expertise in high-precision engineering for aerospace, defence, energy, and semiconductor industries.	Heavy reliance on the aerospace sector, contributing 99.35% of revenue in Fiscal 2024, limits diversification.
Strong partnerships with leading global OEMs and approved licensees ensure consistent business opportunities.	Regulatory changes and technological advancements may impact future performance and competitiveness.
Adherence to globally recognised AS9100D and BS EN ISO 9001:2015 standards enhances credibility and trust.	Delays in statutory payments have occurred, risking penalties that could affect financial stability.
Specialisation in “high-mix, low-volume” manufacturing caters to niche market demands and client-specific needs.	Insufficient insurance coverage for certain risks, including litigation, may expose the company to liabilities.
Expertise in “build-to-print” and “build-to-specifications” ensures precise custom solutions for diverse clients.	High dependence on a limited number of customers could lead to revenue fluctuations if key clients reduce demand.
Advanced 3D modelling software and skilled engineering capabilities drive innovation and operational efficiency.	Socio-economic conditions, such as geopolitical instability, could disrupt operations and market demand.
Proven ability to serve 26+ customers across seven countries broadens its global market presence.	Rising competition in high-precision engineering may pressure margins and market share.
Continuous revenue growth showcases market demand and operational resilience.	Dependency on specialised industries leaves the company vulnerable to sector-specific downturns.
Manufacturing of 2,980 SKUs between 2022 and 2024 highlights its capability to manage complex projects.	Fluctuations in raw material costs may negatively impact profitability and project execution.
Opportunity to expand into adjacent industries beyond aerospace, leveraging core expertise.	Potential currency exchange risks due to international operations may impact revenue and costs.

More AboutUnimech Aerospace and Manufacturing Limited

Unimech Aerospace and Manufacturing Limited is a global provider of high-precision engineering solutions, specialising in “build to print” and “build to specifications” manufacturing for aerospace, defence, energy, and semiconductor industries. It produces complex tooling, mechanical assemblies, turnkey systems, and precision components, especially for aero-engine and airframe tooling (Source: F&S Report).

Between Fiscal 2022 and 2024, Unimech Aerospace delivered 2,356 tooling SKUs and 624 precision machined parts, serving 26+ customers across seven countries. Export revenue accounted for over 91% annually, reaching ₹2,038.49 million in Fiscal 2024.

The company operates two advanced facilities in Bangalore spanning 1,20,000 sq. ft., accredited with AS9100D, BS EN ISO 9001:2015, and ISO 45001:2018 certifications. With an order book of ₹992.38 million as of June 30, 2024, and delivery timelines between 4 to 16 weeks, Unimech Aerospace prioritises quality and timely fulfilment.

Capabilities

• Offers comprehensive engineering solutions from product conceptualisation to final assembly.
• Expertise spans design, engineering, manufacturing, fabrication, special processes, assembly, and quality assurance.
• Utilises advanced design platforms for prototypes, manufacturability, and serviceability.
• Engineering includes 2D to 3D modelling, detailing, process planning, and inspection planning.
• Manufacturing capabilities cover turning, milling, EDM, grinding, and large-scale assembly.
• Handles assemblies up to 10 metres with precision fits and laser tracker calibration.
• Testing capabilities include load testing (70 tonnes), pressure testing (420 bars), and NDT tests.
• Electrical integration includes wire harnessing, control panels, and electronic testing.

Global Opportunities

Unimech Aerospace and Manufacturing Limited are strategically positioned in India’s aerospace and defence GSTE and precision component manufacturing sectors, catering to global OEMs and their approved licensees (Source: F&S Report).

• The Asia-Pacific and China region is set to lead global aviation with the addition of 11,925 aircraft by 2042, reinforcing its aviation dominance (Source: F&S Report).
• In energy, India’s focus on renewable energy sources like solar and wind is growing, driven by cost-effectiveness and environmental benefits.
• Nuclear power generation is expanding with 22 operational reactors and 11 more expected, adding 8,700 MW capacity.
• Asian countries, including Taiwan, South Korea, China, and Japan, dominate semiconductor manufacturing, with India emerging as a significant player in precision components for chip production (Source: F&S Report).

Strong Financial Growth and Performance

Unimech Aerospace and Manufacturing Limited is the fastest-growing company in its sector, with a revenue growth CAGR of 139.7% between FY 2022 and FY 2024. In FY 2024, the company reported ₹2,087.75 million in revenue, up from ₹941.66 million in FY 2023 and ₹363.49 million in FY 2022. EBITDA grew from ₹77.26 million in FY 2022 to ₹791.86 million in FY 2024, with margins increasing from 21.25% to 37.93%. PAT surged from ₹33.92 million in FY 2022 to ₹581.34 million in FY 2024, with margins rising from 9.33% to 27.85%.

Industry Outlook

Indian Manufacturing Sector Overview

India’s manufacturing sector is poised to significantly increase its GDP contribution, aiming to rise from 15% in 2022 to 22% by 2030. This growth is driven by initiatives like Make in India and increasing foreign investments. In 2019, the sector grew by 5.4%, but the pandemic led to a 3% contraction in 2020. The sector rebounded in 2021 and 2022 but faced a 0.6% decline in 2023.

The Index of Industrial Production (IIP) grew from 126.6 in 2017-18 to 131.5 in 2018-19 before dropping in 2020-21, followed by recovery in 2021-22.

Key Growth Drivers:

1. China+1 Policy: Global companies are shifting production to India, seeking cost-efficiency and risk diversification.
2. Make in India: Policy reforms, infrastructure improvements, and skill development support domestic manufacturing.
3. PLI Scheme & Aatmanirbhar Bharat: The PLI scheme encourages local production, with 2,952 products indigenised by 2023.
4. Ease of Doing Business: India’s ranking improved from 142nd in 2014 to 63rd in 2019, enhancing the business environment.
5. Global Opportunities: Europe’s deindustrialisation presents an opportunity for India to emerge as a key manufacturing hub.

Aerospace Investment and Growth

The UDAN Scheme, launched in 2017, is enhancing air connectivity in underserved areas, benefiting over 13 million passengers. By 2027, the scheme aims to serve 500 million passengers with 499 new routes.

Air Travel Growth:

Passenger numbers are expected to reach 4.7 billion by 2024, with airline industry revenue forecasted to rise to USD 717 billion, up from USD 642 billion in 2023. This surge in travel, including business and religious tourism, drives the demand for new aircraft. The global aerospace market is projected to grow, with both passenger and freighter aircraft orders increasing.

• Commercial Aircraft Market: Airbus and Boeing dominate the commercial aircraft market, with Airbus leading with 12,500 aircraft in 2023. Asia-Pacific will be the primary market for deliveries, with the fleet expected to grow by nearly 12,000 units by 2042.
• Defence Aircraft: In 2023, 188 defence aircraft were delivered, with notable deliveries like 155 F-35 fighters to the USA. Geopolitical tensions and India’s Make in India initiative are major growth drivers for defence manufacturing.

MRO Market

The MRO (Maintenance, Repair, and Overhaul) market is expanding rapidly, especially in India, which is expected to grow at a CAGR of 14.6%, from USD 1.46 billion in 2023 to USD 2.89 billion by 2028. The engine MRO segment is seeing the fastest growth.

Precision Tooling Market

The global precision tooling market grew from USD 130.45 billion in 2018 to USD 151.26 billion in 2023, driven by demand in aerospace, defence, and automotive sectors. The market is projected to reach USD 278 billion by 2028, growing at a CAGR of 15.8%. The aerospace & defence segment, accounting for over 50% of the market, will grow at 16.1% CAGR from 2024 to 2028

How Will Unimech Aerospace and Manufacturing Limited Benefit?

• Rising Demand in Aerospace Manufacturing: The global aerospace manufacturing sector is growing rapidly, with passenger numbers forecasted to reach 4.7 billion by 2024, and a surge in aircraft orders. This trend creates significant opportunities for Unimech Aerospace to supply crucial precision components, tooling, and aero-engine parts.
• Precision Tooling Growth Opportunities: The precision tooling market is on track for significant growth, expected to reach USD 278 billion by 2028, with a 15.8% CAGR. Unimech, with its expertise in high-precision tooling for aerospace and energy, is well-positioned to capitalize on this expansion through advanced technologies.
• Favourable Policies and Market Trends: India’s ‘Make in India’ initiative supports Unimech’s aerospace and defence manufacturing capabilities. Additionally, the Production Linked Incentive (PLI) scheme encourages local production, creating increased demand for precision-engineered products, a key area for Unimech’s growth and operational focus.
• Expansion in Energy and Semiconductor Markets: The renewable energy market, driven by wind and solar technologies, increases demand for precision-engineered components like turbine blades. Simultaneously, the semiconductor sector’s growth, expected to reach USD 45.67 billion by 2028, creates additional opportunities for Unimech’s precision machining expertise.
• Global Export Leadership: Unimech’s strong export presence, with over 91% of its revenue from seven countries, provides stability amid regional market fluctuations. The company’s robust order book of ₹992.38 million reflects solid demand for its high-quality products, positioning it well for continued international growth.
• Advancements in the MRO Market: The Maintenance, Repair, and Overhaul (MRO) market, particularly in the engine segment, is set to expand significantly, reaching USD 53.20 billion by 2028. Unimech’s precision components are ideally suited to meet fleet maintenance needs, and India’s labour cost advantage further strengthens its competitive positioning.
• Defence Sector Momentum: Unimech benefits from India’s growing indigenous defence programs, such as HAL Tejas, by providing precision parts and tooling. Increased global defence budgets and geopolitical tensions boost demand for advanced fighter jets and surveillance aircraft, creating opportunities for Unimech in the defence sector.
• Quality and Certification Edge: Unimech’s adherence to stringent industry certifications, such as AS9100D and ISO, ensures superior quality standards. These certifications, combined with advanced manufacturing facilities, enable the company to meet rising demand, reduce delivery timelines, and maintain a competitive advantage in precision engineering.

Why is Unimech Aerospace and Manufacturing Limited Going Public?

Unimech Aerospace and Manufacturing Limited is going public to tap into growth opportunities, strengthen its finances, and boost global visibility. The IPO will support:

• Manufacturing Expansion: Enhance infrastructure to meet growing aerospace demand.
• Debt Reduction: Use proceeds to manage and lower debt.
• Market Position: Increase brand visibility and competitiveness in the global aerospace market.
• Innovation: Drive expansion in aerospace and defence, focusing on precision engineering for modern aircraft.

Lead Managers

Lead Managers

Anand Rathi Advisors Limited

Equirus Capital Private Limited

Unimech Aerospace and Manufacturing Limited IPO Valuation Overview

KPI	Value
Earnings Per Share (EPS)	13.23
Price/Earnings (P/E) Ratio	TBD
Return on Net Worth (RoNW)	53.53%
Net Asset Value (NAV)	24.71
Return on Equity	53.53%
Return on Capital Employed (ROCE)	54.36%
EBITDA Margin	37.93%
PAT Margin	27.85%
Debt to Equity Ratio	0.21

Peer Group Comparison 

Particulars	Unimech Aerospace and Manufacturing Limited	MTAR Technologies Ltd	Azad Engineering Ltd	Paras Defence & Space Technologies Ltd	Dynamatic Technologies Ltd	Data Patterns (India) Ltd
Revenue from operations (₹ in million)	2,087.75	5,807.52	3,407.71	2,535.00	14,293.30	5,198.00
Face value per equity share (₹)	N.A.	101.71	21.63	101.21	106.70	22.92
Closing price on August 16, 2024 (₹) per equity share	N.A.	93.97	145.37	146.89	37.34	89.98
P/E (x)	13.23	18.24	11.29	8.22	179.41	32.45
EPS (Basic) (₹ per share)	3.53	8.30	9.08	6.77	8.24	13.72
EPS (Diluted) (₹ per share)	3.53	8.30	9.08	6.77	8.24	13.72
RoNW (%) for Fiscal 2024	24.71	8.30	9.08	6.77	8.24	13.72
Net Worth (₹ in million)	581.34	561.13	585.81	300.35	1,218.10	1,816.90
Net Asset Value per share (₹ per share)	24.71	219.88	109.12	113.66	983.21	236.53
Enterprise value/EBITDA for Fiscal 2024	N.A.	9.66	17.19	1.85	8.52	34.95

Key Insights

• Revenue from Operations: Unimech Aerospace and Manufacturing Limited’s revenue stands at ₹2,087.75 million for FY 2024, significantly lower than its peers like Dynamatic Technologies Ltd, which reports ₹14,293.30 million. This revenue difference highlights the company’s smaller operational scale, with larger competitors showing more substantial market reach and financial performance.
• Face Value per Equity Share: Unimech Aerospace does not have its face value listed, but compared to peers like MTAR Technologies Ltd with a face value of ₹101.71, and Azad Engineering Ltd at ₹145.37, its absence can reflect either a different equity structure or a non-disclosure of its value for specific reasons.
• P/E Ratio: Unimech Aerospace’s P/E ratio of 13.23 is notably lower compared to Data Patterns (India) Ltd at 32.45 and Dynamatic Technologies Ltd at 179.41. A lower P/E indicates that the market might consider Unimech’s earnings more conservative or less growth-driven, which contrasts with the high investor expectations set for larger peers.
• EPS (Earnings per Share): Unimech Aerospace has an EPS of 3.53, which is lower than Data Patterns (India) Ltd at 13.72 and MTAR Technologies Ltd at 8.30. A lower EPS typically indicates less profitability per share, which might influence investor sentiment, reflecting lower earnings expectations compared to its industry peers.
• RoNW (Return on Net Worth): Unimech Aerospace shines with a strong RoNW of 24.71%, much higher than Data Patterns (India) Ltd at 13.72% and MTAR Technologies Ltd at 8.30%. This shows that Unimech is better at utilising its equity to generate profits, reflecting efficient management of its financial resources.
• Net Worth: Unimech Aerospace has a net worth of ₹581.34 million, which is significantly lower than that of Dynamatic Technologies Ltd at ₹1,218.10 million. The smaller net worth may limit Unimech’s ability to invest heavily in growth initiatives or absorb operational setbacks compared to its larger peers.
• Net Asset Value per Share (NAV): Unimech Aerospace’s NAV per share stands at ₹24.71, much lower than Dynamatic Technologies Ltd’s NAV of ₹983.21. A higher NAV usually indicates stronger backing of assets per share, showing a more secure foundation for investment, which larger companies like Dynamatic possess over Unimech.
• Profit Margin: Unimech Aerospace has a solid profit margin of 27.85%, reflecting its ability to maintain profitability. However, Data Patterns (India) Ltd leads with a remarkable 34.95% profit margin, indicating more efficient profit generation per unit of revenue. Despite this, Unimech’s margin is still competitive within its peer group.
• Borrowings: Unimech Aerospace has relatively low borrowings at ₹288.56 million, compared to Paras Defence & Space Technologies Ltd, which has borrowings of ₹646.14 million. Lower borrowings suggest that Unimech maintains a more conservative approach toward leveraging, reducing financial risk and improving its ability to manage debts effectively.
• EBITDA: Unimech Aerospace’s EBITDA stands at ₹791.86 million, which is considerably lower than Dynamatic Technologies Ltd’s EBITDA of ₹1,594.10 million. A lower EBITDA suggests that Unimech’s operational efficiency or profitability from core activities lags behind larger competitors, pointing to potential areas for improvement in managing its cost structure.

Unimech Aerospace and Manufacturing Limited IPO Strengths

• Advanced Manufacturing Capabilities

The company is a global leader in high-precision engineering, specialising in complex product manufacturing. Offering “build to print” and “build to specification” services, it caters to aerospace, defence, energy, and semiconductor industries. Its expertise spans machining, fabrication, assembly, testing, and tooling production.

• Digital-First Manufacturing with Seamless Integration

Utilising a digital-first approach, the company integrates its operations through an in-house ERP system, streamlining processes from order origination to delivery. This system ensures precision in machining and quality control, improving supply chain management, enhancing coordination, and ensuring timely deliveries for various industries.

• Established Player with Unique Capabilities

With a proven track record of producing over 2,350 SKUs between 2022 and 2024, the company excels in tooling, mechanical assemblies, and precision components. Serving aerospace, defence, and semiconductor sectors, it maintains high-quality standards and strong OEM relationships, positioning itself as a formidable industry leader.

• Export-Driven Player with a Global Delivery Service Model

As a major exporter of aerospace components, the company generates over 90% of its sales from global markets, including the USA, Germany, and the UK. With ₹2,038.49 million in international revenue in Fiscal 2024, it ensures reliable, cost-effective deliveries through an optimised logistics model.

• Robust Vendor Ecosystem and Strong Sub-Contractor Management

The company’s vendor ecosystem comprises 44 vendors and 100 machines, selected for high-quality standards. A well-structured sub-contractor network supports non-critical tasks, allowing focus on core competencies. This flexibility ensures high-quality production, swift adaptability, and risk mitigation in the company’s high-mix, low-volume environment.

• Experienced and Complementary Management Team with Strong Implementation Skills

Led by promoters with 90 years of combined experience, the management team is supported by 164 engineers skilled in process innovation and automation. With backgrounds in leading companies, they drive operational excellence, workforce development, and technological advancements, ensuring global competitiveness and continuous growth.

• Track Record of Strong Financial Performance

The company has seen remarkable financial growth, with a 139.7% CAGR in revenue from FY2022 to FY2024. Total revenue grew from ₹363.49 million to ₹2,087.75 million, while EBITDA surged from ₹77.26 million to ₹791.86 million, resulting in increased EBITDA and PAT margins, showcasing strong profitability.

Objectives of the IPO Proceeds

The Net Proceeds from the Offer will be allocated as follows:

Particulars	Amount (₹ million)
Funding of capital expenditure for expansion through the purchase of machineries and equipment by our Company	325.88
Funding working capital requirements of our Company	252.85
Investment in our Material Subsidiary for:
a. Funding of capital expenditure for expansion through the purchase of machineries and equipment	439.43
b. Funding its working capital requirements	447.15
c. Repayment/prepayment, in full or part, of certain borrowings	400.00
General corporate purposes (1)	[●]
Net Proceeds	[●]

Unimech Aerospace and Manufacturing Limited Financials(millions)

Particulars	31 Mar 2024	31 Mar 2023	31 Mar 2022
Assets	1756.34	933.41	568.75
Revenue	2137.86	949.30	370.81
Profit After Tax	581.34	228.13	33.92
Reserves and Surplus	865.92	478.03	266.16
Total Borrowings	288.56	222.59	171.16
Total Liabilities	670.39	444.96	292.17

Key Insights from Financial Performance

• Assets: The company’s assets have grown significantly from ₹568.75 million in FY 2022 to ₹1,756.34 million in FY 2024. This sharp increase indicates robust expansion and investment in infrastructure. It reflects the company’s strategic efforts to enhance its resource base, supporting its growing operations and market presence, which enhances its ability to handle increased production and demand.
• Revenue: Revenue has surged dramatically, increasing from ₹370.81 million in FY 2022 to ₹2,137.86 million in FY 2024, reflecting a growth rate of approximately 475%. This indicates that the company has experienced strong demand for its products or services, expanding its market share and driving growth. Such significant revenue growth underscores the company’s increasing operational scale and competitiveness.
• Profit After Tax (PAT): The company’s Profit After Tax (PAT) has grown impressively from ₹33.92 million in FY 2022 to ₹581.34 million in FY 2024, a rise of 1610%. This surge indicates greater operational efficiency, cost management, and improved profit margins. The significant increase in PAT showcases the company’s ability to convert revenue into profits, contributing to its overall financial strength.
• Reserves and Surplus: Reserves and surplus grew from ₹266.16 million in FY 2022 to ₹865.92 million in FY 2024, reflecting a 226% increase. This growth shows the company’s ability to retain earnings, boosting its financial strength. The rise in reserves and surplus indicates strategic reinvestment of profits, strengthening the company’s foundation for future growth and financial stability.
• Total Borrowings: Total borrowings have increased from ₹171.16 million in FY 2022 to ₹288.56 million in FY 2024. This increase suggests the company is utilising debt to fund its expansion and growth. While borrowings help support development, managing debt levels is crucial to avoid financial strain. The increase reflects a strategic decision to leverage debt while expanding operations and capabilities.
• Total Liabilities: Total liabilities rose from ₹292.17 million in FY 2022 to ₹670.39 million in FY 2024, a 129% increase. This growth is tied to the company’s expansion plans and use of debt for funding. While higher liabilities can support growth, they require careful management to ensure the company can meet its financial obligations without negatively impacting its financial health.

Other Financial Details

• Cost of Materials Consumed: Increased from ₹89.32 million in FY 2022 to ₹486.31 million in FY 2024, reflecting higher production capacity and sales volumes in line with the company’s expansion.
• Subcontractor Charges: Rose from ₹28.89 million in FY 2022 to ₹269.14 million in FY 2024, indicating greater reliance on subcontractors for specialized services during operational growth.
• Employee Benefits Expense: Increased from ₹82.67 million in FY 2022 to ₹324.40 million in FY 2024, driven by a growing workforce and higher compensation to support increased operations.
• Finance Costs: Grew from ₹16.44 million in FY 2022 to ₹32.32 million in FY 2024, suggesting the company took on more debt to fund its expansion and operations.
• Depreciation and Amortisation Expense: Increased from ₹30.95 million in FY 2022 to ₹44.64 million in FY 2024, reflecting investments in machinery, equipment, and infrastructure to support growth.
• Other Expenses: Rose from ₹103.37 million in FY 2022 to ₹259.68 million in FY 2024, highlighting the increased operational scale, including expanded facilities and higher overhead costs.

Key Strategies for Unimech Aerospace and Manufacturing Limited 

1. Market Development Strategy

Unimech is focused on enhancing its global footprint in strategic regions, improving the customer experience for current clients, and expanding into new markets. Serving major aerospace, defence, semiconductor, and energy OEMs globally, the company plans to establish a manufacturing presence in the USA and increase its footprint in Europe. These steps will re