Event Participants
Executives
3 Harish Bang, Manav Paul, Rajeev Kaul
Analysts
10 Abhishek Chowdary Kanithi, Akash Dubey, Archit Joshi, Deep Shah, Deepak Krishnan, Disha Chamriya, Gaurav Nagori, Jyoti Gupta, Mahesh Bendre, Praveen Gupta, Vansh Modi
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Consolidated Revenue | ₹3,955 million | +55% YoY, +8% QoQ; broad-based growth led by aerospace (+40%) and consumer (~3x) |
| Revenue incl. JV share | ₹4,301 million | +53% YoY, +8% QoQ |
| Reported EBITDA | ₹215 million (5% margin) | Q4 FY26 was ₹321 million; lower other income (₹67M vs ₹279M in Q4) drove sequential decline |
| Operational EBITDA (excl. other income) | ₹148 million (4% margin) | +3.5x sequentially from ₹42 million in Q4 FY26; driven by narrowing consumer losses |
| Aerospace Revenue | ₹3,222 million | +40% YoY, +6% QoQ; segment EBITDA ₹731 million (+30% YoY) at 23% margin |
| Consumer Revenue | ₹734 million | +190% YoY, +16% QoQ; EBITDA loss narrowed to ₹361 million from ₹473 million in Q4 |
| Consumer EBITDA Loss | -₹361 million | Narrowed 24% QoQ from ₹473 million; YoY loss of ₹74 million reflects cost capitalization in Q1 FY26 vs. recognition in Q1 FY27 |
| Depreciation & Amortization | ₹453 million | Stable vs. ₹455 million in Q4 FY26; reflects expanded consumer electronics asset base |
| Finance Costs | ₹189 million | Down from ₹358 million in Q4 FY26; debt reduction of ~₹2,527 million loan repayments + ₹789 million net reduction in working capital borrowings |
| PAT (loss) | -₹532 million | Improved from adjusted Q4 FY26 loss of ₹631 million (excl. ₹90 million exceptional gain) |
| Order Book | $1,004 million | +13% QoQ from $889 million; milestone crossing $1 billion |
| Parts Portfolio | 5,740 parts | Added 86 new parts in Q1; aerospace |
| Cash & Cash Equivalents | ₹2,340 million (+₹537 million other bank balances) | Total equity ₹14,332 million |
| Net Working Capital Days | 25 days (annualized) | Down from 127 days at FY26 end; improved receivables/payables management |
| Capex (Q1 FY27) | ₹830 million | FY27 guidance: ₹660 crore total |
| Capacity Utilization (Consumer) | ~22-23% | Similar to Q4; revenue growth driven by throughput, mix, and execution |
Geographic & Segment Commentary
Aerospace: Revenue grew 40% YoY to ₹3,222 million with segment EBITDA at ₹731 million (23% margin). Order book crossed $1 billion (+13% sequential) following a strong Farnborough Air Show with new Tier 1 customer agreements. Added 86 new parts (portfolio now 5,740). Management evaluating acceleration of aerospace capex to support new wins, targeting 25-30% FY27 growth with >20% segment margins.
Consumer (Electronics & Toys): Revenue nearly tripled YoY to ₹734 million (+16% QoQ) with EBITDA loss narrowing 24% sequentially to ₹361 million. Operating at ~22-23% utilization while driving higher throughput through better mix and execution. Path to EBITDA breakeven by Q4 FY27 on track; expects utilization to reach 40-50% by Q4. Consumer contributed 19% of revenue vs. 10% a year ago.
Company-Specific & Strategic Commentary
Airbus A320 Wheel Contract: Signed first fully integrated contract with Safran Landing Systems to deliver completely assembled Airbus A320 wheels from India-sourced aerospace-qualified aluminum—covering forging, machining, surface treatment, and assembly at Belgavi. 15-year agreement, not yet reflected in order book (will show next quarter). Management highlighted it as first time customer has outsourced this capability outside their own facilities.
Hosur Ecosystem: New integrated facility focused on aeroengine and landing gear components—described as "end to end" like Belgavi. First machining facility operational between September-March FY28; revenue kickoff expected FY29. Total committed investment including JV partners: ₹1,900 crore over 10 years.
FY27 Priorities: Three stated priorities: (1) grow aerospace 25-30% with >20% segment EBITDA margins, (2) drive consumer utilization for operating leverage, (3) achieve consumer EBITDA breakeven by Q4 FY27. FY27 capex maintained at ₹660 crore with possible reallocation toward aerospace and away from consumer.
Strategic Ambitions: Target to be India's largest aeroengine components manufacturer. Five-year consumer business ambition: evolve from component supplier to preferred manufacturing/co-development partner by FY31.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Consolidated Revenue Growth | 45-50% for FY27 | Weighted to H2 as consumer utilization builds; Q1 was ₹3,955 million (~10% of implied FY27 run-rate) |
| Operational EBITDA | Double from FY26 | Through consumer loss narrowing and aerospace margin discipline |
| Aerospace Revenue Growth | 25-30% for FY27 | Supported by $1 billion+ order book, new Farnborough wins, and parts progression |
| Aerospace EBITDA Margin | >20% for FY27 | Q1 delivered 23%; contract wins may carry higher margins but no specific guidance |
| Consumer Utilization | 40-50% by Q4 FY27 | Required to achieve EBITDA breakeven; management "fairly confident" |
| Consumer EBITDA | Breakeven by Q4 FY27 | "First quarterly proof point" delivered with ₹120 million sequential loss narrowing |
| Consumer Revenue Growth | 125-150% over FY26 | Embedded in FY27 consolidated guidance |
| Capex | ₹660 crore for FY27; $350-400 million FY27-FY31 | Possible acceleration aerospace; consumer portion flexible on utilization ramp |
| Consumer EBITDA Margin (steady state) | 18-20% | At scale |
| Group ROCE (steady state) | 18-20% | For both aerospace and consumer at steady state |
| PAT Breakeven | H1 FY28; Consumer PAT breakeven FY30; meaningful PAT FY31 | Milestones from Investor Day |
| Fundraising | ~$150 million over plan period (no FY27 plans) | Unless accelerated capex or inorganic opportunity arises |
Risks & Constraints
| Risk | Context |
|---|---|
| Consumer Ramp Execution | Utilization at ~22% with 40-50% target by Q4 FY27 is aggressive; sequential improvements demonstrate progress but any demand or execution slippage risks EBITDA breakeven timeline. Management remains "confident" with committed customers on both sub-verticals. |
| Raw Material Import Dependency | 99% of raw materials imported due to lack of India-qualified aerospace sources; only 1-2 aluminum alloys qualified domestically (for forging only). Long qualification timelines create supply chain concentration risk, though customers support sourcing. |
| Capital Intensity & ROCE Timeline | $350-400 million capex planned FY27-FY31 (plus ₹1,900 crore Hosur over 10 years) before significant consumer EBITDA; ROCE targets (18-20%) dependent on utilization hitting 40-50% and sustained aerospace growth. Capex partially contingent on customer commitments. |
| Consumer Revenue Mix Concentration | Consumer electronics driven by single (undisclosed) large brand; toys and consumer durables (Meta and Chromatin) provide diversification but electronics ramp is key to consolidated profitability. |
| Forex Volatility | ₹212 million QoQ swing in other income (₹279 million to ₹67 million) impacted reported EBITDA; forex movements not projected, adding reporting volatility. |
| Depreciation Overhang | ₹453 million quarterly D&A expected to persist without additional capex; at current utilization, pushes consolidated PAT negative despite operational EBITDA improvements. |
Q&A Highlights
Airbus A320 Wheels Contract with Safran
- Question: How large is the order and will margins exceed segment average? (Gaurav Nagori, Avendus Spark)
- Answer: 15-year agreement, one of the longest in Aequs history; full make-in-India from aluminum source to finished parts. "Each business will deliver the right level of return" without specific margin disclosure. First time Safran has moved this capability outside its own facilities. Contract not yet in order book—will reflect next quarter. (Aravind Melligeri)
Consumer Utilization & Revenue Growth
- Question: Utilization dipped from 23% to 22% despite sequential revenue growth—does this reflect capacity expansion? (Gaurav Nagori, Avendus Spark)
- Answer: No capacity expansion; revenue growth from enhanced throughput, better product mix, and improved execution at similar utilization. Management expects utilization to improve as ramp progresses. Consumer breakeven by Q4 FY27 remains committed. (Rajeev Kaul, Aravind Melligeri)
Depreciation, Other Income, Full-Year Trajectory
- Question: Why is depreciation so high? Full-year revenue seems ~₹1,600 crore vs. ₹1,800 crore guidance? Other income guidance? (Jyoti Gupta, Ashika)
- Answer: Depreciation (~₹453 million) will persist at Q4 levels—consumer electronics capitalization stopped at Q3 end. Revenue trajectory: Q4 utilization of 40-50% will drive higher Q4 revenues to hit 45-50% full-year growth. Other income driven by interest and forex; no revaluation reserves—interest will remain at Q1 levels, forex not projected. (Harish Bang)
Hosur Investment & Timeline
- Question: How much is the Hosur investment and when does Phase 1 go operational? (Deep Shah, New Vernon Capital)
- Answer: Integrated facility for engine and landing gear components, "end to end" like Belgavi. First machining facility operational between September-March next FY (FY28); revenues from FY29. Total investment including JV partners: ₹1,900 crore over 10 years. Vertical integration work done by 2030. (Aravind Melligeri)
FY27 Capex Split & Flexibility
- Question: What is the FY27 capex split, and can it be cut if consumer utilization lags? (Deepak Krishnan, Kotak)
- Answer: Original split ~₹500 crore consumer, ₹160 crore aerospace; possible acceleration in aerospace with some reduction in consumer optimization—total remains ₹660 crore. Aerospace adding roughly one machine per week currently. (Harish Bang)
Consumer Segment Mix (Electronics vs. Toys)
- Question: Can you provide a directional split between consumer electronics and toys QoQ? (Archit Joshi, Nuvama)
- Answer: Management does not split consumer sub-verticals; growth is "tandem" across both with underutilized capacity in each. Key customers in both sub-verticals are committed to growth—execution is the constraint, not demand. (Aravind Melligeri)
Raw Material Sourcing & Localization
- Question: How much of raw material is localized given supply chain de-risking trends? (Unidentified, Bright Politics)
- Answer: ~99% of raw materials are imported; no qualified Indian sources for aerospace-grade materials yet. Only 1-2 aluminum alloys qualified in India (for forging only); long journey to build domestic ecosystem. (Aravind Melligeri)
Long-term Funding & ROIC
- Question: How will you fund ₹660 crore FY27 capex and the ₹1,900 crore Hosur plan? What is the ROIC expectation? (Praveen Gupta, San Ventures)
- Answer: ₹1,900 crore is over 10 years, not one year; five-year capex plan of $350-400 million with ~$150 million equity raise over plan period (none planned FY27 unless accelerated capex/inorganic). ROIC target 18-20% steady state for both aerospace and consumer. (Rajeev Kaul, Aravind Melligeri, Harish Bang)
FY27 EBITDA Targets & Revenue Mix
- Question: What blended EBITDA margin for FY27, and how does the consumer share evolve long-term? (Vansh Modi, Swan Investments)
- Answer: Operational EBITDA to roughly double vs. FY26 (~₹180 crore). Consumer revenue share: ~19% in Q1, on 5-year basis expected to reach 40% vs. 60% aerospace. Aerospace EBITDA guidance 25-30%, consumer 18-20% at steady state. (Aravind Melligeri)
Key Takeaway
Aequs reported a strong Q1 FY27 with consolidated revenue up 55% YoY to ₹3,955 million, led by aerospace growth of 40% and consumer revenue nearly tripling. The headline EBITDA of ₹215 million masked operational progress—excluding volatile other income, operational EBITDA improved 3.5x sequentially to ₹148 million, driven by a 24% narrowing of consumer EBITDA losses (₹361 million) as the company tracks toward its Q4 FY27 consumer breakeven commitment. The aerospace order book crossed $1 billion (+13% QoQ) after a productive Farnborough Air Show, highlighted by a 15-year fully integrated Airbus A320 wheel contract with Safran—the first time this capability has been outsourced—and two new Tier 1 aerostructure customers. Management maintained FY27 guidance of 45-50% revenue growth with doubling of operational EBITDA, supported by consumer utilization expected to reach 40-50% by Q4, though Q1 utilization held at 22%. The company is evaluating acceleration of aerospace capex (FY27 plan: ₹660 crore) to support new wins, with the ₹1,900 crore Hosur facility coming online from FY29. Key watch points include consumer ramp execution, 99% imported raw material dependency, and sustained forex volatility in reported EBITDA while depreciation (₹453 million/quarter) keeps consolidated PAT negative until H1 FY28 breakeven.