Unimech Aerospace and Manufacturing Ltd Q1 FY26 Earnings Analysis

- Targeting 35% to 40% revenue growth in FY '26, driven by tooling, precision, and nuclear segments. - Aim to grow at a 40% CAGR for the next 4 years, with ambition to reach INR 1,000 crore sales by FY '29. - Capacity utilization expected to increase from current ~55-58% to 70-75% in FY '26, and optimistically up to 80%. - By FY '28, machine capacity utilization expected at 85-90%, supporting higher revenue growth. - Expansion into aerospace, defense, nuclear, semiconductor, and energy sectors to diversify order book and boost volumes. - M&A activities considered to deepen technical capabilities and expand customer base. - Overall, stable long-term margins around 35% expected after short-term compression in FY '26 due to increased costs and investments.

- FY '26: Margins expected to be around 30%-32% due to cost of capacity expansion and investments. EBITDA margins will be under some pressure owing to increased employee count and operating expenses. - Long term: Targeting 35% EBITDA margins as operating leverage kicks in from FY '27 onwards. - Revenue Growth: Moderate growth in near term with FY '26 expected revenue growth at 35%-40%, supported by tooling, precision, and nuclear segments. - Capacity Utilization: Utilization expected to rise from ~55%-58% currently, to 70%-75% in FY '26, reaching around 85%-90% by FY '28, supporting revenue and margin growth. - Ambition to achieve INR 1,000 crore sales by FY '29 with consistent 40% growth over next 4 years. - Profitability and returns expected to improve post FY '26 as foundational investments bear fruit with sustainable margins above 35% EBITDA.

- For FY '26, management plans capex investment of INR 75 to 80 crores primarily in machinery and infrastructure. - Working capital investment planned around INR 60 crores, with INR 35 crores utilized in FY '26 and INR 30 crores reserved for the next year. - Capacity expansions include increasing machine hour capacity from around 6.33 lakh hours to 8 lakh hours, with factory floor space exceeding 3 lakh square feet. - Majority (60-70%) of FY '25 capex already incurred; remaining to be spent partly in FY '25-26. - Expansion supports growth in aerospace, nuclear, and precision segments, targeting optimal utilization of 85-90% machine capacity over 3 years. - Strategic investments include ongoing M&A efforts targeting precision manufacturing companies, mainly in India and the U.S., aiming to expand technical capabilities and customer base. - No immediate plan to fully acquire Dheya Engineering; further stake will be acquired post engine approval. - The focus is also on building infrastructure to handle emerging orders, including engine stands.

- The company raised some long-term debt last year, which is expected to be repaid in the coming months as mentioned in their IPO objectives. - Despite having IPO funds and cash on their books, they utilized debt partially for strategic reasons including potential M&A opportunities. - There is no explicit mention of any immediate new fundraising through debt or equity planned currently. - The company is open to acquisitions and is actively evaluating precision manufacturing companies but will proceed only when targets meet criteria. - Cash utilization plans include capex investment of INR 75-80 crores and working capital allocation about INR 60 crores over this year and next. - They indicated earmarking funds for M&A opportunities but no fresh capital raise for that purpose has been stated.

- Current order book stands close to INR 93-100 crores, holding good for approximately 3 to 4 months of revenue. - The order book was over INR 100 crores at the end of last quarter but reduced due to better execution and revenue materialization. - The company continues to receive daily and weekly customer inquiries, which keeps the order book evolving. - In the nuclear segment, several tenders are expected to open in the next 1-2 quarters, including refurbishment and new projects like EMCCR. - Deliveries for certain nuclear orders are pending and expected in Q1 and Q2 of the new financial year. - The precision segment is actively onboarding new customers with a growing order pipeline. - Overall, management is confident of achieving over 40% revenue growth in FY '26 supported by strong order inflows in aero tooling, precision, and nuclear segments.