Aequs

Specializing in precision component manufacturing

Manufacture precision components for aerospace segment

Aequs is a vertically integrated precision component manufacturer with manufacturing capabilities in the Aerospace Segment and Consumer Segment. The company is one of the few manufacturers in India with niche metallurgy capabilities, specializing in precision machining of high-end alloys, including titanium alloys for its aerospace clients. It offer advanced manufacturing solutions across the precision manufacturing value-chain.

Over the past 15 years, the company has consistently grown its business by developing and acquiring new manufacturing capabilities, and diversifying its product portfolio and customer base across the Aerospace Segment and Consumer Segment. It strategically expanded its manufacturing operations in North America and France, through acquisitions in 2015 and 2016, respectively, which have allowed it to acquire new capabilities in the Aerospace Segment, grow its footprint in North America and Europe, and expand its portfolio of products.

The company is the leading company within a single special economic zone in terms of end-to-end manufacturing capabilities (machining, forging, surface treatment and assembly) for the Aerospace Segment in India, based on the number of capabilities and approvals.

The company has one of the largest portfolios of aerospace products in India. Its diverse aerospace product portfolio includes components for engine systems, landing systems, cargo and interiors, structures, assemblies and turning for its aerospace clients. As of September 30, 2025, the company has produced over 5,000 products within the Aerospace Segment under a variety of manufacturing and assembly programs established with its aerospace customers, including programs for single aisle (such as A220, A320, B737) and long range (A330, A350, B777, B787) commercial aircrafts.

The company though primarily operate in the aerospace segment, over the years, it have also expanded its product portfolio to include consumer electronics, plastics, and consumer durables for its consumer clients. Its diverse consumer product portfolio includes consumer durables such as cookware and small home appliances, plastics such as outdoor toys, figurines, toy vehicles and components for consumer electronics such as portable computers and smart devices.

Of the FY25 revenue from operation, the aerospace business accounted for about 89.19% (78.44% in FY24) and consumer segment 10.81% (21.56% in FY24). Thus, its business is heavily dependent on the performance of the global aerospace industry, particularly in the U.S., France and India, which are the main markets that the company it sell its products to.

A significant portion of its revenue from operations is derived from direct and indirect exports. Only 11.44% of its revenue from H1FY26 and 10.74% comes from India. USA, France, Germany accounted for 23.02%, 22.11% and 12.28% of its revenue in FY25.

It operate in three unique, engineering-led vertically integrated precision manufacturing “ecosystems” in India which enable it to produce complex products for its global OEM customers across the aerospace and consumer sectors. And these manufacturing ecosystems comprise the company, few of its suppliers and its Joint Ventures, which allow it to manufacture products in accordance with its clients’ specifications.

It have entered into long-term joint ventures with global companies such as Magellan Aerospace Limited, Aubert & Duval SAS and Tramontina, which has enhanced its manufacturing capabilities and enabling it to drive sustained growth.

In recent years, the company have strategically prioritized the selective outsourcing of lower value added activities, including 3-axis and 4-axis machining, within and outside of its manufacturing ecosystem to third party subcontractors, allowing it to concentrate on producing more complex and higher value components through higher value-added activities, including 5-axis machining. Further, it aim to leverage its existing aerospace manufacturing capabilities to diversify customer base in Aerospace Segment by pursuing opportunities to develop new relationships and strengthening its presence in the Aerospace Segment.

Across its three manufacturing ecosystems in India and two dedicated aerospace facilities outside India, that it operate in, it had an aggregate capacity of 2,919,058 annual machining/molding hours for products within the Aerospace Segment and Consumer Segment, and over 200 computer numerical control (“CNC”) machines for Aerospace Segment and 161 molding machines deployed for consumer products, each as of September 30, 2025. Its extensive machining capabilities enable it to manufacture critical and complex components, such as engine systems, landing systems, at a large scale and in a timely manner.

The issue, objects of the issue

The offer comprises the fresh issue of equity shares worth aggregating upto Rs 670 crore and offer for sale of 20,307,393 equity shares by both promoter selling share holders and investor selling shareholders. OFS comprises sale of 1423500 equity shares by promoter selling shareholder [i.e. 1323500 equity shares by Melligerie Private Family Foundation; 100000 equity shares by Aequs Manufacturing Investments] and sale of 18883893 equity shares by Investor selling shareholders [ Amicus Capital PE I LLP 7481908 shares; Amicus Capital Partners India Fund II 8879915 shares; Amicus Capital Partners India Fund I 754450 shares; Raman Subramanian 25000 shares; Girija Dempo Family Trust 435656 shares; Vasundra Dempo Family Trust 435656 shares; Raindra Mariwala 871308 shares].

Of the net proceeds from the issue, the company propose to deploy Rs 433.167 crore towards repayment and/ or prepayment, in full or in part, of certain outstanding borrowings and prepayment penalties, as applicable, availed by the company or its subsidiaries; Rs 64.002 crore towards funding capital expenditure to be incurred on account of purchase of equipment by the company and AeroStructures Manufacturing India, a WoS of the company; and balance towards funding inorganic growth through unidentified acquisitions, other strategic intitiatives and general corporate purposes.

Total aggregate secured and unsecured borrowings as of Oct 31, 2025 amounted to Rs 630.86 crore.

Strength

Advanced and vertically integrated precision manufacturing capabilities;

Operations in unique, engineering-led vertically-integrated precision manufacturing ecosystems;

Manufacturing presence across three continents with strategic proximity to end customers;

Comprehensive precision product portfolio across high value segments;

Long-standing relationships with high entry barrier global customers;

Founder-led business supported by an experienced management team and a qualified employee base.

Weakness

Top 3/5/10 customer groups accounted for 53.97%/73.17%/88.57% of its revenue from operations in FY25. Any failure to maintain its relationship with these customer groups or any adverse changes affecting their financial condition will have an adverse effect on the business of the company.

Pricing pressure from OEM customers is prevalent in the industry in which it operate.

Contractual arrangements of the company with its OEM customer groups are typically requirement-based contracts which do not obligate its customers to place a fixed quantity of orders with it within a fixed time frame, and any termination of such contracts or decline in the production requirements of any of its customers, may adversely affect the business.

All the units in the manufacturing clusters that it operate in, in India are located in the state of Karnataka.

Company and certain of its subsidiaries have had negative operating cash flows in the past.

Have a significant amount of foreign exchange borrowings, including foreign exchange borrowings which are unhedged or subject to variable rates, which may expose it to currency and interest rate fluctuations, and in turn adversely affecting business, results of operations.

Current & non-current borrowing of the company stood at Rs 533.51 crore as end of Sep 2025. The company has current and non current lease liability of Rs 335.34 crore. Thus the debt equity ratio works out to about 1.4 times. On expanded equity it works out to 0.6 times.

Valuation

Consolidated re-stated sales stood lower by 4% to Rs 924.61 crore in FY 2025 due to decline in revenue from the consumer segment due to general slowdown in market demand for its consumer products. The fall in gross consumer segment was Rs 111.09 crore (to Rs 107.508 crore) which more than offset the rise in gross aerospace that was Rs 77.68 crore (to Rs 909.254 crore). With the OPM contract by sharp 480 bps to 7.9%, the operating profit was down 40% to Rs 73.36 crore. Other income was up 49% to Rs 34.61 crore. Thus the PBIDT was down 26% to Rs 107.97 crore. After accounting for lower interest and depreciation, the PBT was a loss of Rs 54.34 crore compared to a loss of Rs 25.98 crore, a year ago. EO expense for the fiscal was Rs 48.27 crore against an income of Rs 18.65 crore. Thus the PBT after EO was a loss of Rs 102.60 crore against a loss of Rs 7.33 crore. The taxation was lower by 16% to Rs 8.34 crore. Thus at PAT level it was a loss of Rs 110.94 crore against a loss of Rs 17.30 crore a year ago. After accounting for share of profit from associate of Rs 8.52 crore, an increase of 65%, the net profit after MI was a loss of Rs 102.42 crore against a loss of Rs 12.15 crore.

Sales for the half year ended Sep 2025 was up by 17% to Rs 537.16 crore with increase in revenue from aerospace segment due to increase in order volume from customers in the aerospace segment. With OPM expand by 140 bps to 10.4% the operating profit was higher by 35% to Rs 55.72 crore. But after accounting for higher other income, higher interest and depreciation, the PBT was a loss of Rs 8.80 crore against a loss of Rs 22.98 crore. Eventually the net profit after MI was a loss of Rs 16.68 crore against a loss of Rs 71.61 crore, which is partly inflated by EO expense of Rs 48.27 crore against nil in H1FY26.

Though the company reports profit at operating level, at PAT level it reports losses due to higher interest and depreciation. The company is to utilize about Rs 433.167 crore from IPO proceeds towards repayment and/ or prepayment of debt there by substantial reduction in interest outgo. There by improving the profitability and EPS.

The company quotes at a P/BV of 5.6 times. The company trades at EV/sales 9.5 times on FY2025 sales.

In comparison, Unimech Aero, Azad Engineering, Kaynes Technologies, Amber Enterprises, Dixon Technologies and PTC Industries quotes at a P/BV of 7 times, 7.2 times, 7.8 times, 6.8 times, 21.6 times and 19.4 times respectively and EV/sales of 20.3 times, 23.3 times, 13.3 times, 2.7 times, 2.3 times and 88.9 times.