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12+ years of aircraft backlog: a multi-decade aero-tooling opportunity

We believe Unimech is well positioned to capture a multi-year aerotooling cycle, driven by rising aircraft production, new-generation engine programmes and recurring MRO demand. The ~17,000-aircraft backlog, expanding global fleet and potentially USD 193 Bn MRO TAM by 2036 provide strong structural demand visibility. Unimech’s ~86% tooling revenue, ~6,300 qualified SKUs versus 932 in FY22, and exposure to global OEMs/Tier-1s further strengthen its positioning. Importantly, aerospace qualification creates customer stickiness and extends the revenue opportunity from initial tooling to repeat production and, eventually, MRO.

Precision components: 10% today, significant headroom ahead

We expect precision components to become Unimech’s second growth engine, taking it beyond tooling into higher-value applications. The business already contributes ~10% of FY26 revenue, with ~INR 870 Mn of nuclear orders and INR 4,000+ Mn EMCCR pipeline providing early scale-up visibility. Hobel adds capabilities in bellows, tubing, welding and engineered assemblies, enabling higher content per customer, while the Saudi JV opens a localisation-led growth opportunity. The shift from individual components to assemblies, coupled with new markets, can materially expand Unimech’s share of wallet and growth runway.

52% utilisation: significant earnings opportunity from existing capacity

Unimech’s expanded capacity provides a meaningful earningsconversion opportunity, with the next leg of growth increasingly driven by higher asset utilisation rather than fresh capex. Installed capacity has increased nearly 7.0x to ~6.8 lakh machine hours in FY26, while utilisation remains at just ~52% (excluding 10% for first article inspection), leaving significant headroom as qualified programmes move into serial production. We expect utilisation to improve to ~65% in FY27E and ~78% in FY29E, enabling the company to absorb more of its fixed-cost base as rev. scales up

Optionality:

1) Hobel: We factor ~INR 1,960 Mn of FY29E revenue, leaving upside from faster scaling of its expanded capabilities and higher-value assemblies.

2) Dheya: No PAT contribution from Dheya is factored into our estimates till FY29E, making commercialisation of its propulsion and related technologies incremental upside.

3) Saudi/Kanoo: We factor only ~INR 800 Mn of FY29E revenue, leaving significant headroom if the JV scales faster amid Saudi Arabia’s localisation push.

4) M&A: The proposed INR 750 Cr QIP provides capital for capacity expansion and strategic acquisitions.

Investment View:

We initiate coverage on UNIMECH, driven by the abovementioned investment thesis, we expect 58.6% / 67.8% / 56.2% Revenue / EBITDA / PAT CAGR over FY26–29E, led by higher capacity utilisation and scaling of newer businesses. We assign a ‘BUY’ rating with a target price of INR 1,950, based primarily on our DCF valuation. As a secondary check, 50x average FY28–29E EPS of INR 39.4 implies a value of INR 1,969, broadly validating our DCF-based target.

Key Risks:

Delays in customer qualifications and aerospace programs rampups could defer growth, while execution challenges in scaling newer businesses could pressure margins. Slower capacity utilisation or higher-thanplanned capex could weaken operating leverage

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