Unimech Aerospace and Manufacturing Limited

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%.

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%.

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.

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.

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.

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.