Unimech Aerospace IPO Listing: Stock lists at 90% premium over IPO price
Unimech Aerospace IPO Listing
Unimech Aerospace IPO Listing: ₹785 Share Debuts at ₹1491, Brokers Suggest Caution Amid 89.94% Listing Gain
Unimech Aerospace, a prominent player in the aerospace manufacturing sector, has successfully listed its shares on the stock exchanges following its ₹500 crore Initial Public Offering (IPO).
The shares were offered at an issue price of ₹785 and have made a spectacular debut on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).
Despite the initial excitement and strong listing gains, market analysts are advising investors to approach the stock with caution, as the price has experienced fluctuations post-listing.
This article offers an in-depth look at the Unimech Aerospace IPO listing, its strong subscription numbers, financial performance, and the brokerage outlook.
Unimech Aerospace IPO Listing: Stellar Debut but with Volatility
Unimech Aerospace’s IPO, which was open for subscription from December 23-26, has witnessed significant interest from investors.
The shares made a remarkable debut on December 29, listing at ₹1491 on the BSE and ₹1460 on the NSE, marking an immediate listing gain of 89.94% for those who subscribed to the IPO at the issue price of ₹785.
The strong debut performance reflects the high demand for the stock, with the issue subscribed 184.34 times overall.
However, while the opening price was impressive, the stock faced immediate volatility after its listing. Within hours of the market opening, the stock saw a steep drop from its high of ₹1491 on the BSE to ₹1341.95, representing a 30% decline from the day’s high.
Despite the fall, by the close of trading, Unimech Aerospace shares were still up by 70.95%, closing at ₹1341.95 on the BSE.
On the NSE, the stock ended at ₹1,332.80. The fluctuation in price has sparked mixed reactions from analysts, many of whom have warned investors to track the stock closely before making any decisions about profit booking.
Unimech Aerospace IPO Subscription Details
The ₹500 crore IPO from Unimech Aerospace was well-received, with significant demand across all investor categories.
The issue was subscribed a staggering 184.34 times, highlighting the strong investor appetite. The breakdown of the subscription was as follows:
- Qualified Institutional Buyers (QIBs): Subscribed 334.68 times, showing an overwhelming interest from institutional investors.
- Non-Institutional Investors (NIIs): Their portion was subscribed 277.55 times, reflecting strong demand from high-net-worth individuals (HNIs).
- Retail Investors: Their portion was subscribed 59.19 times, which indicates healthy participation from individual investors despite a higher overall subscription rate.
- Employee Portion: Subscribed 100.95 times, showing confidence from within the company.
The IPO consisted of two components: fresh issue of shares worth ₹250 crore and an Offer for Sale (OFS) component where 3.18 million shares were sold by existing shareholders.
The funds raised from the fresh issue will be used to purchase machinery and equipment, meet working capital requirements, invest in material subsidiaries, and cover general corporate expenses. In contrast, the proceeds from the Offer for Sale (OFS) will go directly to the selling shareholders.
About Unimech Aerospace
Founded in 2016, Unimech Aerospace and Manufacturing is a company engaged in the manufacturing of high-precision aerospace components and systems.
The company’s core products include mechanical assemblies, electro-mechanical systems, and parts for aeroengines and airframes.
Unimech Aerospace primarily serves the aerospace and defense industries, offering its products for maintenance, repair, and overhaul (MRO) operations, as well as for semiconductor and energy industries.
The company has demonstrated strong financial growth in recent years, making it an attractive option for investors. In FY 2022, Unimech Aerospace posted a net profit of ₹3.39 crore, which surged to ₹22.81 crore in FY 2023.
This upward trajectory continued in FY 2024, with the company reporting a net profit of ₹58.13 crore.
Revenue also experienced significant growth, rising at a compound annual growth rate (CAGR) of over 140% annually to ₹213.79 crore in FY 2024.
In the first half of FY 2024-25 (April-September 2024), the company reported a net profit of ₹38.68 crore and revenue of ₹127.58 crore, signaling strong momentum heading into the next phase of its business cycle.
Brokerage Trends and Investment Recommendations
The strong performance of Unimech Aerospace in its IPO and the solid fundamentals of the company have attracted positive attention from market analysts.
Several leading brokerages have weighed in on the stock, offering a positive outlook, though they have also highlighted the need for caution due to the potential for short-term volatility.
- SBI Securities: SBI Securities noted that the issue was priced at a discount to its peers in terms of valuation, making the stock an attractive proposition for long-term investors. Given the company’s solid financial performance and its strategic positioning in the aerospace and defense sectors, they recommended subscribing to the IPO. They also suggested that the stock could outperform its peers in the long term, given its growth trajectory.
- Bajaj Broking: Similarly, Bajaj Broking issued a subscribe rating for the long term, citing the company’s growth prospects in the aerospace and defense sectors. They noted that Unimech Aerospace was well-positioned to benefit from the increasing demand for aerospace components in India and globally, as well as its specialization in high-precision systems.
- Caution on Short-Term Volatility: Despite the bullish long-term outlook, both brokers and analysts have expressed caution about the stock’s immediate post-listing performance. The significant fluctuations in the stock price on the first day of trading suggest that there may be considerable short-term volatility. As such, investors are advised to monitor the stock closely and be prepared for possible fluctuations before deciding to take profits or hold for the long term.
Financial Performance and Growth Outlook
Unimech Aerospace has demonstrated impressive growth, both in terms of revenue and profitability, over the last few years.
The company’s revenue growth has been driven by strong demand for aerospace components and systems, particularly from the aerospace MRO (maintenance, repair, and overhaul) segment and the defense sector.
These industries are expected to continue growing, especially in India, where the aerospace and defense sectors are seeing increasing investments.
The company’s profitability has also significantly improved, with net profits increasing by over 500% from ₹3.39 crore in FY 2022 to ₹58.13 crore in FY 2024.
With a CAGR of 140% in revenue, the company’s financial trajectory appears robust, signaling further growth potential in the coming years.
Final Remarks: A Promising Investment with Volatility Risks
Unimech Aerospace’s IPO has been a success, with strong subscription figures and a solid market debut. Investors who bought into the IPO at the issue price have already seen substantial gains.
However, given the price fluctuations observed on the first day of trading, caution is recommended. While the long-term outlook for the company is positive due to its strong financial performance and strategic positioning in the aerospace and defense sectors, potential investors should carefully monitor the stock’s price movements and consider taking profits at an opportune moment.
In conclusion, while Unimech Aerospace presents a promising growth story, investors should weigh the risks of short-term volatility against the long-term potential of the company, based on their investment goals and risk appetite.
