Unimech Aerospace IPO: Comprehensive Analysis and Investment Insights

Introduction 

Unimech Aerospace and Manufacturing Limited, a prominent player in high-precision engineering solutions, has launched its Initial Public Offering (IPO) to raise ₹500 crore. This article provides an in-depth IPO analysis, including company background, financial performance, subscription details, and investment considerations.

Company Overview of Unimech Aerospace

Unimech Aerospace delivers complex manufacturing services to sectors such as aerospace, defense, energy, and semiconductors. The company's expertise lies in both "build to print" and "build to specifications" models, catering to a diverse global clientele, particularly in the USA, Germany, and the United Kingdom. 

Notably, export sales constituted approximately 96% of total revenue in the first half of FY25, with the USA accounting for about 83% of these exports.

Unimech Aerospace IPO Details

• Issue Size: ₹500 crore, comprising:
• Fresh Issue: ₹250 crore
• Offer for Sale (OFS): ₹250 crore
• Price Band: ₹745 to ₹785 per share
• Lot Size: 19 shares
• IPO Dates: December 23, 2024, to December 26, 2024
• Listing Date: Expected on December 31, 2024

The IPO aims to fund capital expenditure for expansion, working capital requirements, and investments in subsidiaries for machinery acquisition and debt repayment.

Subscription Status of Unimech Aerospace IPO

The IPO received an overwhelming response, with an overall subscription of 174.82 times:

• Qualified Institutional Buyers (QIBs): 317.63 times
• Non-Institutional Investors (NIIs): 263.25 times
• Retail Individual Investors (RIIs): 56 times
• Employee Category: 95.43 times

This robust demand reflects strong investor confidence in the company's prospects.

Grey Market Premium (GMP) of  Unimech Aerospace IPO

As of December 26, 2024, Unimech Aerospace's shares commanded a grey market premium of ₹630, indicating a potential listing price of ₹1,415 per share. This suggests an approximate 80% gain over the upper IPO price band, highlighting positive market sentiment.

Financial Performance of Unimech Aerospace 

Unimech Aerospace has demonstrated impressive financial growth:

• Revenue: Increased from ₹94.17 crore in FY23 to ₹208.78 crore in FY24, a growth of 121.71%.
• Net Profit: Rose from ₹34.56 crore in FY23 to ₹79.19 crore in FY24, marking a 129.14% increase.
• EBITDA Margin: Maintained at 40.47%.

The company's revenue and net profit have grown at a compound annual growth rate (CAGR) of 140.95% and 214.25% over the past two years, respectively, indicating robust financial health.

Investment Considerations 

  Strengths

• Diversified Capabilities: Expertise across multiple high-precision engineering sectors.
• Strong Export Market: Significant revenue from international clients, particularly in the USA.
• High Return Ratios: Return on Equity (RoE) and Return on Capital Employed (RoCE) at approximately 54% each in FY24.

Risks

• Customer Concentration: Dependence on a limited number of clients.
• Export Risks: Exposure to foreign market dynamics and currency fluctuations.
• Long Gestation Periods: Extended timelines for project completion and revenue realization.

Peer Comparison 

Unimech Aerospace competes with companies like MTAR Technologies, Azad Engineering, and Dynamatic Technologies. Despite operating on a smaller scale, Unimech boasts a higher return on net worth at 9.92%, reflecting efficient operational performance.

Conclusion 

Unimech Aerospace's IPO presents a compelling opportunity for investors, given its strong financial performance, significant market demand, and strategic growth plans. However, potential investors should carefully consider the associated risks, including customer concentration and export dependencies, before making investment decisions.

FAQs

Q1: What is the price band for Unimech Aerospace's IPO?

A1: The price band is set between ₹745 and ₹785 per share.

Q2: How has the IPO been received by investors?

A2: The IPO was oversubscribed by 174.82 times, indicating strong investor interest.

Q3: What are the key financial highlights of Unimech Aerospace?

A3: The company reported a revenue increase from ₹94.17 crores in FY23 to ₹208.78 crores in FY24, and net profit growth from ₹34.56 crore to ₹79.19 crores during the same period.

Q4: When will the shares be listed on the stock exchanges?

A4: The shares are expected to be listed on December 31, 2024.

Q5: What is the Grey Market Premium (GMP) for the IPO?

A5: As of December 26, 2024, the GMP is ₹630, suggesting a potential listing price of ₹1,415 per share.