Aequs IPO

The advanced vertical integration within a single Special Economic Zone (SEZ) in India, covering full Aerospace Segment capabilities (machining, forging, surface treatment, assembly), is a unique competitive advantage. This segment is highly material, contributing 88.2% of net external revenue in H1 FY26, supported by one of the largest aerospace product portfolios in India.

The Aerospace Segment is highly lucrative, reporting a robust EBITDA margin of 24.68% for the six months ended September 30, 2025. This core segment drives the majority (88.2% in H1 FY26) of the total operating revenue.

This dependence on the top ten customer groups (82.51% of revenue in H1 FY26) is supported by long-standing relationships. For example, the average years of relationship with the ten largest customer groups is 11 years. Additionally, the three largest customer groups have an even longer average tenure of 15 years.

Its financial base has expanded significantly, with total assets growing to ₹1,859.8 crore by FY25 (an 18.6% CAGR between FY23 and FY25), which further grew to ₹2,134.35 crore by September 30, 2025. This growth is backed by substantial ongoing capital work-in-progress.

Operations in Special Economic Zones (SEZ) provide significant cost advantages, yielding ₹146.75 crore in duty exemptions and tax deductions in the six months ended September 30, 2025, equating to 27.32% of its revenue from operations.

A crucial manufacturing footprint across three continents (India, the US, and France) provides strategic proximity to global OEMs and facilitates a strong export orientation. Only 11.44% of revenue came from sales within India in 6M FY26.

The company has a demonstrated history of consistent consolidated losses across the last three years, including ₹102.35 crore in FY25. Sustained profitability remains a significant challenge.

Revenue is extremely reliant on key accounts; the top ten customer groups generated 82.51% of revenue in the six months ended September 30, 2025. Loss of any single major customer would severely disrupt operations.

The secondary consumer Segment consistently reports operational losses, with EBITDA loss reaching ₹28.67 crore in FY25. This segment's underperformance reduces overall consolidated profitability.

The company’s total borrowings have increased from ₹346.1 crore in FY23 to ₹533.5 crore as of H1 FY26 (as of September 30, 2025). Out of these borrowings, 39.9% of its total borrowings, amounting to ₹212.86 crore, were unhedged foreign exchange borrowings, exposing it heavily to currency fluctuations.

It suffers from low capital efficiency, reflected by a prolonged Cash Conversion Cycle of 253 days in FY25. This cycle has steadily increased from 157 days in FY23, indicating growing slowness in collecting funds and managing inventory. In simple terms, a Cash Conversion Cycle of 253 days means the company takes 253 days to turn its investments in inventory and sales into actual cash.

Despite having 29.19 lakh (2,919,058) annual machining/molding hours capacity, capacity utilization remains low at 41.77% in FY25. Specifically, the Consumer Segment capacity was extremely underutilized at 20.62% in 6M FY26, hindering fixed cost absorption.

It experienced negative net cash flow from operations in FY24 of ₹19.11 crore. Continued reliance on external funding to cover operations and expansion is a persistent risk.

Its arrangements with OEM customers are usually requirement-based, not obligating fixed quantities. This means that customers can terminate contracts or reduce production orders suddenly, negatively impacting revenue projections.