Unimech Aero.

Unimech Aerospace reported Q1 FY26 revenue of ₹63 crores, marking a 6% year-on-year increase despite a challenging market. The company achieved a gross margin of 66% and an EBITDA of ₹20 crores, translating to a 31% margin. However, EBITDA saw a 23% year-on-year decline, primarily due to increased employee costs and operating expenses. PAT for the quarter stood at ₹19 crores, representing a 26% margin.

The company is well-positioned to capitalize on the rapid growth of India's aerospace and defense sector, supported by government initiatives to establish India as a global manufacturing hub. Global OEMs are increasing sourcing from India, with Boeing's annual sourcing growing from $250 million to $1.25 billion in a decade. Domestically, India's aviation sector is booming, creating 7.7 million jobs and seeing 15% YoY passenger traffic growth, with 157 operational airports and more in the pipeline.

As of June 2025, Unimech's order book was ₹81 crores, with approximately 85% originating from the aero tooling segment. The company secured a new order for high-value engine stands, with production slated for Q2 and deliveries expected in Q3 and early Q4. Unimech has participated in EMCCR tenders worth over ₹800 crores in the last 1-2 months, with results anticipated by August/September, and expects further tenders for 220 MW reactors in August.

Unimech is implementing company-wide initiatives to enhance financial leaness, focusing on cost and process efficiency. Employee costs, currently over 20% of revenue, are expected to range 20-22% for FY26, with a long-term target of 14-16%. Capacity utilization for Q1 was 58%, and the company aims to achieve an optimal utilization level of 85-90% within the next 24 months through efficiency drives.

Ongoing tariff discussions are creating market uncertainty^🌐, potentially leading to slower shipments and negative impacts on gross margins due to customer requests for cost sharing. To mitigate this, Unimech plans to utilize direct drop shipments to end customers outside the U.S. for approximately 70% of its goods. Management expects more clarity on the tariff impact and its implications for margins in Q2.

The company holds ₹120 crores of undeployed IPO funds, with ₹90 crores earmarked for utilization in the current fiscal year and ₹30 crores for working capital in the next fiscal year. Working capital days are projected to increase from the current 100-110 days to 150-160 days, primarily due to the growing involvement in the nuclear segment, for which ₹50 crores of debt funding has been factored in but not yet availed.

Unimech is actively pursuing inorganic growth opportunities through M&A and joint ventures, evaluating precision manufacturing targets in both India and the US. The company is not planning organic warehouse setups but rather focusing on strategic acquisitions and JVs to enhance offshoring capabilities and achieve synergies. Management aims to finalize a deal within the current year to accelerate global growth.