The Unimech Aerospace IPO has officially opened for public subscription on December 23, 2024, and will remain open until December 26, 2024. This ₹500 crore IPO has already garnered significant attention from investors, with a mix of fresh equity issuance and an offer-for-sale (OFS) by the company’s promoters. As of Day 1, the IPO has been subscribed 1.04 times, with strong interest from retail investors and a promising grey market premium (GMP) indicating robust listing potential.

Here’s everything you need to know about the Unimech Aerospace IPO, including its financial performance, subscription status, GMP, and expert recommendations.

Unimech Aerospace IPO: Key Details

• IPO Size: ₹500 crore
  • Fresh Issue: ₹250 crore
  • Offer-for-Sale (OFS): ₹250 crore (by promoters and promoter group)
• Price Band: ₹745 to ₹785 per share
• Subscription Period: December 23 to December 26, 2024
• Anchor Book: Raised ₹149.5 crore on December 20, 2024
• Allocation:
  • 50% for Qualified Institutional Buyers (QIBs)
  • 15% for Non-Institutional Investors (NIIs)
  • 35% for Retail Investors

Unimech Aerospace: Company Overview

Based in Bengaluru, Karnataka, Unimech Aerospace is a leading engineering solutions provider specializing in precision-engineered components for the aerospace, defense, energy, and semiconductor sectors. The company operates two state-of-the-art manufacturing facilities:

1. Unit I: Located in Peenya, Bengaluru, spanning 30,000 sq. ft.
2. Unit II: Situated in a Special Economic Zone (SEZ) near Bengaluru International Airport, covering 90,000 sq. ft.

Unimech’s product portfolio includes aero tooling, ground support equipment, electro-mechanical sub-assemblies, and other precision components. The company serves some of the world’s leading airframe and aero-engine OEMs, making it a critical player in the global supply chain.

Day 1 Subscription Status

As of the first day of bidding, the Unimech Aerospace IPO has been subscribed 1.04 times, with the following breakdown:

• Retail Investors: Subscribed 1.58 times
• Non-Institutional Investors (NIIs): Subscribed 0.9 times
• Qualified Institutional Buyers (QIBs): Yet to be fully subscribed

The strong response from retail investors highlights the growing interest in Unimech Aerospace’s IPO, while institutional participation is expected to pick up in the coming days.

Grey Market Premium (GMP) Trends

The grey market premium (GMP) for Unimech Aerospace IPO is currently trending at ₹480 per share, according to market observers. This indicates that the shares are trading at a premium of 61.15% over the upper price band of ₹785, with an estimated listing price of ₹1,265 per share.

The upward trend in GMP reflects strong investor confidence in the company’s growth potential and financial performance.

Financial Performance and Growth

Unimech Aerospace has demonstrated exceptional financial growth, making it one of the fastest-growing companies in its sector.

• Revenue CAGR: 139.7% (FY22-FY24)
• EBITDA Growth: 220.2% (FY22-FY24)
• PAT Margin: 27.9% in FY24 (up from 24.2% in FY23)
• ROCE: 57.6%

The company’s strong financials are driven by its operational efficiency, advanced manufacturing capabilities, and partnerships with global OEMs.

Expert Recommendations

BP Wealth

BP Wealth has given a “SUBSCRIBE” rating for the Unimech Aerospace IPO, citing the company’s strong financial performance, attractive valuation, and industry tailwinds. The firm highlights Unimech’s impressive EBITDA margin of 38% and its ability to outperform peers in growth and profitability.

Nirmal Bang

Nirmal Bang also recommends subscribing to the IPO, emphasizing the company’s:

• Advanced manufacturing capabilities
• Digitally integrated operations
• Expertise in a high-entry-barrier sector
• Strong vendor ecosystem

The firm notes that Unimech’s valuation multiples (EV/EBITDA of 51x and P/E of 69x) are reasonable compared to its competitors, reflecting its strong fundamentals and growth potential.

Investment Rationale

1. Industry Leadership: Unimech Aerospace is a key player in the global precision tooling market, which is expected to grow at a CAGR of 15.8% from 2024 to 2028.
2. Strong Financials: The company’s revenue CAGR of 140% and industry-leading EBITDA margin of 38% make it a compelling investment.
3. High-Entry-Barrier Sector: Operating in a niche market with limited competition, Unimech benefits from its established expertise and strong vendor ecosystem.
4. Attractive Valuation: Despite its high growth rates, Unimech’s valuation multiples are more reasonable than its peers, offering significant upside potential.

Key Risks

While Unimech Aerospace presents a strong investment case, there are certain risks to consider:

1. Dependence on Export Markets: A significant portion of the company’s revenue comes from global industries, making it vulnerable to geopolitical and economic uncertainties.
2. Raw Material Price Volatility: Fluctuations in raw material prices could impact the company’s profitability.
3. Reliance on Imported Parts: Dependence on imported standard parts may pose supply chain risks.

Conclusion

The Unimech Aerospace IPO has opened to a strong start, with robust subscription numbers and a high grey market premium reflecting investor confidence. As a leader in the precision-engineered components market, Unimech Aerospace is well-positioned to capitalize on industry tailwinds and deliver sustained growth.

With its impressive financial performance, advanced manufacturing capabilities, and established expertise in a high-entry-barrier sector, Unimech Aerospace presents a compelling investment opportunity. Whether you’re looking for listing gains or long-term growth, this IPO is worth considering. However, as with any investment, it’s essential to evaluate the risks and align your decision with your financial goals.

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