Buy Unimech Aerospace; target of Rs 2138: Motilal Oswal

Moneycontrol • 3 days ago

Original source

Key Investment Pillars

  • Unimech Aerospace reported a strong set of results in 2QFY27, with revenue/EBITDA/PAT surging 98%/164%/103% YoY, driven by healthy demand, robust execution, and strong operating leverage.
  • The company has a robust order book of INR8.5b, providing long-term growth visibility, and is expanding its precision manufacturing capabilities.
  • Management expects strong business momentum to sustain in 2H and beyond, with the semiconductor business scaling up in FY27 and O&G in FY28.
  • The company has signed long-term agreements with FACC, Honeywell Aerospace, and an Aerospace Tier-1 manufacturer, providing a strong foundation for future growth.

Thesis Validation Checklist

  • Investors should watch for the company's ability to sustain its strong business momentum, with a focus on revenue growth, margin expansion, and order book execution.
  • The company's expansion into new businesses, such as semiconductor and O&G, and its ability to execute on long-term contracts, will be key drivers of future growth.
  • The company's strong operating leverage and robust margin expansion will be critical in driving profitability.
  • Investors should also monitor the company's working capital cycle and its ability to manage its debt levels.