Detailed Narrative
Strong FY26 Performance and Q4 Momentum
Aequs reported a landmark FY26 with consolidated revenue growing by 33% to INR12,304 million and EBITDA increasing by 43% to INR1,545 million, expanding margins to 13%. The company capped off the year with its strongest quarter ever in Q4 FY26, achieving INR3,671 million in revenue, a 47% year-on-year growth. Both aerospace and consumer segments contributed to this robust performance, validating the company's platform strategy.
Strategic Investments for Future Growth
The company announced significant long-term investments to underpin future growth. In February 2026, an MoU was signed with the Tamil Nadu government to invest INR1,900 crores over 10 years for a new aerospace manufacturing ecosystem at Hosur. This will focus on aero engine and landing gear components. Additionally, in March 2026, an MoU with the Karnataka government committed INR2,856 crores over five years for expansion in existing Belagavi and Hubballi clusters, targeting aerospace precision engineering and consumer segment capacity.
Aerospace Segment's Robust Performance and Order Book
The aerospace segment demonstrated exceptional financial delivery, with FY26 revenue reaching INR10,464 million, a 27% year-on-year growth, and EBITDA growing by 76% to INR2,813 million. The segment added 433 new parts in Q4, bringing the total aerospace portfolio to 5,654 SKUs, a 26% increase from the previous year. The aerospace order book stood at a robust USD $889 million, providing strong revenue visibility and reflecting deep customer relationships and high entry barriers.
Consumer Segment's Ramp-up and Path to Profitability
The consumer segment's revenue grew by 84% year-on-year to INR1,840 million in FY26, with its contribution to total revenue increasing to 15% from 11% in FY25. Despite a Q4 EBITDA loss of INR473 million and an FY26 EBITDA loss of INR783 million due to ramp-up costs and low utilization (23%), management expects utilization to reach 40-50% by year-end FY27, leading to EBITDA breakeven by Q4 FY27. The company is committed to scaling volumes with key customers like Mattel, which is expected to absorb the impact of Hasbro's revised sourcing strategy.
Financial Outlook and Margin Management
For FY27, Aequs projects 25-30% revenue growth for aerospace with maintained 20% EBITDA margins, and 125-150% revenue growth for consumer, targeting EBITDA breakeven by Q4 FY27. At a consolidated level, the company expects 45-50% top-line revenue growth and a doubling of operational EBITDA in FY27. While Q4 FY26 saw margin compression to 9% due to consumer ramp-up costs, management anticipates consolidated PAT to hit break-even by H1 FY28, driven by improved utilization and operating leverage.
Balance Sheet Strength and Working Capital Dynamics
The company's balance sheet strengthened significantly, with net debt-to-equity improving to 0.23 as of March 31, 2026, from 0.99x a year ago, indicating strong capitalization. Cash and cash equivalents increased to INR3,015 million from INR609 million. However, net working capital days increased to 151 from 132 days, primarily due to proactive inventory stocking (4-6 weeks ahead) for aerospace and passing through plastics material price increases to customers, ensuring delivery commitments amidst supply chain uncertainties.
Leadership Transition and R&D Focus
Dinesh Iyer, the Chief Financial Officer, will be stepping down at the end of June 2026 for personal reasons, with Harish Bang taking charge in the interim. The company is also strengthening its leadership bench with Ravi Kumar Assudani joining as head of engineering for the consumer segment in Q1 FY27. Aequs continues to invest in R&D, establishing an advanced materials R&D ecosystem at IIT Dharwad campus to enhance capabilities and deliver cutting-edge products.