Aequs Limited — Q4 FY26 earnings call

Call held 26 May 2026

Management summary

Aequs delivered a strong Q4 and FY26, marked by significant revenue and EBITDA growth across both aerospace and consumer segments, alongside strategic capacity expansion investments. While Q4 saw margin compression and continued PAT losses due to consumer segment ramp-up, management provided optimistic FY27 guidance, projecting substantial revenue growth, doubling of operational EBITDA, and breakeven for the consumer segment by Q4 FY27, and consolidated PAT by H1 FY28, underpinned by a robust aerospace order book.

Highlights

  • Consolidated revenue grew 33% to INR12,304 million in FY26, demonstrating strong execution.

  • EBITDA grew 43% to INR1,545 million, with margins expanding to 13% in FY26, indicating operational efficiency.

  • Q4 FY26 marked the strongest quarter in Aequs history with INR3,671 million in revenue and 47% year-on-year growth.

  • The aerospace segment delivered a very strong performance, with FY26 revenue of INR10,464 million (up 27% YoY) and EBITDA of INR2,813 million (up 76% YoY).

  • The aerospace order book stood at a robust USD $889 million, providing strong revenue visibility.

  • Significant new investments of INR1,900 crores in Tamil Nadu and INR2,856 crores in Karnataka were announced to expand aerospace and consumer manufacturing capabilities.

Concerns

  • Q4 FY26 EBITDA margin compressed to 9% due to consumer electronics capacity coming fully online and operating at low utilization.

  • Consolidated PAT for FY26 was a loss of INR1,133 million, primarily due to heavy depreciation from consumer capex and increased tax provisions.

  • The consumer segment recorded an EBITDA loss of INR783 million for FY26, a 173% increase YoY, reflecting planned investment and ramp-up costs.

  • Net working capital days increased to 151 days in FY26 from 132 days in FY25, partly due to proactive inventory stocking amidst geopolitical uncertainties.

Key financials

  1. Consolidated Revenue 12,304 Mn +33%YoY
  2. Consolidated EBITDA 1,545 Mn +43%YoY
  3. Consolidated EBITDA Margin 13%
  4. Consolidated PAT -1,133 Mn
  5. Consolidated PAT Margin -9%
  6. Total Assets 26,905 Mn
  7. Net Working Capital Days 151 days
  8. Cash and Cash Equivalents 3,015 Mn

What they filed

Q1 FY27: revenue up 54.7%, net profit down 1425.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue216 249 256 282 326 +51%367 +47%396 +55%
EBITDA7 25 27 29 29 +314%4 −84%15 −44%
Net profit-40 9 4 -21 -43 −7%-54 −700%-53 −1425%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue
Consolidated (Including JVs, FY26) 13,466 Mn 36.3%
Aerospace (FY26) 10,464 Mn 28.2%
Consolidated (Including JVs, Q4 FY26) 3,984 Mn 10.7%
Consolidated (Q4 FY26) 3,671 Mn 9.9%
Aerospace (Q4 FY26) 3,040 Mn 8.2%
Consumer (FY26) 1,840 Mn 5.0%
Consumer (Q4 FY26) 631 Mn 1.7%

Order book

high confidence

Total value

$889 Mn

as of 2026-03-31 quantified

Execution

secured long-term contract

The aerospace order book is robust, and the company is actively moving up the value chain into landing gear and engine components, which offer higher complexity, value, and margins.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹660 Cr leveraging debt fund this capex along with internal accruals
    • Aerospace segment capacity expansion ₹160 Cr
    • Consumer segment capacity expansion ₹500 Cr
    • New vertically integrated aerospace manufacturing ecosystem at Hosur (over 10 years) ₹1,900 Cr
    • Expansion of aerospace precision engineering and consumer segment capacity in Belagavi and Hubballi (over five years) ₹2,856 Cr
    On Capex: In our aerospace segment, we have planned about INR160 crores approx. And in our consumer segment, we have planned about INR500 crores approx for the full year FY27. ... For FY27, we will leverage borrowings and also some bit of internal accruals to fund the planned capex.
  • Debt 0.2× EBITDA
    Our net debt-to-equity ratio was 0.23 as of March 31, 2026, an improvement from 0.99x at the end of FY25, which shows that we are well capitalized for the next phase of growth.
  • Liquidity Cash ₹3,015 Mn Cash and cash equivalents stood at INR3,015 million as of March 31, 2026, compared to INR609 million at the end of FY25.
    Cash and cash equivalents stood at INR3,015 million as of March 31, 2026, compared to INR609 million at the end of FY25.

Guidance & targets

Revenue

  • Aerospace Revenue Growth Revenue · FY27 · High confidence 25% to 30%
    Aerospace revenues profitably. We have the order book, the capacity and the customer relationships to support this, which should deliver 25% to 30% revenue growth, with EBITDA margins maintained at 20% at the segment level.

    — Aravind Melligeri

  • Consumer Revenue Growth Revenue · FY27 · High confidence 125% to 150%
    On consumer, we see a revenue growth of about 125% to 150%.

    — Harish Bang

  • Consolidated Top-line Revenue Growth Revenue · FY27 · High confidence 45% to 50%
    At a consolidated level, we are expecting approximately 45% to 50% top-line revenue growth.

    — Aravind Melligeri

  • Consumer Gross Block Turnover Revenue · closer to '29 · Medium confidence INR2,000 crores
    Most probably closer to in '29.

    — Aravind Melligeri

  • Aerospace Long-term CAGR Revenue · 5 to 10 years · Medium confidence 25%
    Can we see the similar rate of 25% CAGR for the next 10 years, or it is not the case? If you can give some clarity, sir? Thank you. ... Yeah. We don't see any reason. The 20-plus percent is what we have guided in the past, in the long-term

    — Aravind Melligeri

Profitability

  • Aerospace EBITDA Margin Profitability · FY27 · High confidence 20%
    Aerospace revenues profitably. We have the order book, the capacity and the customer relationships to support this, which should deliver 25% to 30% revenue growth, with EBITDA margins maintained at 20% at the segment level.

    — Aravind Melligeri

  • Consumer EBITDA Break-even Profitability · Q4 FY27 · High confidence Break-even
    Third, move our consumer EBITDA to break even by Q4 FY27, which will be a major inflection point for our consolidated profitability.

    — Aravind Melligeri

  • Consolidated Operational EBITDA Profitability · FY27 · High confidence Doubling
    We project doubling our operational EBITDA, proving immense operating leverage embedded in our current business model.

    — Aravind Melligeri

  • Consolidated PAT Break-even Profitability · H1 FY28 · High confidence Break-even
    we fully expect to see consolidated PAT hit break-even by H1 FY28.

    — Rajeev Kaul

  • Consumer Steady-state EBITDA Margin Profitability · at 75% to 80% utilization · Medium confidence 18% to 20%
    So, this 18% to 20% can be seen at 75% to 80% utilization?

    — Aravind Melligeri

Capacity

  • Consumer Capacity Utilization Capacity · by year end FY27 · High confidence 40% to 50%

    From 23% today

    Our primary focus this year will be driving capacity utilization from 23% today to a target of 40% to 50% by the year end.

    — Rajeev Kaul

What to watch in Q1 FY27

Consumer Segment Capacity Utilization

by year end FY27
Current 23%
Target 40% to 50%

Why it matters

Increased utilization is key to absorbing fixed costs and improving profitability in the consumer segment.

Our primary focus this year will be driving capacity utilization from 23% today to a target of 40% to 50% by the year end.

Risks & concerns

  • Low utilization and EBITDA losses in the consumer segment during ramp-up

    medium

    The consumer segment is currently operating at 23% utilization, leading to significant EBITDA losses (INR473 million in Q4 FY26), but management expects this to improve as utilization increases to 40-50% by year-end FY27 and breakeven by Q4 FY27.

    Management acknowledged

  • Increased working capital days due to proactive inventory stocking

    medium

    Net working capital days increased from 132 to 151 days in FY26, primarily driven by the need to stock material 4-6 weeks ahead for aerospace due to geopolitical uncertainties, impacting cash flow.

    Management acknowledged

  • Dependency on China for critical equipment and potential supply chain disruptions

    medium

    The company has faced challenges with geopolitical issues impacting equipment sourcing from China and is actively working with customers to find alternate geographic locations and develop new suppliers, which takes time.

    Analyst acknowledged

Q&A highlights

7 direct
Capex plans for FY27-28 across segments Direct
On Capex: In our aerospace segment, we have planned about INR160 crores approx. And in our consumer segment, we have planned about INR500 crores approx for the full year FY27.

Provides specific capital expenditure plans for the upcoming fiscal year, broken down by segment, indicating future growth investments.

Asked by Nikhil Jain

Impact of Hasbro discontinuation and Mattel ramp-up on consumer business Direct
Yes, we have signed a long-term agreement with Mattel and both sides are fully committed to scaling volumes. We also expect Mattel volumes to absorb the capacity impact from Hasbro. More broadly, we continue to engage with large strategy customers across the consumer segment and remain confident that overall growth of the business will not be materially impacted.

Addresses concerns about a major customer's exit and outlines the strategy to mitigate its impact through another large customer, reassuring about the consumer segment's growth trajectory.

Asked by Nikhil Jain

Reconciliation of aerospace EBITDA margin (27% in FY26 vs 20% guidance for FY27) Direct
So, 27% is the segment EBITDA, which includes other income and it excludes the unallocated corporate costs. ... So, we continue to drive 20% EBITDA margin excluding these two elements.

Clarifies the difference in reported vs. guided EBITDA margins by explaining the exclusion of other income and unallocated corporate costs from the core segment margin, providing clarity on profitability expectations.

Asked by Suraj Malu

Rationale for consumer capex despite current low utilization (23%) Direct
Well, look, the customer wants us to have a meaningful share of their requirements, you know, And together we are committed to scale up the operations and absorb more work in India. And this additional capital is basically, driven by clear customer demand and the opportunity to capture the meaningful share of the customer India manufacturing requirement.

Explains that capex is driven by strong customer demand and strategic commitment to scale, emphasizing the need to meet customer requirements and prevent them from seeking alternative suppliers.

Asked by Bhavika Singhvi

Impact of West Asia crisis on logistics costs and working capital Direct
Well, in the last quarter, we did not see any significant impact from a margin perspective. Our material prices are largely covered under long-term agreements. What we did see were some supply constraints and a slight increase in logistics costs, but in our view, these were not material for the business. ... Working capital has been impacted, right? We saw some of the numbers. We went from 132 days to 151 days

Addresses a potential external risk, confirming minimal margin impact but noting an increase in working capital days due to proactive inventory stocking, highlighting operational adjustments.

Asked by Priyankar Biswas

Dependency on China for critical equipment and potential issues with restrictions Partial
And coming down to the China geopolitical issues on equipment, look, we have had, gone through some of these challenges in the past. It continues to evolve over a period of time. At the same time, we are working with customers always to find alternate different geographic locations, including India.

Acknowledges past challenges with Chinese equipment dependency and outlines a strategy of working with customers to find alternative sourcing locations, indicating a proactive approach to supply chain resilience.

Asked by Nikhil Chowdhary

Long-term strategy for the consumer division and potential spin-off Direct
Look, we are building a precision manufacturing platform here. The verticals are more of a capability certain specific to products, but we have a common, for example, we have CNC machines in both the places, consumer side and aerospace side. So, that's like a precision manufacturing piece. And similarly, injection molding will go both the sides.

Clarifies the strategic rationale for integrating consumer and aerospace segments under one platform, emphasizing shared manufacturing capabilities and rejecting the idea of a spin-off, which is crucial for the company's long-term structure.

Asked by Priyansh Miri

Timeline for consumer segment to achieve INR2,000 crores turnover based on asset turn Direct
Most probably closer to in '29.

Provides a specific, albeit longer-term, timeline for the consumer segment to reach its projected turnover based on asset utilization, offering a key metric for future evaluation.

Asked by Navin Vijay

3 min read 7 chapters

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.

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