Shares of Unimech Aerospace and Manufacturing debuted on Dalal Street at Rs 1,491, with a premium of Rs 706 or 90 per cent over the IPO price of Rs 785. On NSE, the shares listed at Rs 1,460.
The Rs 500 crore IPO of the aero-engine component maker Unimech Aerospace, comprising a fresh issue of Rs 250 crore and an offer-for-sale of Rs 250 crore, was open for subscription during December 23-26. The company’s IPO received a solid response from investors, with overall subscription of 175.31 times equivalent to 82.46 crore equity shares against 47.04 lakh shares on the offer.
The retail investors portion was subscribed 56.74 times, while the non institutional investors (NIIs) subscribed by 263.78 times. The qualified institutional buyers (QIB) category was booked 317.63 times.
However, the briefly touched the 10 per cent lower circuit of Rs 1341.95 on the BSE after the debut. It is also the stock's 52-week low. On Tuesday, the stock settled at Rs 1,376.25, up 75.32 per cent from the issue price.
Unimech Aerospace IPO - Should you sell or hold?
Analysts have recommended subscribing to the issue, highlighting the company’s solid position in the aerospace sector due to its focus on manufacturing critical components for global original equipment manufacturers (OEMs).
Abhishek Pandya, Research Analyst at StoxBox, noted that despite the initial drop, Unimech's strong financial performance, industry tailwinds, and attractive valuation make it a solid long-term investment.
"The issue is valued at a price-to-earnings (P/E) ratio of 59.3x on the upper price band based on FY24 earnings, which is comparatively lower than its peers. Considering the company’s strong financial performance, industry tailwinds, and attractive valuation, we recommend that investors who have been allotted shares consider holding their positions from a medium to long-term perspective," he said.
The company aims to utilize the net proceeds from fresh issue towards funding capital expenditure for expansion through the purchase of machinery and equipment, working capital requirements and investment in their material subsidiary
“Unimech Aerospace is looking to expand its designing and manufacturing capabilities through acquisitions (recent acquisition of 30 per cent stake in Dheya Engg). It is also scouting for organic/inorganic opportunities in USA which will expand its capacity and ability to service customers in its key market,” said SBI Securities while assigning a subscribe rating to the stock.
“At the upper price band of Rs 785, the company is valued at FY25 annualized P/E multiple of 51.6x on post-issue capital which is at a discount to its peers. We recommend investors to subscribe to the issue at a cut-off price,” the brokerage firm said.
About the company
Incorporated in 2016, Unimech Aerospace and Manufacturing is an engineering solutions company specializing in manufacturing and supply of high precision & critical components to major OEMs (original equipment manufacturers) and their licensees worldwide for aerospace, defence, energy, and semiconductor industries. It is an export-oriented company with customers across the USA, Germany and the United Kingdom. They have two manufacturing facilities in Bangalore operating at a capacity utilization of 95 per cent. As of 30th September 2024, they have an order book of Rs 80 crore which would be fulfilled in 4-16 weeks.
(Disclaimer: The views expressed by the spokespersons in this article are their own and do not constitute financial advice.)
