Buy UNIMECH; target of Rs 1950: Choice Institutional Equities

Moneycontrol • 3 days ago

Original source

Key Investment Pillars

  • UNIMECH's strong Q2FY27 results, with revenue/EBITDA/PAT growing 98.4%/164.3%/102.8% YoY, respectively, beating estimates across key parameters.
  • The company's transition from short-cycle aerospace tooling orders to multi-year precision-component programmes strengthens revenue visibility, with over 250 parts qualified and 340+ parts in the qualification pipeline.
  • Expansion into new areas such as semiconductor equipment, engine components, and nuclear applications, while the Hobel Bellows acquisition adds exposure to industrial and data centre-related demand.
  • Management's aspiration to reach INR 1,000 Cr in revenue, with a potential equity fundraise in early CY27, subject to funding needs and market conditions.

Thesis Validation Checklist

  • Monitor the company's ability to maintain its strong execution and meet its revenue growth targets.
  • Track the progress of UNIMECH's expansion into new areas, such as semiconductor equipment and nuclear applications.
  • Watch for signs of increasing revenue predictability and sustained growth beyond the core tooling business.
  • Keep an eye on the company's ability to manage its working capital and funding requirements, particularly in light of its growth ambitions.