Unimech Aerospace: Who are they and why is everyone talking about their IPO?
Unimech Aerospace and Manufacturing Limited is gearing up for its initial public offering (IPO), drawing attention from investors across the board. Specialising in high-precision aerospace tools, mechanical assemblies, and electro-mechanical systems, Unimech has carved out a niche in sectors like defence, energy, and semiconductors.
Founded in 2016, Unimech Aerospace operates two major manufacturing units in Bangalore, spanning over 1,20,000 sq ft, supplying clients across 7 countries. With cutting-edge technology and a robust product portfolio, the company is poised for significant growth, making their IPO a hot topic in the market.
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Why is Unimech Aerospace going public?
The IPO is set to raise Rs 500 crore through a combination of fresh equity and an offer-for-sale (OFS). The fresh issue (worth Rs 250 crore) aims to fund capital expenditure, working capital needs, and investments in its subsidiaries. Meanwhile, the OFS allows existing stakeholders like Ramakrishna Kamojhala and Rajanikanth Balaraman to divest part of their holdings.
This move aligns with Unimech’s broader strategy to expand its manufacturing capabilities, reduce debt, and solidify its market position.
Current status of Unimech Aerospace IPO
The IPO opened for subscription on December 23, 2024, and will close on December 26, 2024. As of midday on Day 1, the IPO was subscribed 1.21 times, with retail investors leading at 1.84x. Non-institutional investors (NII) subscribed 1.29x, while the qualified institutional buyer (QIB) category is yet to be fully subscribed.
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IPO subscription snapshot (Day 1):
- Retail investors: 1.84x
- Non-institutional investors (NII): 1.29x
- Employee category: 3x
- Total subscription: 1.21x
Grey market premium (GMP) indicates strong demand, with shares trading at Rs 480 above the upper price band of Rs 785, suggesting a potential listing price of Rs 1,265.
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Financials at a glance
Unimech Aerospace’s financial performance has been remarkable, with revenue growing by 125% and profit after tax (PAT) surging by 155% between FY23 and FY24. The company’s return on equity (ROE) and return on capital employed (ROCE) are 53.53% and 54.36%, respectively, reflecting efficient capital use and robust profitability.
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| Period Ended | 30 Sep 2024 | 31 Mar 2024 | 31 Mar 2023 | 31 Mar 2022 |
| Revenue (in Rs crore) | 127.58 | 213.79 | 94.93 | 37.08 |
| PAT (in Rs crore) | 38.68 | 58.13 | 22.81 | 3.39 |
| Assets (in Rs crore) | 509.27 | 175.63 | 93.34 | 56.88 |
| Net Worth (in Rs crore) | 390.1 | 108.60 | 48.85 | 27.66 |
Key IPO details
| IPO Date | December 23, 2024 – December 26, 2024 |
| Listing Date (Tentative) | December 31, 2024 |
| Price Band | Rs 745 to Rs 785 |
| Lot Size | 19 shares |
| Total Issue Size | Rs 500 crore (63,69,424 shares) |
| Fresh Issue | Rs 250 crore (31,84,712 shares) |
| Offer for Sale (OFS) | Rs 250 crore (31,84,712 shares) |
Shareholding pattern (pre and post-issue)
| Shareholder Category | Pre-Issue Shareholding | Post-Issue Shareholding |
| Promoters | 91.83% | – |
| Public | 8.17% | – |
How will Unimech use the IPO funds?
The proceeds from the fresh issue will be strategically allocated across different verticals:
- Capital expenditure – Rs 363.66 Mn for expanding manufacturing units and purchasing equipment.
- Working capital – Rs 252.85 Mn for day-to-day operational needs.
- Subsidiary investment – Rs 438.91 Mn towards machinery and working capital for the material subsidiary.
- Debt repayment – Rs 40 Mn to reduce borrowings.
Should you invest in the Unimech Aerospace IPO?
- Unimech Aerospace boasts a robust client portfolio, partnering with leading global airframe and aero-engine OEMs, along with their authorised licensees.
- The company’s manufacturing facilities hold prestigious certifications, including AS 9100D for aerospace quality management, BS EN ISO 9001:2015 for quality management systems, and ISO 45001:2018 for occupational health and safety.
- From FY22 to the six-month period ending September 30, 2024, Unimech Aerospace produced 2,999 SKUs in tooling and precision sub-assemblies, alongside 760 SKUs in precision-machined parts. These products were supplied to over 26 customers across seven countries, demonstrating the company’s expansive global reach, with clients in the US, Germany, and the UK.
- Unimech’s advanced manufacturing capabilities cover machining processes such as turning, milling, double-column milling, electro-discharge machining, and grinding. The assembly centre can manage large-scale assemblies, accommodating sizes up to 10 metres and diameters of up to 3 metres.
- The company’s assembly expertise spans various techniques, including interference and transition fits, heli-coil assemblies, and smooth sealing applications. It can assemble up to 3,000 components in a single unit. Additional capabilities include laser tracker calibration, load testing up to 70 tonnes, pressure testing up to 420 bars, and balancing to within 1 gram. The company also conducts helium leak detection and non-destructive testing such as ultrasonic, magnetic particle, die-penetrant, fluorescent penetration, and drive mechanism testing.
- Fabrication capabilities extend to engineering fabrication up to 2 metres and structural fabrication up to 6 metres, executed by AWS and ASME-certified welders. Special processes, including painting, polymer-based coatings, and NADCAP-certified heat treatment and anodising, are handled through third-party vendors.
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Bottomline
Unimech Aerospace IPO presents a compelling opportunity for investors seeking exposure to the aerospace and precision tooling sector. With robust financials, a global footprint, and strategic expansion plans, the IPO appears attractive. However, investors should weigh sector-specific risks before making their final decision.
