Defence Stock to Buy Now for an Upside of 52%; Recommended by Anand Rathi

Synopsis: Anand Rathi has a Buy rating on Unimech Aerospace, citing strong growth prospects, expanding industry presence, improving profitability, and potential upside of nearly 52 percent.

This Small-Cap Defence Stock, engaged in manufacturing precision-engineered tooling, complex assemblies, and critical components for the aerospace, defence, nuclear, energy, and semiconductor industries, is in focus after Anand Rathi gave a buy target of Rs. 1,435, which has an upside potential of 51.85 percent.

With a market capitalization of Rs. 4,776.73 crore, the shares of Unimech Aerospace and Manufacturing Limited closed at Rs. 945 per equity share, rising nearly 0.71 percent from its previous day’s close price of Rs. 938.70.

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 52 percent from its closing price.

Anand Rathi remains positive on Unimech Aerospace due to its strong growth visibility, improving margins, and expanding presence across high-growth sectors such as aerospace, defence, nuclear, semiconductor, and oil & gas.

The brokerage expects the company to deliver a strong 75 percent revenue CAGR, 83 percent EBITDA CAGR, and 52 percent PAT CAGR between FY26 and FY28. A key growth driver is the PCA business, where revenue is expected to grow at an impressive 151 percent CAGR over the same period. The company added 200+ customer approvals (FAAs) in FY26 and plans to double this in FY27, supporting future growth. It has also secured a Rs. 866 million nuclear order, providing strong revenue visibility.

Further, the upcoming FTWZ facility, Kanoo joint venture, and Hobel acquisition are expected to strengthen the company’s product offerings and market reach. Anand Rathi also expects RoCE to improve to 18.7 percent by FY28, supported by better utilization, healthy margins, and an improved product mix, which supports the premium valuation and positive outlook on the stock.

Order Book Details

Unimech Aerospace’s order book has shown strong momentum, increasing to Rs 313.7 crore as of May 26, 2026, compared with Rs 93.4 crore in March 2025. This sharp rise reflects strong demand across its key business segments and provides healthy revenue visibility for the coming quarters.

The company secured Rs 383.1 crore worth of orders during FY26, marking its highest-ever annual order inflow. The order book also includes Rs 86.6 crore of nuclear business orders, highlighting Unimech’s growing presence in high-value sectors such as nuclear, defence, and aerospace, which could support long-term growth.

Business Highlights

Unimech Aerospace has a strong global footprint, serving 35 customers across 7 countries, with 89 percent of its revenue coming from exports. The company operates 2.75 lakh sq. ft. of manufacturing capacity and serves leading aerospace, defence, nuclear, and semiconductor customers.

Its product portfolio includes over 5,900 qualified SKUs, comprising 4,718 tooling and precision sub-assemblies and 1,205 precision machined parts. This broad qualification base reflects strong engineering capabilities and supports long-term growth opportunities across multiple high-value industries.

Company Overview

Unimech Aerospace is a precision engineering company that manufactures critical tools, parts, and assemblies for the aerospace, defence, energy, nuclear, and semiconductor industries. The company specializes in aero tooling, ground support equipment, electro-mechanical sub-assemblies, and other high-precision components used in mission-critical applications.

The company operates through two key business segments, which includes Aero Tooling/MRO Tooling and Precision Parts & Assemblies. It supplies aero engine and airframe tools to leading global aerospace companies, including customers linked to Airbus, Boeing, Pratt & Whitney, Rolls-Royce, and LEAP engines. With a strong manufacturing base in Bengaluru and exposure to multiple high-growth industries, Unimech is well positioned to benefit from increasing demand for precision-engineered products globally.

Recent Quarter Results

Coming into financial highlights, Unimech Aerospace and Manufacturing Limited’s revenue has increased from Rs. 68 crore in Q4 FY25 to Rs. 82 crore in Q4 FY26, which has grown by 20.59 percent. The net profit has decreased by 10.34 percent from Rs. 29 crore in Q4 FY25 to Rs. 26 crore in Q4 FY26.

Unimech Aerospace and Manufacturing Limited’s revenue and net profit have grown at a CAGR of 36.68 percent and 39.92 percent, respectively, over the last three years.

In terms of return ratios, the company’s ROCE and ROE stand at 11.8 percent and 9 percent, respectively. Unimech Aerospace and Manufacturing Limited has an earnings per share (EPS) of Rs. 12.4, and its debt-to-equity ratio is 0.17x.

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