Bajaj Broking has issued a positive recommendation on the ₹500 crore initial public offering (IPO) of Unimech Aerospace and Manufacturing Limited, advising investors to “Subscribe for the Long Term.” The IPO, open from December 23 to December 26, 2024, is priced in the range of ₹745-₹785 per share.
Why Bajaj Broking is Bullish:
Bajaj Broking highlighted several factors behind its favorable recommendation for the IPO:
- Strong Financial Growth: The company’s FY24 performance showed a 122% increase in revenue to ₹2,087.75 crore and a 155% rise in net profit to ₹581.34 crore.
- Industry Prospects: With over 95% of its revenue derived from the growing aerospace sector, Unimech stands to benefit from heightened global demand for precision engineering solutions.
- Reasonable Valuation: At the upper price band, the IPO’s P/E ratio of ~59.33x is significantly lower than the sector average of ~222.44x.
- Expansion Plans: The IPO funds will be utilized for capital expenditure, subsidiary investments, and debt reduction, positioning the company for sustained growth.
Key IPO Details:
- Issue Size: ₹500 crore
- Minimum Lot: 19 shares
- Listing Date: December 31, 2024
- Exchange: BSE, NSE
Unimech Aerospace IPO: Key details, GMP, and subscription schedule
Risks to Consider:
Bajaj Broking noted potential risks, including the company’s heavy reliance on the aerospace industry (95% of revenue), elongated payment cycles (7-28 weeks), and exposure to geopolitical uncertainties in key markets like the USA and Europe.
Bajaj Broking’s View:
Bajaj Broking sees Unimech Aerospace as a promising investment for long-term wealth creation. The firm’s focus on high-growth sectors such as aerospace, defense, and semiconductors, combined with its robust financial performance, makes the IPO a compelling opportunity for investors.
Investors seeking exposure to the precision engineering industry and a company with export-oriented growth potential are encouraged to consider subscribing to this IPO.
