Motilal Oswal starts coverage on an aerospace stock that’s up 40% in 2026. Know target, upside

Domestic brokerage firm Motilal Oswal initiated coverage on Unimech Aerospace with a Buy rating and a target price of Rs 1,530, implying an upside of 27% from current market levels. The stock has already gained 40% on a year-to-date basis.

The company manufactures specialised aero engine tools for LEAP, Pratt & Whitney and Rolls Royce engines, and airframe tools for Airbus and Boeing. UNIMECH currently serves 18 customers in this segment.

Why is Motilal bullish on the stock?

Motilal Oswal says the company has the ability to offer competitive pricing, combined with favourable tailwinds from new engine programs, and the shift in MRO demand toward Asia suggests strong growth potential. The segment contributed 80% to its FY26 total revenue and will remain a major contributor in the medium term.


1.) Expansion in new markets - Stronger industry penetration with high-mix and low-volume precision engineering business has been the company’s core strategy. It currently serves 17 customers in this segment. The segment contributed 20% to its FY26 total revenue. However, this segment is expected to grow faster, considering a vast total addressable market.

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2.) Acquisitions, JVs bode well - Motilal Oswal said Unimech continues to pursue inorganic expansion opportunities that are aligned with its long-term strategy of strengthening capabilities, driving innovation and expanding its market presence.

The brokerage noted that following the acquisition of Hobel Bellows, a joint venture with Kanoo and an investment in Dheya Engineering, the company is now exploring opportunities to establish a manufacturing footprint in the U.S. through acquisitions or organic expansion. It added that these initiatives are expected to support faster market entry and enhance services for Unimech's marquee customers in Europe and the U.S.

3.) Financials look strong - Analysts expect Unimech to deliver a 74% revenue CAGR, 83% EBITDA CAGR and 57% PAT CAGR over FY26-28E after a flat revenue performance and profit decline due to margin contraction in FY26.

The brokerage believes growth will be driven by a healthy recovery in the company's core aero tooling and precision components businesses, along with contributions from its recently formed joint venture and acquisitions. It also expects EBITDA margins to remain at 35%, while RoE and pre-tax RoCE are projected to improve to 16% and 18%, respectively, by FY28 from 9% and 12% in FY26, supported by better asset turnover and stronger operating performance.

Motilal Oswal believes Unimech is well positioned to benefit from long-term growth opportunities in the aerospace and defence, energy and semiconductor equipment sectors. However, the brokerage highlighted key risks, including the company's high revenue concentration in the aerospace business, dependence on its top five customers, and significant reliance on exports and a limited number of international markets.

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Unimech raised Rs 500 crore through its IPO in December 2024, including Rs 250 crore through a fresh issue, to support its expansion plans. The company intends to utilise Rs 80.3 crore for capital expenditure, Rs 40 crore for debt repayment, Rs 70 crore towards working capital requirements, and the remaining proceeds for general corporate purposes and issue-related expenses.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)