Nuvama Institutional Equities has initiated coverage on Aequs Limited with a 'Buy' rating and a target price of ₹444 per share, implying an upside potential of 87-91% from current levels around ₹237-242. The brokerage's bullish thesis centers on the company's position as India's only vertically integrated aerospace Special Economic Zone (SEZ), a massive $889 million order book, and long-term contracts with global aerospace original equipment manufacturers (OEMs).
Aequs reported strong operational performance in FY26, with consolidated revenue growing 33% year-on-year to ₹12,304 million. This growth was driven by two distinct segments: aerospace and consumer electronics. The aerospace segment, contributing 85% of total revenue, grew 27% to ₹10,464 million. Meanwhile, the consumer electronics segment, though currently loss-making, showed explosive growth of 84% to reach ₹1,840 million, expanding its revenue share from 11% in FY25 to 15% in FY26.
The company's aerospace order book strengthened to $889 million during the year, representing 7.4 times FY26 revenue coverage. This isn't just a sales pipeline—these are solid purchase orders tied to OEM production schedules, each part underpinned by complete First Article Inspection and an 18-36 month requalification wall. Aequs added 433 new aerospace parts during Q4 FY26 alone, taking its total portfolio to 5,654 stock keeping units (SKUs).
Here's the paradox: Aequs delivered 33% revenue growth and improved EBITDA margins by 100 basis points to 13%, yet net losses widened to ₹1,133 million from ₹1,024 million in the previous year. The culprit? The consumer electronics expansion.
The consumer electronics business began commercial operations in FY26, incurring higher operating costs while capacity utilization remained low at just 23%. Fixed costs grew less than 10% even as consumer revenues scaled, indicating that breakeven is primarily a volume problem, not a margin problem. The aerospace segment, by contrast, operates at 70% capacity utilization with 27% segment-level EBITDA margins and 20% return on capital employed. Transcripts
Nuvama values Aequs using a 30-year Discounted Cash Flow (DCF) model with a Weighted Average Cost of Capital (WACC) of 16% and terminal growth of 3%. The 30-year horizon deliberately matches the longevity of aerospace programs being served—the Boeing 737 has run for 58 years and the A320 for 38 years.
The brokerage projects 42% sales CAGR and 84% EBITDA CAGR over FY26-29, driven entirely by the aerospace order book. Remarkably, Nuvama assumes the consumer electronics segment contributes zero to current valuation, creating significant upside optionality if the segment succeeds. This conservative approach provides substantial downside protection.
Nuvama describes Aequs as "India's first genuine pure-play aerospace precision manufacturer"—a moat built over 15 years through patient capital allocation, not merely through capital expenditure. The company operates a unique ecosystem with co-located capabilities spanning forging, precision machining, surface treatment, and assembly, enabling end-to-end manufacturing of complex, high-precision components.
The customer base includes some of the world's leading aerospace manufacturers: Airbus, Boeing, Safran, Collins Aerospace, and Bombardier. Every aircraft component must undergo extensive certification before commercial production begins. Once approved, suppliers generally remain part of the programme for many years. As Nuvama puts it: "A qualification won today is an annuity, not a contract".
The consumer electronics segment presents both opportunity and risk. On one hand, it grew 84% in FY26 and contributed 17% of Q4 revenue, demonstrating scaling potential. The company works with global brands including Hasbro, Spin Master, Tramontina, and Wonder Chef. On the other hand, the segment is currently loss-making, and Hasbro intends to cease placing purchase orders with Aequs Engineered Plastics, creating near-term revenue uncertainty.
Nuvama approaches margin assumptions with discipline. Global peers Catcher Technology and Everwin Precision—precision enclosure suppliers to large consumer electronics companies—earn 8-15% operating margins, well below management's 20% EBITDA margin guidance. The brokerage is baking in 15-18% EBITDA CAGR at steady state with a 75% three-year sales CAGR.
Aequs isn't standing still. The company has announced large-scale strategic investment plans through MoUs with Tamil Nadu (₹1,900 crore) and Karnataka (₹2,856 crore) governments. The Tamil Nadu investment is particularly significant—it aims to establish India's first integrated aero-engine ecosystem, marking Aequs' strategic pivot toward higher-value engine components.
Management targets 4-6 times revenue growth over FY26-31 and EBITDA margins between 18-22% by FY31. The consumer segment is expected to achieve EBITDA breakeven by Q4 FY27 as utilization improves to 40% from current levels. Transcripts
Nuvama highlights three key risks. First, raw material procurement cycles of 52-75 weeks are pressuring working capital. Second, the consumer ramp-up depends on anchor customer execution. Third, Boeing's production recovery remains incomplete, which could affect order book conversion.
The brokerage explicitly states they are "buyers of all three risks at a valuation where the consumer contributes zero, and the OB trades at a fraction of its contracted forward revenue". This risk-accepted approach reflects the significant margin of safety built into their valuation.
Since listing in December 2025 at ₹124, Aequs shares have demonstrated remarkable resilience. The stock fell to a record low of ₹113.30 in March 2026 but has since surged around 118% to current levels near ₹242. This recovery suggests the market is increasingly recognizing the aerospace fundamentals and order book strength that Nuvama highlights.
However, the scarcity value as India's only aerospace SEZ, combined with superior growth projections, supports Nuvama's view that this valuation gap will close as execution progresses.
The investment thesis ultimately comes down to this: Aequs deserves a valuation premium above pharma Contract Development and Manufacturing Organisations (CDMOs) because, unlike molecules, aircraft programmes never expire. With 90-95% of the valuation dependent on aerospace execution and consumer electronics providing pure upside optionality, Nuvama's ₹444 target price offers compelling risk-reward for investors willing to look through near-term profitability challenges.
