ET Intelligence Group: Unimech Aerospace and Manufacturing, which provides critical components used in aero-engine and airframe production to global companies, plans to raise ₹250 crore through a fresh issue of shares to fund capex and partly repay debt. It will also raise an equal amount through an offer for sale by the promoters. The promoter group's stake will fall to around 80% after the IPO from nearly 92%. The company operates in a niche segment with high growth potential. It has among the highest margins and returns ratios in its areas of operation. Given these factors, investors may consider the IPO.Business: The company designs and manufactures parts including aero tooling, ground support equipment, and electro-mechanical components for aerospace, defence, energy and semiconductor sectors. It has two manufacturing facilities in Bengaluru. The company derived over 95% of revenue through exports in three years to FY24 to global original equipment manufacturers (OEMs) and their licensees across USA, UK and Germany.Financials: The company is in the rapid growth phase. Its revenue grew six-fold to ₹208.8 crore and net profit 27 times to ₹58.1 crore between FY22 and FY24. The operating margin before depreciation and amortisation (Ebitda margin) improved to 37.9% in FY24 from 21.3% in FY21. Other companies in related businesses operated at Ebitda margins of 11-43% in FY24. Unimech reported the highest return on equity of 53.5% in FY24 among these companies. Of the total debt of around ₹67 crore, the company will repay ₹40 crore through the IPO proceeds.116645921Valuation: In July 2024, the company raised ₹23.8 crore through a preferential issue of shares to three institutional investors at an average price of ₹681.7 per share. The upper end of the IPO price band is 15% higher than the preferential issue price. Considering the equity after the IPO, the company demands a price-earnings (P/E) multiple of around 52 based on the annualised net profit for the six months ending September 2024. It does not have a direct peer. Other companies, including MTAR Technologies and Azad Engineering, which are involved in fuel cell technology and aerospace components, trade at P/Es of more than 100.
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