Unimech Aerospace and Manufacturing Limited

Unimech Aerospace and Manufacturing Limited reported Q3 FY26 revenues of ₹34 crores, which was lower than its historical run rate and the ₹61 crores reported in Q2. The company's profitability for the quarter was slightly above break-even. Despite the revenue dip, gross margins remained strong at 71% for Q3 and 68% year-to-date, while EBITDA margins were 4.6% for Q3 and 25% for the nine-month period. Net profits for Q3 stood at ₹2.4 crores, with year-to-date net profits at ₹37 crores.

The external environment has significantly improved with the reduction of U.S. tariffs from 50% to 18%, making India a more favorably tariffed manufacturing nation. This development is expected to restore confidence in order flows and encourage inventory rebuilding. The Free Trade Warehousing Zone (FTWZ) establishment is largely complete, awaiting regulatory approvals, which is anticipated to conclude this quarter. Once operational, the FTWZ will enable duty-free inventories, predictable order flows, and reduced logistics friction.

The company achieved a record order book of ₹210 crores as of February 12, 2026, which is double its past order bookings. This includes ₹35 crores in aero tooling ground support equipment and ₹68 crores in nuclear business orders. Management expects Q4 FY26 to show recovery with deeper order pickup, targeting to surpass last year's revenue of ₹240 crores for the full fiscal year. Year-end margins are projected to reach 25% for both EBITDA and PAT, with FY27 expected to return to structurally higher growth and improved financial performance.

Unimech continues to build its offerings in the precision segment, which contributed 23% of the nine-month revenue. The company has received additional FAA requests for 24 new parts, indicating progress in this segment. In the nuclear segment, ₹68 crores worth of orders have been secured, with more awards expected. The introduction of the new Shanti Bill is anticipated to improve private sector participation, supporting healthy growth in this segment.

As part of its global footprint strategy, Unimech has entered a strategic alliance in the form of a Joint Venture with the Yusuf Bin Ahmed Kanoo Group in Saudi Arabia. Unimech holds a 51% stake in this JV, which involves a $30 million investment by partners over three years. The JV targets $30 million in revenue by year five, with 35% EBITDA and 20% PAT margins. Additionally, the company increased its stake in Dheya Technologies to 30% from 16%, progressing towards early commercialization of micro gas turbine and hydrogen anode blower platforms.

Capacity utilization for Q3 was around 60%, with annualized machine availability exceeding 7 lakh hours. The company's fixed asset investment is close to ₹210 crores, with current asset turns at 1.4 times. Management aims to increase asset turns to over three times, with an additional ₹40-50 crores investment in gross block. Working capital consumption increased, with the bank limit rising to ₹70 crores from ₹60 crores in Q2, leading to a marginal increase in finance costs to ₹1.6 crores.

Management emphasized diversification as a key strategy, learned from past challenges like COVID and tariff regimes. The company is expanding into energy and semiconductor sectors, leveraging its capabilities. While aerospace tooling remains a core focus, with a market size of $2-2.5 billion, the precision component segment offers a larger market of over $800 billion. The company also sees significant opportunities in the energy sector, estimated at $500-600 billion. The revenue mix is projected to shift from 77% aero tooling to 65% aero tooling and 35% precision components within the next three years, with the export-to-domestic ratio moving from 95:5 to 80:20.