Unimech Aerospace IPO opens in 2 days: 10 key points to know from RHP before you subscribe to ₹500 crore issue

Unimech Aerospace IPO: The initial public offering (IPO) of Unimech Aerospace is scheduled to open for subscription on Monday, December 23, and will remain open till Thursday, Thursday 26. The company aims to raise ₹500 crore through the offering, which comprises a fresh issue of 0.32 crore shares worth ₹250 crore and an offer for sale of 0.32 crore shares, also aggregating to ₹250 crore.

The IPO price band is set at ₹745 to ₹785 per share. Of the total offering, 50% is reserved for Qualified Institutional Buyers (QIBs), 35% for Retail Investors, and 15% for Non-Institutional Investors (NIIs).

Anand Rathi Securities and Equirus Capital Private are the book-running lead managers for the Unimech Aerospace IPO, while KFin Technologies is the registrar for the issue.

Retail investors can apply for a minimum of 19 shares in one lot and its multiples thereafter. At the upper end of the IPO price band, retail investors are required to make a minimum investment of ₹14,915 per lot.

Let us take a look at some of the key points mentioned in Unimech Aerospace’s RHP:

Unimech Aerospace IPO: 10 key things to know

About the Company: Unimech Aerospace is a global high-precision engineering solutions provider, specialising in the manufacturing of complex products through “build to print” and “build to specifications” offerings.

These processes involve machining, fabrication, assembly, testing, and the creation of new products tailored to the specific requirements of clients in the aerospace, defence, energy, and semiconductor industries.

Its product portfolio includes engine lifting and balancing beams, assembly, disassembly and calibration tooling, ground support equipment, airframe assembly platforms, engine transportation stands, mechanical & electro-mechanical turnkey systems, and precision components.

Objectives of the Issue: The company intends to utilise the net proceeds from the fresh issue to fund capital expenditure for expansion by purchasing machinery and equipment, as well as to meet its working capital requirements.

Additionally, a portion of the proceeds will be invested in its material subsidiary for purchasing machinery and equipment, funding its working capital needs, and repaying or prepaying certain borrowings availed by the subsidiary, either in full or in part. The remaining funds will be allocated for general corporate purposes, as per the RHP.

Manufacturing Capacity: As of March 31, 2024, the company had two manufacturing facilities, Unit I and Unit II, in Bangalore, which are spread across an aggregate area of over 120,000 sq. ft. Its facility in Unit I in Peenya, Bangalore, is spread across an area of over 30,000 sq. ft., and its Unit II facility in Devanahalli is situated in a Special Economic Zone (“SEZ”) near Bangalore International Airport, which is spread across an area of over 90,000 sq. ft.

Capabilities: As an engineering solutions provider, it offers a range of capabilities, from product conceptualisation to final assembly. Its capabilities include design, engineering, manufacturing, and quality assurance, enabling it to deliver complex and customised solutions to its clients.

The company has manufactured 2,356 SKUs in the 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.

Global Opportunities: The company is well-positioned in both aerospace and defence GSTE and precision component manufacturing, serving global OEMs and approved licensees. The Asian region is set to see the largest fleet expansion, with 11,925 aircraft expected by 2042, solidifying its role as a global aviation hub.

In the energy sector, there is increasing emphasis on renewable sources like solar and wind, supported by government initiatives. Additionally, India is expanding its nuclear power capacity, with 22 operational reactors and 11 more expected, adding 8,700 MW.

Peer Comparison: The company considers Azad Engineering, Dynamatic Technologies, MTAR Technologies, Data Patterns (India), and Paras Defence and Space Technologies as listed peers, which are into the manufacturing of certain components used in the aerospace and defence industry.

Financials: Its total revenue from operations was ₹2,087.75 million, ₹941.66 million, and ₹363.49 million for fiscal years 2024, 2023, and 2022, respectively. Its EBITDA for the fiscal years 2024, 2023, and 2022 was ₹791.86 million, ₹345.63 million, and ₹77.26 million, respectively, resulting in EBITDA margins of 37.93%, 36.70%, and 21.25%.

The company PAT increased from ₹33.92 million in Fiscal Year 2022 to ₹228.13 million in Fiscal Year 2023 and then to ₹581.34 million in Fiscal Year 2024, translating into a PAT margin of 27.85%, 24.23%, and 9.33% in Fiscal Years 2024, 2023, and 2022, respectively.

International Sales a Key Revenue Source: The company generates the majority of its revenue through exports, accounting for 91.06%, 95.20%, and 97.64% of total revenue from operations in Fiscal 2022, 2023, and 2024, respectively. More than 95% of this revenue comes from sales to its top 10 customers in each of these fiscal years.

Key risks: A significant portion (more than 94%) of its total revenue from operations in each of the last three fiscal years is attributable to the aerospace sector, wherein it manufactures products related to aero engine tooling and airframe tooling. Any adverse changes in the aerospace sector could adversely impact its business, results of operations, and financial condition.

Allotment and Listing Details: The allotment of shares for the Unimech Aerospace IPO is expected to be finalised on Friday, December 27, 2024. Tentative listing on both the BSE and NSE is scheduled for Tuesday, December 31, 2024.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.