Unimech Aerospace Stock Up 3% After Acquiring Hobel Bellows in All cash ₹450 Cr Deal

Synopsis: In a capability-led acquisition disclosed through an analyst concall on April 28, 2026, Unimech Aerospace and Manufacturing Limited announced the purchase of Hobel Bellows, a Visakhapatnam-based manufacturer of metallic bellows and precision tubular assemblies.

Shares of a Bengaluru-based precision aerospace components manufacturer came into focus after the company held an investor conference call on April 28, 2026, disclosing an inorganic acquisition. The call, hosted by Anand Rathi Share and Stock Brokers Limited, featured the company’s Chairman and Managing Director and four Whole-Time Directors, including the CFO.

With a market capitalisation of Rs. 5,250.46 crore, the shares of Unimech Aerospace and Manufacturing Limited were trading at Rs. 1,032.40up 2.99 percent from its previous close of Rs,1,002.4. It is trading at a P/E of 76.45.

Unimech has acquired Hobel Bellows, a manufacturer of metallic bellows, exhaust manifolds, and precision tubular assemblies, operating out of a 200,000 square foot facility within the Visakhapatnam Special Economic Zone. The total consideration stands at Rs. 450 crore, structured as an all-cash payment with a 10 percent holdback retained for one year.

The deal was funded entirely from Unimech’s internal balance sheet with no fresh borrowings raised. The transaction was executed through a newly formed subsidiary, with intra-group financing between the holding company and subsidiary routed via a Compulsorily Convertible Debenture structure, a mechanism internal to the acquirer and not bearing on the seller’s cash consideration.

For the year ended March 31, 2026, Hobel Bellows reported approximately Rs. 129 crore in revenue. EBITDA margins exceed 50 percent and gross margins are below 70 percent, both reflecting the niche, mission-critical nature of the product and long qualification cycles that have established Hobel as a high-pricing-power supplier to global OEMs. The company was entirely debt-free prior to acquisition and carried pre-acquisition ROCE of over 50 percent. 

Management estimates post-acquisition ROCE at around 25 percent on the Rs. 450 crore invested cost,  a dilution from Hobel’s standalone returns, though the business itself remains highly cash-generative. The acquisition is priced at approximately 3.5 times FY26 revenue, or 6 to 7 times EBITDA by management’s characterization, a discount to listed Indian precision engineering peers, which typically trade at 25 to 30 times EV/EBITDA. Management attributed the below-market exit multiple to the promoter’s retirement and absence of a succession plan, with two daughters settled abroad and no intent to continue in the business.

Hobel’s product portfolio is concentrated in metallic bellows (over 75 percent of revenue), with exhaust manifolds and structural tubular components making up the balance. Nearly 90 percent of revenues come from exports across the UK, United States, Singapore, and China. Two large OEM groups account for approximately 93 percent of Hobel’s revenues, a customer concentration risk that management acknowledged, though it noted procurement is distributed across 10 to 12 geographies and multiple end-use segments including power generation, locomotive engines, and automotive applications.

The bellows range from 2 to 16 inches, serving engines between 900 and 9,000 BHP. Approximately 70 percent of the products manufactured are single-sourced meaning Hobel carries no direct competition in those specific items.

Strategic Rationale and Synergy Outlook

Unimech’s stated intent in making this acquisition was capability-led rather than purely financial. The company had internally budgeted Rs. 100 crore to build metal forming, tube bending, and sheet metal fabrication capabilities organically a process estimated to take 18 to 24 months. Hobel brings those capabilities immediately, along with existing customers and a six-month order book of approximately Rs. 65 crore.

The near-term synergy opportunity lies in cross-selling: introducing Hobel’s bellows into Unimech’s existing nuclear and industrial customer base, and using Hobel’s marine and naval relationships to support Unimech’s broader growth ambitions. Over the medium term, management is targeting aerospace customers who had already been requesting metal forming and tube bending capabilities.

Though Hobel is not yet AS9100 certified, the aerospace quality standard that would be a prerequisite for formal OEM qualification. Management guided approximately one year to secure NPCIL qualification for nuclear tubular assemblies and did not specify a timeline for AS9100 certification.

Revenue growth guidance for Hobel on a standalone basis stands at 15 to 17 percent annually over the next three to four years, driven largely by existing customers, with upside from Unimech cross-sells not yet factored in. Current capacity utilization is 50 to 60 percent, offering organic headroom without near-term capex. Management indicated new capex would be evaluated only at 80 to 90 percent utilization levels. The estimated payback period for the Rs. 450 crore investment, under conservative assumptions, is 8 to 10 years.

Business Overview

Incorporated in 2016, Unimech Aerospace and Manufacturing Limited is a precision engineering company supplying complex components and assemblies to global aerospace, defence, power generation, and semiconductor customers, including Airbus, Boeing, Dassault Aviation, GE, and Rolls-Royce.

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