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Green shoots visible; eyeing mid-teen growth

We interacted with the management of Uniparts, a leading global supplier of 3- point linkage (3PL) and precision machined parts (PMP), to understand its operations and business prospects. KTAs: 1) After a 2Y downcycle (FY23-25), and with the worst now behind (bottom seen in Q3FY25), the management highlighted green shoots for Uniparts: a) new orders across verticals (~Rs2bn; 20% of FY25 revenue), b) improving outlook in existing business (healthy order pipeline for 3PL/PMP), c) strong revival in the aftermarket (~18% of revenue). 2) The mgmt gave guidance for FY26 revenue growing in mid-teens led by ~12% growth from new orders and single-digit growth in the legacy business. 3) Growth driven by dual shoring (manufacturing in US/India) and growing enquiries due to China+1. 4) Uniparts aims to outpace the end-markets (which are currently soft; mainly the US) or consolidate its position via geographical diversification. 5) Mexico operations to start from Q3FY26 (via exports from India). 6) As regards M&A, Uniparts prioritizes hydraulics/fabrication; order of preference, territory-wise: US, India, EU. 7) Capex guidance: 3% of revenue.

New orders worth Rs2bn to drive mid-teen growth despite weak markets

After a ~2Y downcycle (FY23-25) and with the worst now behind (bottom in Q3), the mgmt highlighted green shoots: a) new order wins across verticals (worth ~Rs2bn; 21% of FY25 revenue; strong ramp-up in Caterpillar with huge potential, akin to John Deere), b) improving visibility in existing business (healthy order pipeline for 3PL, PMP). The mgmt gave mid-teen revenue growth guidance for FY26, to be led by single-digit legacy business growth and 11-12% from new orders; Q1FY26 to be better than Q4FY25; rampup in H2FY26. Uniparts is operating at ~55% capacity utilization; can be up-scaled to ~80%, ie gain ~25% incremental revenue without added capex. Capex at 3% of revenue.

Dual-shoring/China+1 aiding growth; seeking M&A in hydraulics/fabrication

Uniparts is being further bolstered by its dual-shoring capabilities (manufacturing in US/India which helps mitigate tariff impact) and rising number of enquiries owing to China+1. Mexico operations (set up for client Bobcat) would commence from Q3FY26, initially via a warehousing model (ie exports from India). Uniparts will assess the viability of manufacturing in Mexico, based on volume scale-up. It is seeking M&A opportunities, primarily in hydraulics/fabrication; USD150-170mnpa revenue is a requisite; however, it will steer clear of loss-making companies or those in need of a turnaround; on the territory front, the company favors US, India, and EU, in that order. For any acquisition, Uniparts plans to eventually shift 30-40% production to India, to aid profitability.

Broader markets weak; Uniparts poised to outperform/consolidate position

For the construction segment, Americas remains under pressure with a persistent, high double-digit decline. Europe and Asia-Pacific are likely to be flat/see a 5% drop. Given early signs of recovery in Q4FY25, the mgmt remains cautiously optimistic about gradual pickup from H2FY26. In the agri business, despite global demand expected to be flat at -5% in FY26 (Americas to see 5-10% dip), Uniparts is poised to grow, on stable domestic share and ongoing expansion in Asia Pacific. In the aftermarket, Uniparts continues to expand its footprint in NA/EU and is hopeful of further consolidating its position in FY26.

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