Unimech Aerospace and Manufacturing Limited — Q4 FY26 earnings call

Call held 28 Apr 2026

Management summary

Unimech Aerospace and Manufacturing Limited announced the strategic acquisition of Hobel Bellows, a specialized manufacturer of metallic bellows and assemblies, reporting INR 129 crores revenue and over 50% EBITDA margins in FY26. This capability-led acquisition aims to fast-track Unimech's entry into high-value precision engineering, aerospace, nuclear, and semiconductor segments. The company also reported a recovery in its core business and readiness of its FTWZ facility, with the acquisition funded through internal accruals.

Highlights

  • Acquisition of Hobel Bellows, a debt-free, margin-accretive business with >50% EBITDA margins and >50% pre-acquisition ROCE.

  • Hobel Bellows reported INR 129 crores revenue in FY26, enhancing Unimech's overall earnings profile.

  • Unimech's core business showed clear recovery and improved momentum in Q4 FY26, supported by better demand conditions and a healthy order book.

  • The FTWZ facility is operation-ready with all regulatory approvals received, with customs clearance expected by end of May 2026, strengthening service efficiency.

  • Hobel Bellows has a current order book of INR 65 crores+ for the next 6 months, indicating strong near-term visibility.

Concerns

  • Hobel Bellows is not yet AS9100 certified, which is a prerequisite for direct entry into the aerospace segment, with certification expected to take about a year.

  • Management provided a conservative growth guidance of 15-17% for Hobel Bellows over the next 3-4 years, despite acknowledging a large and fast-growing addressable market.

  • Hobel Bellows exhibits high customer concentration, with two key OEM groups contributing approximately 93% of its revenue.

Key financials

2 periods

Headline

  • Hobel Bellows Pre-Acquisition ROCE
    50%
  • Hobel Bellows Gross Margins
    70%

FY26

  • Hobel Bellows Revenue
    ₹129 Cr
  • Hobel Bellows EBITDA Margin
    50%

What they filed

Q1 FY27: revenue up 71.4%, net profit up 47.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue61 54 68 63 62 +2%34 −37%82 +21%108 +71%
EBITDA23 16 28 20 19 −17%2 −87%35 +25%39 +95%
Net profit18 16 29 19 16 −11%2 −87%26 −10%28 +47%
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.

Order book

high confidence

Total value

₹65 Cr

as of 2026-04-28 quantified

Execution

for the next 6 months

The current order book for Hobel Bellows stands at INR 65 crores+ for the next 6 months, with OEMs providing schedules for a full year and indications for the next year's platforms. This represents a strong growth opportunity.

Source: Q&A

Capital allocation

high confidence
  • Capex Capex disclosed
    So there's a lot of investment that is going on as recent as, you know, this, you know, the last financial year. Some of this is yet to actually come in. We feel there is enough and good capex that has been installed with modern technology that, you know, in the near term we don't feel there's going to be any capex need unless there's a maintenance kind of requirement.
  • Debt Debt disclosed
    This debt-free business acquisition is margin accretive with strong annual cash generation, enhancing the overall quality of Unimech's earnings profile.
  • M&A Hobel Bellows Acquisition · Closed · Consideration ₹[object Object] (cash)

    Capability-led acquisition to build a competitive, high-value precision engineering platform, fast-tracking entry into aerospace, defense, nuclear, and other high-entry barrier segments.

    Margin accretive with strong annual cash generation, enhancing overall quality of Unimech's earnings profile. Pre-acquisition business generated a ROCE of over 50%.

    We are pleased to announce the acquisition of Hobel Bellows, a highly specialized technology-driven manufacturer of metallic bellows, flexible tubing components, and precision engineered assemblies. This is a strategic capability-led acquisition that aligns closely with our long-term vision of building a competitive, high-value precision engineering platform. For the year ended 31st March 2026, Hobel Bellows reported approximately INR129 crores in revenue along with EBITDA margins exceeding 50%. This debt-free business acquisition is margin accretive with strong annual cash generation, enhancing the overall quality of Unimech's earnings profile. Pre-acquisition business used to generate a ROCE of over 50%. This acquisition is again, you know, the it's a cash deal. The CCD structure is between holding and subsidiary company mechanism, okay, where, you know, the holding has funded subsidiary company to acquire that, you know. But it is ultimate owner has got only full cash, okay, except 25, you know, 10% holdback, you know, which is for one year. But for all practical purpose, investors need to understand, you know, that this is a cash deal and the CCD structure or loan structure is between holding and subsidiary company that is for, you know, the transaction between, you know, parent and subsidiary but not to deal with, you know, the owner, the seller.
  • Liquidity Liquidity disclosed The acquisition was funded from internal funds on Unimech's balance sheet, with no further borrowings planned.
    So yes, it was used from the internal funds that was in the Unimech's balance sheet. There are no further borrowings that we are planning to do.

Guidance & targets

Growth

  • Hobel Bellows Revenue Growth Growth · next 3-4 years · Medium confidence 15% to 17%
    Sure. So we see a clear pathway to scale the business assuming conservative growth rate of 15% to 17% over the next 3 to 4 years.

    — Management

Profitability

  • Hobel Bellows EBITDA Margins Profitability · medium term · High confidence >50%
    Yes. So Manish, I think here important thing is yes, the gross margin and the EBITDA margins are as Anil also mentioned, more than 50%. So here one important thing is the margins are a reflection of niche mission-critical nature of the product and the company's positioning as a high-quality supplier, at present to global OEMs... we believe margins in the range of 50% are sustainable over the medium term.

    — Management

ROCE

  • Hobel Bellows ROCE (post-acquisition) ROCE · over the year · High confidence 25%
    So which I am at present, you know, estimating as 25% level, you know, over the year, no, when the capacity utilization which is as of now at 50% to 60% and after, you know, robotic introduction and, you know, the capacity will be further utilized. So and thereafter my intention is to increase, no, the ROCE, you know, from 25% to much higher, a higher percentage.

    — Anil Kumar Puttan

  • Hobel Bellows ROCE (post-acquisition) ROCE · Low confidence much higher than 25%

    Previously 25% → much higher than 25%

    So and thereafter my intention is to increase, no, the ROCE, you know, from 25% to much higher, a higher percentage.

    — Anil Kumar Puttan

Capacity

  • Hobel Bellows Capacity Utilization Capacity · Medium confidence 85-90%
    The intent will be to grow up to 85%-90% and only then redeploy some capex and then grow.

    — Management

Regulatory

  • FTWZ Customs Clearance Regulatory · end of May · High confidence Completed
    The facility is operation-ready and has now received approvals from all regulatory authorities, with only customs clearance pending, which we expect to be completed by the end of May.

    — Anil Kumar Puttan

  • Hobel Bellows AS9100 Certification Regulatory · About a year · Medium confidence Certified
    And currently the company is also not AS9100 certified. So the first task is going to be getting into that certification followed by qualification and such.

    — Management

What to watch in Q1 FY27

FTWZ Customs Clearance

end of May 2026
Current Pending
Target Completed

Why it matters

Timely customs clearance for the FTWZ facility is crucial for improving supply chain efficiency and realizing anticipated revenue momentum.

The facility is operation-ready and has now received approvals from all regulatory authorities, with only customs clearance pending, which we expect to be completed by the end of May.

Risks & concerns

  • Customer Concentration

    medium

    Two key OEMs contribute approximately 93% of Hobel Bellows' revenue, though management notes diversification across geographies and end-use segments.

    Analyst acknowledged

  • AS9100 Certification for Aerospace Entry

    medium

    Hobel Bellows is not yet AS9100 certified, which is a necessary step to fully leverage its capabilities for direct aerospace opportunities. Certification is expected to take about a year.

    Analyst acknowledged

  • Conservative Growth Guidance

    low

    Management's 15-17% growth guidance for Hobel Bellows over the next 3-4 years is conservative, potentially understating the full market opportunity in fast-growing sectors.

    Analyst acknowledged

Q&A highlights

6 direct
Hobel Bellows valuation and reason for selling Direct
The understanding that we have realized and focused upon is there has not been any succession plan in the business. The owner or the erstwhile promoter had two daughters who are all settled abroad and they had no intent of coming down to India and take care of the businesses. And the owner as well has crossed the retirement age and he wants to take an exit and give it into an able hands which he found Unimech as a most suitable player to run this business.

Explains the rationale behind the acquisition from the seller's perspective, addressing concerns about the valuation multiple.

Asked by Kamlesh Bagmar

Hobel Bellows growth guidance vs. market opportunity Partial
Though I do agree but I will not be very aggressive in answering this part. We will have to take a cautious stand though on the outset it looks like it's a very heavy demand industry as of now. But let us get into those nitty-gritties and then we'll be able to address this question very specifically in the future interactions.

Highlights management's conservative approach to growth guidance despite acknowledging a large and fast-growing addressable market, suggesting potential upside but also a cautious stance.

Asked by Ravtej

Payback period for the acquisition Direct
Yes. See payback wise like, it takes more than 8 to 10 years kind of thing. But again, it depend on two factors. How fast the revenue growth and EBITDA growth happens, then it changes. But naturally, yes, 8 to 10 years is a kind of an initial calculations we made. Yes, but things will change, but as of now we are conservative in declaring what it's going to be.

Provides a specific, albeit conservative, estimate for the acquisition's payback period, crucial for investor return calculations.

Asked by Shreya Ruia

Hobel Bellows AS9100 certification timeline and impact Direct
And currently the company is also not AS9100 certified. So the first task is going to be getting into that certification followed by qualification and such.

Asked by Ajinkya Jadhav

Funding mechanism for the Hobel Bellows acquisition Direct
This acquisition is again, you know, the it's a cash deal. The CCD structure is between holding and subsidiary company mechanism, okay, where, you know, the holding has funded subsidiary company to acquire that, you know. But it is ultimate owner has got only full cash, okay, except 25, you know, 10% holdback, you know, which is for one year.

Clarifies that the acquisition is an all-cash deal for the seller, with internal CCDs being an internal financing mechanism between Unimech and its subsidiary, reassuring investors about the funding structure.

Asked by Jai Chauhan

Cost optimization vs. revenue expansion post-acquisition Direct
Also, I mean, cost optimization is not a number one goal for us. Our number one goal is to actually expand and build a larger revenue. That is our number one goal because we feel like there is a lot more, you know, business that, you know, Hobel can actually take in considering Unimech has its own customers and, you know, customer base across industries and Hobel also has few of the other green chutes that we are actually building on. Our focus is going to be largely to increase.

Articulates management's primary focus on revenue growth and capability expansion over immediate cost-cutting for the acquired entity, indicating strategic priorities.

Asked by Aman Soni

Hobel Bellows customer concentration Direct
but there are two key OEMs or the OEM groups who contribute close to around 93% of their revenue. But you'll also have to understand this exposure is distributed across multiple entities operating in different geographies and has end-use segments which such as power generation, automotive engines and other industrial systems also as well as locomotive engines.

Reveals a high customer concentration for Hobel Bellows, which could be a risk, but management mitigates this by highlighting diversification across geographies and end-use segments.

Asked by Kamlesh Bagmar

2 min read 6 chapters

Detailed narrative

Strategic Acquisition of Hobel Bellows

Unimech Aerospace and Manufacturing Limited announced the strategic acquisition of Hobel Bellows, a highly specialized manufacturer of metallic bellows, flexible tubing components, and precision engineered assemblies. This capability-led acquisition, valued at an enterprise value of INR 450 crores, aims to fast-track Unimech's journey into high-value precision engineering. Hobel Bellows reported INR 129 crores in revenue for FY26 with EBITDA margins exceeding 50% and was a debt-free business with a pre-acquisition ROCE of over 50%.

Financial and Strategic Rationale

The acquisition is expected to be margin accretive and cash-generative, enhancing Unimech's overall earnings profile. Management projects a conservative growth rate of 15-17% for Hobel Bellows over the next 3-4 years, driven by organic momentum and synergy-led opportunities. The deal, valued at 6-7x EBITDA, is considered favorable given the niche, mission-critical nature of Hobel's products and its strong pricing power, which allows for sustainable margins above 50%.

Market Opportunity and Synergies

Hobel Bellows primarily serves the locomotive and power engine sectors, with approximately 90% of its revenue from exports to markets including the UK, US, Singapore, and China. While not directly serving aerospace currently, its capabilities in metal forming, tube bending, and advanced welding are in high demand among Unimech's aerospace customers. The acquisition provides a clear pathway to expand into high-value segments such as aerospace grade systems, nuclear applications, and semiconductor energy systems, leveraging Hobel's proprietary drawings and single-source products.

Operational Efficiency and Capacity

Hobel Bellows operates a modern 200,000 sq ft manufacturing facility in Visakhapatnam SEZ, with a current capacity utilization of 50-60%. Management intends to increase this to 85-90% before considering significant new capex, as the existing infrastructure, including recent machinery additions and automation, is deemed sufficient for near-term growth. The company emphasized its focus on revenue expansion and maintaining high margins rather than aggressive cost optimization.

FTWZ Facility and Regulatory Updates

Unimech's Free Trade Warehousing Zone (FTWZ) facility is now operation-ready, having received all regulatory approvals except for customs clearance, which is anticipated by the end of May 2026. This facility is strategically important for mitigating cross-border tariffs and improving supply chain flexibility. Additionally, Hobel Bellows will pursue AS9100 certification, a key step for direct engagement with aerospace customers, with an estimated timeline of about one year.

Management Outlook and Capital Allocation

Unimech funded the Hobel Bellows acquisition entirely through internal funds from its balance sheet, with no plans for further borrowings. Management's primary goal is to expand revenue and build a larger business, leveraging the acquired capabilities. The estimated payback period for the acquisition is 8-10 years, subject to revenue and EBITDA growth. The company also highlighted its commitment to retaining Hobel's experienced workforce, including senior management, through competitive compensation and potential ESOPs.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Capital Goods earnings calls