The brokerage house Nuvama initiated coverage on the aerospace manufacturing company Aequs with a ‘Buy’ rating and a target price of Rs 444 per share. Based on the current market price of around Rs 237, the brokerage sees an upside potential of nearly 87%.
Nuvama believes the company’s strong order book, expanding manufacturing capabilities and growing presence in precision engineering could support earnings growth over the next few years.
Key brokerage call
| Particulars | Details |
| Brokerage | Nuvama Institutional Equities |
| Rating | Buy |
| Current Price | Rs 237 |
| Target Price | Rs 444 |
| Upside Potential | 87% |
Aerospace business remains the biggest growth driver
Aequs is India’s only vertically integrated aerospace Special Economic Zone (SEZ), manufacturing aircraft structures, landing gear components and engine parts from its integrated facility in Belagavi, Karnataka.
Its customer base includes some of the world’s leading aerospace manufacturers such as Airbus, Boeing, Safran, Collins Aerospace and Bombardier.
Nuvama said, “Aequs Limited is India’s only vertically-integrated aerospace SEZ.” The brokerage further described the company as “India’s first genuine pure-play aerospace precision manufacturer.”
According to the report, one of the biggest strengths is the company’s order visibility. Nuvama noted that Aequs has an order book worth $889 million. This provides strong revenue visibility for the coming years.
The brokerage said, “A solid $889 million order book warrants a 42% and 84% sales/EBITDA CAGR over FY26–29E.”
Long-term contracts create high entry barriers
According to the brokerage report, aerospace manufacturing differs from many other industries because aircraft programmes typically continue for several decades.
Every aircraft component must undergo extensive certification before commercial production begins. Once approved, suppliers generally remain part of the programme for many years.
Nuvama noted, “The $889 million contracted order book…is not just a sales pipeline, these are solid purchase orders tied to OEM production schedules.”
The brokerage also highlighted the company’s expanding presence in aircraft engine manufacturing through its recently announced investment plans in Tamil Nadu.
Consumer electronics business offers additional opportunity
Aequs is also expanding its consumer electronics manufacturing business.
According to the brokerage report, this division is currently operating below capacity, which has affected profitability. However, Nuvama believes utilisation levels can improve over time as production volumes increase.
The report said, “Moving to 40% utilisation raises revenue while fixed costs grow less than 10% – breakeven is a volume problem, not a margin one.”
Furthermore, the brokerage expects the consumer electronics business to become an additional growth driver over the medium term.
Why Nuvama believes the valuation is attractive
One of the key reasons behind its positive outlook is the long life cycle of aerospace programmes.
Nuvama said, “A qualification won today is an annuity, not a contract.” It also added that “Aequs deserves a valuation premium above pharma Contract Development and Manufacturing Organisations (CDMOs) – unlike molecules, aircraft programmes never expire.”
The brokerage has valued the company using a 30-year Discounted Cash Flow (DCF) model, assuming a Weighted Average Cost of Capital (WACC) of 16% and terminal growth of 3%.
Risks investors should monitor
Nuvama highlighted a few risks that investors should keep in mind.
The brokerage report noted that longer raw material procurement cycles, slower-than-expected scaling of the consumer electronics business and delays in aircraft production, particularly at Boeing, could affect the company’s growth trajectory.
Disclaimer: The brokerage stock coverage, initiating target prices, and technical models detailed above are sourced from a third-party institutional equity report and do not reflect the opinions of this publication. They are not direct investment calls or solicitations to trade. Equity investments are subject to market risks, and target estimates are not guaranteed. Readers must consult a SEBI-registered financial advisor before executing any buy, sell, or hold positions. This disclaimer has been generated using AI to support user well-being and responsible content consumption.
