Aerospace and Defence Stock Where Anand Rathi Sees 43% Upside Potential

Synopsis: Anand Rathi maintains a Buy on Unimech Aerospace with Rs. 1,435 target, citing Hobel acquisition, strong 44.9% revenue CAGR outlook, improving RoCE, and diversification driving 43% upside potential.

This small-cap Defence Stock, engaged in precision engineering, manufacturing aerospace components, tooling solutions, and advanced assemblies for defence, semiconductor, and industrial sectors, is in focus after Anand Rathi assigned a Buy target of Rs. 1,435, which has an upside potential of 43.04 percent.

With a market capitalization of Rs. 5,101.96 crore, the shares of Unimech Aerospace and Manufacturing Limited closed on Thursday at Rs. 1003.20 per equity share, down nearly 5 percent from its previous day’s close price of Rs. 1,055.95. 

What is the News?

Anand Rathi a prominent brokerage firm, has recommended a “Buy” call on Unimech Aerospace and Manufacturing Limited with a target price of Rs. 1,435 per share, indicating an upside potential of 43.04 percent from its previous day’s close price of Rs. 1003.20 per share.

Anand Rathi holds a positive outlook on Unimech Aerospace and Manufacturing Ltd. The company’s acquisition of Hobel Bellows for Rs. 4.5 billion strengthens its capabilities in advanced engineering. This deal allows Unimech to move from precision parts to integrated systems. It also saves around Rs. 1 billion and requires 18-24 months for organic expansion.

The company is expected to deliver strong financial growth over the coming years. Anand Rathi estimates a revenue CAGR of 44.9 percent and PAT CAGR of 20.5 percent during FY25–FY28. The acquisition will also improve operational efficiency and product mix. RoCE is expected to increase by 505 basis points to 16.1 percent by FY28.

Unimech benefits from diversification into aerospace, nuclear, semiconductor, and defence sectors. The stock currently trades at around 36.7x FY28 earnings. Strong margins, better asset utilization, and efficiency support premium valuation and future growth potential.

Order book:

Unimech Aerospace and Manufacturing Ltd has shown strong growth in its order book over recent months. The order book increased from Rs. 103.4 crore in December 2024 to Rs. 209.8 crore as of February 2026. This steady rise reflects improving demand and better order inflow across its business segments. The company also reported strong order inflows during April 2025 to January 2026, totalling around Rs. 301 crore, which is higher than the previous year.

The company continues to win new orders across key sectors, especially in the nuclear segment, where it secured orders worth Rs. 68 crore this quarter. It has also received additional orders of over USD 1.2 million in February 2026. Management expects further order wins in the coming months, which will support revenue growth and strengthen its business outlook.

Company Overview: 

Unimech Aerospace and Manufacturing Limited is a precision engineering company that makes critical components for aerospace, defence, energy, and semiconductor industries. It mainly focuses on aero tooling and precision parts manufacturing. The company produces engine tools, airframe tools, and complex assemblies used by global aircraft manufacturers.

The company operates manufacturing facilities in Bengaluru, including the KIADB Aerospace SEZ and Peenya Industrial Area. It has strong capabilities like build-to-print and build-to-spec production, handling both high and low volume orders. Unimech serves customers across 7 countries and earns about 86 percent of its revenue from exports.

Unimech has a wide customer base, including engine OEMs, aircraft manufacturers, and defence companies. It also serves the nuclear and semiconductor sectors. The company has over 4,500 tooling SKUs and 1,094 precision parts. With a total manufacturing area of 2,75,000 square feet and around 806 employees, it continues to expand its operations and capabilities.

Recent Quarter Results:

Coming into financial highlights, Unimech Aerospace and Manufacturing Limited’s revenue has decreased from Rs. 53.90 crore in Q3 FY25 to Rs. 33.72 crore in Q3 FY26, which is a drop of 37.44 percent. The net profit has also decreased by 84.65 percent from Rs. 15.57 crore in Q3 FY25 to Rs. 2.39 crore in Q3 FY26. Unimech Aerospace and Manufacturing Limited’s revenue and net profit have grown at a CAGR of 88.99 percent and 202.45 percent, respectively, over the last three years.

In terms of return ratios, the company’s ROCE and ROE stand at 22.2 percent and 19.9 percent, respectively. Unimech Aerospace and Manufacturing Limited has an earnings per share (EPS) of Rs. 13.0, and its debt-to-equity ratio is 0.16x.

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