Unimech Aerospace and Manufacturing Sees Target Price Revision to Rs 1435 by Anand Rathi

Unimech Aerospace and Manufacturing Poised for Growth with Hobel Bellows Acquisition

Unimech Aerospace and Manufacturing has taken a significant step forward with the acquisition of Hobel Bellows, a deal valued at Rs4.5 billion (6-7x FY26 EV/EBITDA). This strategic move positions the company to move up the value chain from precision-machined parts to integrated engineered assemblies and sub-systems across diversified sectors.

The acquisition is expected to be value accretive, with synergies arising from cross-selling, value chain integration, capability enhancement, and operational efficiency to be realized over the medium-term. As a result, we forecast a 44.9% revenue compound annual growth rate (CAGR) for Unimech over FY25-28e, driven by the scale-up of aero-tooling and the contribution of Hobel, alongside diversification into nuclear, semiconductor, and defence precision-crafted assemblies (PCAs).

Strong Outlook Ahead

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We expect Unimech's profit after tax (PAT) to clock a 20.5% CAGR, while return on capital employed (RoCE) is expected to expand by 505 basis points to 16.1% by FY28e. This improvement will be aided by enhanced capacity utilization, a richer product mix, superior asset turns, and leaner working capital compared to aerospace peers. These factors will support a sustained premium valuation for the company.

Recommendation

We maintain a BUY rating on Unimech Aerospace and Manufacturing with a target price of Rs1,435, valuing the company at 50x FY28e earnings per share (EPS).

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