Summary
Unimech Aerospace and Manufacturing Limited - Q3 FY 2026 Earnings Call Summary Friday, February 13, 2026 11:00 AM IST
Event Participants
Executives 6 Aakash Jaiswal, Anil Kumar Puttan, Mani Puttan, Preetham S.V., Rajanikanth Balaraman, Ramakrishna Kamojhala
Analysts 7 Aniket Madhwani, Ayush Bhatnagar, Balasubramanian, Darshit Shah, Gautam, Keyurkumar Vadaliya, Taher Hydrabadwala
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹34 crores | -44.3% QoQ; impacted by high U.S. tariffs and seasonal December slowdown. |
| Gross Margin | 71% | +300 bps QoQ; reflects resilience of cost structure despite lower volumes. |
| EBITDA | ₹1.56 crores | 4.6% margin; significant drop due to lower revenue absorption on fixed costs. |
| Net Profit | ₹2.40 crores | Impacted by seasonally low revenue and higher interest/depreciation. |
| Order Book | ₹210 crores | Record high; includes ₹68 crores from Nuclear and ₹142 crores from Aero/Precision. |
| Subcontracting Cost | 7.3% | Elevated due to lower revenue base; YTD average remains lower at 6.8%. |
| Fixed Asset Turnover | 1.4x | Reflects 60% capacity utilization; management targets 3.0x long-term. |
| Bank Limit Usage | ₹70 crores | Increased from ₹60 crores in Q2 to fund inventory build-up during tariff lull. |
Geographic & Segment Commentary
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Aero Tooling: Contributed 77% of YTD revenue but faced temporary deferrals as U.S. tariffs (50%) forced customers to shift from inventory-led to essential-only orders. Post-tariff reduction to 18% in February 2026, order flow has normalized with ₹10 crore ($1.2M) in orders received in the first week of February alone.
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Nuclear Segment: Secured ₹68 crores in orders with active bidding across NPCIL and NTPCL programs. Management maintains a disciplined bidding strategy, focusing on high-margin projects rather than volume-led L1 bidding.
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Precision Components & Assemblies: Expanding into semiconductor and energy sectors; currently qualifying 24 new First Article Inspections (FAIs). Management reports 52-week visibility for existing semiconductor production orders, though current volumes remain small.
Company-Specific & Strategic Commentary
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U.S. Tariff Normalization: Effective February 2026, tariffs on Indian aero tools reduced from 50% to 18%. This positions India favorably against Southeast Asian peers and is expected to drive customer inventory rebuilding.
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Free Trade Warehousing Zone (FTWZ): Facility setup is complete and awaiting final regulatory approvals. Once operational, it will allow customers to maintain duty-free inventory in India, reducing lead times and de-risking against future tariff volatility.
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Saudi Arabia Joint Venture: Established Kanoo-Unimech JV (51% stake) in Dammam to target oil, gas, and energy sectors. The JV involves a phased $30 million investment targeting $30 million annual revenue by year five with 35% EBITDA margins.
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Dheya Technologies: Increased stake to 30%; achieved technical milestones in micro gas turbines (65,000 RPM) and hydrogen anode blowers. Unimech holds exclusive manufacturing rights for these indigenous aerospace and defense subsystems.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| FY26 Revenue | >₹240 crores | Management aims to exceed FY25 revenue despite Q3 headwinds, backed by ₹90-100 crore Q4 target. |
| EBITDA/PAT Margins | ~25% (Full Year) | Expected to normalize as capacity utilization improves to 70-80% in FY27. |
| Working Capital Cycle | 150-160 days | Stabilizing at this range to support the manufacturing-led growth model. |
| Revenue Mix (3-Year) | 60% Aero / 40% Precision | Strategic shift to reduce reliance on tooling while scaling high-value precision components. |
Risks & Constraints
| Risk | Context |
|---|---|
| Concentration Risk | Currently 95% of revenue is from exports, primarily to the U.S. Management is diversifying into Nuclear (Domestic) and the Middle East to mitigate this. |
| Regulatory Delays | FTWZ operationalization is contingent on ministry approvals; any delay affects the speed of revenue realization for ready inventory. |
| Order Conversion | Nuclear bidding involves long cycles and L1-based selection; management’s refusal to sacrifice margins may lead to lower win rates in competitive tenders. |
Q&A Highlights
Order Book & Guidance
- Question: How will the company reach the previously guided ₹300 crore target for FY26? (Aniket Madhwani)
- Answer: The ₹300 crore was an aspirational target set before the 50% U.S. tariff impact. Q4 is expected to deliver ₹90-100 crores, with total FY26 revenue likely just exceeding the ₹240 crore mark of last year (Anil Kumar Puttan).
Capacity & Utilization
- Question: What is the current capacity utilization and target for asset turns? (Taher Hydrabadwala)
- Answer: Utilization was ~60% in Q3 due to the tariff-led slowdown. Management aims to increase asset turns from 1.4x to 3.0x by scaling production on the existing ₹210 crore gross block (Anil Kumar Puttan).
Semiconductor Opportunity
- Question: What is the status of the semiconductor business entry? (Keyurkumar Vadaliya)
- Answer: The company has 52-week visibility for current orders and is qualifying additional FAIs. Revenue contribution is expected to be ~$0.5 million next year, serving as an entry point into high-volume manufacturing (Rajanikanth Balaraman).
Nuclear Segment Strategy
- Question: Why is the company taking a “pause” in nuclear bidding after reaching ₹68 crore? (Keyurkumar Vadaliya)
- Answer: It is not a pause but a focus on execution. The company bid for ₹800 crore in projects and will continue to selectively bid for orders that meet internal margin thresholds (Ramakrishna Kamojhala).
Key Takeaway
Unimech Aerospace reported a seasonally weak Q3 FY26 with revenue of ₹34 crores, severely impacted by a temporary 50% U.S. tariff regime that caused customers to defer orders. However, the outlook has turned positive following the February 2026 tariff reduction to 18% and a record order book of ₹210 crores. The company is strategically de-risking by establishing a 51% JV in Saudi Arabia for the energy sector and nearing the launch of its FTWZ facility to streamline global logistics. While FY26 growth will be muted with a target to marginally surpass ₹240 crores, the transition toward a 60:40 mix between Aero Tooling and Precision Components, alongside the operationalization of new capacities, positions the firm for structurally higher growth and 25% EBITDA margins in FY27. Management remains focused on high-margin domestic nuclear orders and international expansion to reduce geographic concentration in the U.S. market.
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