Unimech Aerospace IPO opens today: GMP up 61%; Should you subscribe?

Unimech Aerospace IPO: The initial public offering (IPO) of Unimech Aerospace and Manufacturing opens for public subscription today, Monday, December 23, 2024. The company aims to raise Rs 500 crore through a fresh issue of 63,69,424 shares and an offer for sale (OFS) of 31,84,712 shares, with a face value of Rs 5 per share. Ramakrishna Kamojhala, Mani P, Rajanikanth Balaraman, Preetham S V, and Rasmi Anil Kumar are among the promoters of the company participating in the OFS.

 

Here are the key details of Unimech Aerospace IPO:

 

Unimech Aerospace IPO price band, lot size 

The company set the price band at Rs 745-785 per share, and a lot size of 19 shares. Accordingly, the investors can bid for a minimum of 19 shares, requiring a minimum investment of Rs 14,915. A retail investor would need Rs 1,93,895 to bid for a maximum of 13 lots or 247 shares.

 

Unimech Aerospace IPO grey market premium (GMP) today

The unlisted shares of Unimech Aerospace are commanding a strong premium in the grey market ahead of the IPO launch. Unlisted shares of Unimech Aerospace were trading at Rs 1,265 apiece, reflecting a grey market premium (GMP) of Rs 480 or 61.15 per cent against the upper end of the IPO price of Rs 785, according to sources tracking unofficial markets.  Also Read: Mamata Machinery IPO

 

Unimech Aerospace IPO allotment, listing schedule 

The subscription window for the IPO will close on Thursday, December 26, 2024. The basis of allotment of Unimech Aerospace IPO shares is expected to be finalised on Friday, December 27, 2024. Successful allottees will receive the shares in their demat accounts by Monday, December 30, 2024.

 

Unimech Aerospace shares are tentatively scheduled to list on the BSE and NSE on Tuesday, December 31, 2024.

 

Unimech Aerospace IPO registrar, BRLM

KFin Technologies is the registrar for the Unimech Aerospace IPO, while Anand Rathi Securities and Equirus Capital are the book-running lead managers of the public issue.

 

Unimech Aerospace IPO objective

According to its Red Herring Prospectus (RHP), Unimech Aerospace will not receive any proceeds from the OFS. The selling shareholders will be entitled to their respective portions of the proceeds after deducting offer-related expenses and relevant taxes.

 

The company proposes to utilise the net proceeds from the fresh issue for funding capital expenditure related to expansion through the purchase of machinery and equipment and for meeting its working capital requirements. Additionally, the company plans to invest in its material subsidiary to purchase machinery and equipment, fund working capital requirements, and repay or prepay certain borrowings of the subsidiary. A portion of the proceeds will also be allocated to general corporate purposes.

 

Unimech Aerospace IPO - Brokerage recommendations

 

BP Wealth - Subscribe

Analysts at BP Wealth have assigned a ‘Subscribe’ rating to the IPO. According to them, the issue is valued at a price-to-earnings (P/E) ratio of 59.3x on the upper price band based on FY24 earnings, which is comparatively lower than its peers. "Considering the company's strong financial performance, industry tailwinds, and attractive valuation, we recommend a 'Subscribe' rating for this issue," they wrote in a research note.

 

InCred Equities - Subscribe

Brokerage firm InCred Equities has also assigned a ‘Subscribe’ rating to the Unimech Aerospace IPO, citing its presence in niche aerospace and defense sectors, healthy margin profile, diversified capabilities, and higher return ratios. Analysts highlighted that the onboarding process for new customers requires technical expertise and competitive pricing, creating high entry barriers for competitors.

 

Unimech reported strong numbers, with revenue, Ebitda, and PAT clocking a CAGR of 79 per cent, 117 per cent, and 158 per cent, respectively, between FY22 and FY24. The Ebitda margin expanded from 21.3 per cent in FY22 to 37.9 per cent in FY24, driven by a high-mix, high-complexity, low-volume business. In FY24, RoE and RoCE stood at 54 per cent each.

 

Ventura Securities - Subscribe

Ventura Securities has also assigned a ‘Subscribe’ rating to the IPO. The brokerage noted Unimech Aerospace's strengths, including cutting-edge manufacturing capabilities, a digital-first approach, a strong vendor network, and high entry barriers in its niche sector.

 

The brokerage emphasised the company’s experienced management team and growth potential as it prepares to launch its IPO. "With two ISO-certified facilities in Bengaluru spanning 1,20,000 sq. ft. and a skilled workforce of 384 employees, Unimech is equipped to deliver advanced engineering solutions. Its strategic location and robust infrastructure support seamless operations and innovation," it said.

 

About Unimech Aerospace and Manufacturing

Incorporated in 2016, Unimech Aerospace and Manufacturing specialises in the production of complex tools, including mechanical assemblies, electromechanical systems, and components for aero-engine and airframe production. The company provides engineering solutions tailored to clients’ specific requirements in industries such as aerospace, defense, energy, and semiconductors. Their offerings include ‘build to print’ and ‘build to specifications,’ encompassing machining, fabrication, assembly, testing, and the development of new products.