Buy Unimech Aerospace; target of Rs 1375: Anand Rathi

Anand Rathi's research report on Unimech Aerospace

Despite a 12.2% beat on ARe estimates, Unimech reported flattish revenue due to tariff-related headwinds, which are likely to soften FY26 growth given muted near-term ordering. We expect topline to clock a 36.5% CAGR over FY25-28, driven by aero-tooling scale-up (through SKU additions and engine stands ramp-up) and diversification into nuclear, semiconductor, and defence PCA. EBITDA margins should recover to FY25 levels by FY28 as utilisation improves post the capex-heavy phase ending FY26. We estimate a 27% PAT CAGR and an 812 bps RoIC rise to 40.1% by FY28, led by a strong margin profile, superior asset turns, and lean working capital vs. aerospace peers, which should support sustained premium valuations.

Outlook

We maintain BUY rating on the stock with a TP of Rs1,375, valuing it at 50x Sep’27 EPS.