The Rs 500 crore-IPO of Unimech Aerospace and Manufacturing opens for bidding on Monday, December 23. The company shall be offering its shares in the range of Rs 745-785 apiece. Investors can apply for the issue for a minimum of 19 equity shares and its multiples thereafter, until Thursday December 26, when the issue closes for bidding.
Incorporated in 2016, Bengaluru-based Unitech Aerospace and Manufacturing is engaged in the manufacturing of complex tools like mechanical assemblies, electro-mechanical systems, and components for aeroengine and airframe production.
The IPO of Unimech Aerospace includes a fresh shares sale of Rs 250 and an offer-for-sale (OFS) of up to 31.82 lakh equity shares amounting to Rs 250 crore. The net proceeds from the issue shall be utilized towards funding purchase of machineries and equipment; funding working capital requirements; repayment / prepayment of certain borrowings; and general corporate purposes.
Unimech Aerospace mobilised Rs 149.5 crore anchor investors as it finalised the allocation of 19.05 lakh shares at Rs 785 apiece. Anchor book included names like Goldman Sachs, Ashoka India Equity Investment Trust, Sunil Singhania's Abakkus Diversified Alpha Fund, Copthall Mauritius, Clarus Capital, and various domestic mutual funds and insurance companies.
It is an engineering solutions provider specializing in the manufacturing of complex products. This involves machining, fabrication, assembly, testing, and creating new products based on the specific requirements of clients in the aerospace, defense, energy, and semiconductor industries.
Unimech Aerospace have manufactured 2,356 SKUs in tooling and precision complex sub-assemblies category and 624 SKUs in the precision machined parts category, supplying to more than 26 customers across 7 countries. It operated two manufacturing facilities in Bangalore, covering a total area of over 1,20,000 sq ft as of March 31, 2024,
The company has reserved shares worth Rs 1.5 crore for the eligible employees of the company. Of the net offer, 50 per cent shares are reserved for qualified institutional bidders, while non-institutional investors will have 15 per cent of the allocation. Retail investors will get the remaining 35 per cent of the net issue.
Anand Rathi Securities and Equirus Capital are the book running lead managers of the Unimech Aerospace IPO, while Kfin Technologies is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE on Tuesday, December 31, 2024. Here's what a host of brokerage firms said about the IPO of Unimech Aerospace:
InCred Equities Rating: Subscribe Unimech has reported strong numbers, with revenue, Ebitda and PAT clocking a CAGR of 79 per cent, 117 and 158 per cent, respectively, in FY22, 23, 24 while the EBITDA margin expanded by 21.3 per cent in FY22 to 37.9 per cent in FY24 led by a high-mix, high-complexity, low-volume business. In FY24, RoE and RoCE stood at 54 per cent each, said InCred Equities.
"The onboarding process for new customers is time-consuming and requires technical expertise and competitive pricing, creating high entry barriers for competitors. Unimech usually works with 8-16 weeks of orders. We recommend 'subscribe' to it, given its presence in niche aerospace & defence sectors, healthy margin profile, diversified capabilities and higher return ratios," it said.
SBI Securities Rating: Subscribe The global market is poised for significant growth in the next 4-5 years driven by rapid addition of new aircraft to the fleet and the setting up of a domestic MRO and manufacturing ecosystem in India. Unimech is looking to expand its designing and manufacturing capabilities through acquisitions, said SBI Securities.
"It is also scouting for organic/inorganic opportunities in the USA which will expand its capacity and ability to service customers in its key market. The company is valued at FY25 annualized P/E multiple of 51.6 times on post issue capital which is at a discount to its peers. We recommend investors to subscribe to the issue at a cut-off price," it said.
Canara Bank Securities Rating: Subscribe As the aerospace sector anticipates growth, Unimech’s focus on manufacturing critical components positions it favorably to meet increasing demand from global original equipment manufacturers. The proceeds from the IPO are earmarked for capital expenditures and working capital needs, enhancing its production capabilities and market reach, said Canara Bank Securities.
"Overall, Unimech Aerospace’s IPO presents an appealing opportunity for investors in the engineering and aerospace sectors, given its competitive valuation metrics and growth prospects. We recommend 'subscribe' to the issue for both listing and long-term gains," it said.
Marwadi Financial Services Rating: Subscribe Considering the annualized EPS for September 2024 of Rs 15.21, the company is set to list at a P/E of about 52 times with a market cap of Rs 3,992.27 crore, whereas its peers MTAR Technologies, Azad Engineering, Paras Defense, Dynamatic Technologies, and Data Patterns are trading at P/E ratios of approximately 76-144 times, said Marwadi Financial Services.
"We assign 'subscribe' rating to this IPO as the company has advanced manufacturing capabilities and is capable of delivering high precision engineering solutions. Also, it is available at reasonable valuation as compared to its peers," it added.
SMIFS Rating: Subscribe Unimech is well-positioned for sustained growth, benefiting from its strong market presence and expanding capabilities across aerospace, defense, energy, and semiconductor sectors. With export sales accounting for 90 per cent of its revenue, the company has made significant strides in capturing international market share, particularly in the US and Europe, said SMIFS.
"We recommend subscribe to it as the combination of expanding production capabilities, sector diversification, and regional market penetration positions Unimech for continued growth, making it an attractive player in the aerospace, defense, energy, and precision manufacturing industries amongst peers amongst whom the company has the highest revenue growth and Ebitda margins," it said.
StoxBox Rating: Subscribe Unimech's is valued at a price-to-earnings (P/E) ratio of 59.3 times on the upper price band based on FY24 earnings, which is comparatively lower than its peers, said StoxBox. "Considering the company's strong financial performance, industry tailwinds and attractive valuation, we recommend a 'subscribe' rating for this issue," it added.