Aequs Limited Q3 FY26 Earnings Call Summary

Summary

Aequs Limited - Q3 FY26 Earnings Call Summary Thursday, January 29, 2026 18:00 Hours

Event Participants

Executives 4 Aravind Melligeri (Executive Chairman & CEO), Dinesh Iyer (CFO), Harish Bang (VP, Finance & Accounts), Rajeev Kaul (Co-Founder and MD)

Analysts 11 Aashish Upganlawar, Ashok Kumar, Bhavika Singhvi, Dev Thacker, Jai Chauhan, Nemish Sundar, Rachna P, Renuka Baid, Sahil Sangari, Sharan P, Shashi Kant

Financials & KPIs

Geographic & Segment Commentary

• Aerospace Segment: Contributed 86% of 9M FY26 revenue with an 18.5% ROCE. Strategic focus is shifting towards high-value landing gear and engine components, leveraging vertically integrated forging and surface treatment capabilities. The segment maintains over 90% single-source status on its 5,221-part portfolio across Airbus and Boeing platforms.
• Consumer Segment: Revenue grew 157% in Q3 but EBITDA loss widened to ₹15.9 crores due to front-ended investments. Management highlighted that capacity for consumer electronics is fully underwritten by customers, with utilization (currently 31%) being the primary driver for future profitability.
• International Operations: Facilities in France and the U.S. support local defense requirements and aftermarket/MRO services. These units provide global proximity to OEMs while the India clusters (Belagavi, Hubballi, Koppal) serve as the high-volume, value-oriented manufacturing core.

Company-Specific & Strategic Commentary

• Vertical Integration: Aequs operates the only single-SEZ fully integrated aerospace ecosystem in India, covering forging, machining, and NADCAP-certified surface treatment. This “ecosystem” approach reduces cycle times and provides a competitive moat against suppliers with selective capabilities.
• Consumer Electronics Ramp-up: Received MeitY approval for PLI incentives under the electronic component scheme for mechanical enclosures. Strategic entry into this space leverages aerospace-grade precision for high-volume consumer tech.
• Defense & UAV Entry: Formed joint ventures with Accel India and Vagus Defense to enter the design and manufacturing of Unmanned Aerial Vehicles (UAVs) for Indian defense. The goal is to move from component supply to system-level integration.
• Partnership Model: Utilizes JVs with global leaders (Magellan Aerospace, Aubert & Duval, Tramontina) to gain deep process expertise without the long learning curve of organic development.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Aerospace Margins & Ecosystem

• Question: Why are margins below 30% if the ecosystem is a competitive advantage? (Bhavika Singhvi)
• Answer: Aerospace 9M margins are healthy at 24%; the consolidated margin is depressed by the consumer ramp-up. The ecosystem allows for large-scale operations and deep customer integration that smaller competitors cannot match (Dinesh Iyer).

Consumer Electronics Scaling

• Question: What is the roadmap for consumer electronics and the impact of chip shortages? (Renuka Baid)
• Answer: Capacity is fully committed by customers; scaling is limited by internal ramp-up speed rather than demand. Macro chip shortages haven’t impacted volumes as Aequs is a small percentage of the customer’s total supply chain (Aravind Melligeri).

Order Book Execution

• Question: What are the timelines for the $814 million backlog? (Nemish Sundar)
• Answer: This is a TCV through 2031. It is a dynamic number; as we execute, new long-term contracts (typically 5-7 years) are added via a continuous RFP pipeline (Dinesh Iyer).

Profitability Timelines

• Question: Is the FY27 PAT positive target still on track? (Ashok Kumar)
• Answer: Aerospace is profitable, but the consolidated timeline depends on the consumer segment. Success is a double-edged sword; customers are asking for more capacity, which may extend the loss-making phase due to new depreciation/CapEx cycles (Aravind Melligeri).

Key Takeaway

Aequs Limited delivered a record quarterly revenue of ₹326.2 crores in Q3 FY26, representing 51% YoY growth, anchored by a robust performance in its aerospace division which maintains a $814 million order book. While the aerospace segment is highly profitable with 24% margins and 71% utilization, the consolidated bottom line remains impacted by the aggressive scaling of the consumer electronics and toys verticals. The company has successfully industrialized new programs for global majors like Mattel and secured PLI incentive approvals for electronic enclosures. Management’s strategy focuses on balancing these two divisions to achieve a 1:1 revenue mix, targeting 18-20% steady-state EBITDA margins across both. Although heavy front-ended investments in the consumer segment have delayed near-term PAT breakeven, the underwritten demand and capacity expansion requests from key customers suggest strong long-term revenue visibility. Aequs is now pivoting toward high-value aerospace sub-systems and defense UAVs to further enhance its value-add per platform.