Aerospace stock Aequs plunges 19% after Q2 results. Why are investors worried?
ETMarkets.comAequs released its Q2 results after market hours on Monday. Revenue from operations grew 45% year-on-year (YoY) to Rs 409 crore in the July-September quarter of FY27, compared with Rs 282 crore a year earlier. However, the company’s net loss more than doubled, while EBITDA fell 45% YoY to Rs 24 crore. The EBITDA margin also narrowed to 6% from 16% in the year-ago quarter.
“Aerospace continued to deliver strong growth and profitability, supported by healthy demand and program execution. In consumer, the Q2 volume ramp progressed slower than anticipated due to extended qualification timelines and supply chain constraints. We view this as a timing-related shift rather than a change in the underlying opportunity, with customer programs continuing to progress. Given these factors, we are recalibrating the path to consumer EBITDA breakeven, with our near-term focus on improving utilization and translating installed capacity into profitable growth,” the company said in a press release.
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Nuvama on Aequs share price
Nuvama Institutional Equities maintained its ‘Buy’ rating on the shares of Aequs with a target price of Rs 444 apiece, implying over 83% upside potential from the stock’s previous closing price. The brokerage noted that the company’s consumer loss widened to Rs 40 crore on a 21% sequential revenue fall, dragging consolidated EBITDA 51% lower at a 3.4% margin. Consumer EBITDA breakeven target has been withdrawn with no revised timeline.Promoters are infusing Rs 6.5 billion through warrants, which is real skin in the game,” Nuvama said, adding that it likes the Aerospace franchise - a 22% margin business with a $1.1 billion order book, now extending from aerostructures into engine and landing gear components at Hosur.
JM Financial on Aequs share price
JM Financial maintained its ‘Reduce’ call on the shares of Aequs but raised its target price to Rs 245 apiece from Rs 220 apiece, baking in higher capex and accompanying higher sales and EBITDA for FY30-31. The latest target price implies a little over 1% upside potential.The domestic brokerage noted that the company’s EBITDA missed its estimate by 50%. A key surprise was the sequential decline in consumer sales (-21% QoQ) and utilisation (17% down from 22% in Q1 FY27). Consequently, EBITDA breakeven guidance for the consumer segment has been pushed beyond the original target of Q4 FY28, it highlighted, adding that the EBITDA margin also moderated in aerospace even as sales were modestly ahead.
“While the overall results were disappointing, longer-term prospects remain strong as Aequs moves ahead with establishing the aerospace hub at Hosur. It has also signed a long-term supply agreement with Safran. Aequs’ aerospace order book remains robust at $1.1 billion, providing 5-6 years of top line visibility,” JM Financial said, while cutting FY27 and FY28 EBITDA estimates to factor in weakness in the consumer segment.
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Aequs share price
Aequs shares listed at Rs 140 apiece on the NSE in December last year, a premium of nearly 13% over the IPO price of Rs 124. The IPO, comprising a fresh issue of Rs 670 crore and an offer for sale worth Rs 251.81 crore, received a strong investor response. It was subscribed 122.93 times in the QIB category, 83.61 times in the non-institutional investor category and 81.03 times in the retail segment.After listing, the stock fell over 19% to a record low of Rs 113.30 in March this year. It subsequently rallied more than 160% in less than seven months to hit a lifetime high of Rs 295 earlier this month. Since then, however, the stock has declined 33% in less than a month.