Aequs, a Karnataka-based precision manufacturing company, is positioned for sustained long-term growth primarily driven by its aerospace division, which accounts for nearly 90% of revenues. Despite recent challenges such as Hasbro’s decision to halt new orders with its plastics subsidiary, the company remains optimistic about ongoing demand and order visibility in the aerospace sector.
Chairman and CEO Aravind Melligeri highlighted the robust demand visibility, noting that aircraft order cycles extend beyond ten years, with Airbus and Boeing maintaining backlog orders sufficient to support growth. Melligeri indicated that the company anticipates aerospace fabrication and manufacturing to grow at approximately 35% supported by production ramp-ups, with Airbus increasing its monthly aircraft output towards 75 aircraft and Boeing ramping up similarly.
Impact of Market Developments and Company Strategy
The CEO addressed concerns regarding potential demand slowdowns, clarifying that any pressure from airlines would largely affect aftermarket services, which Aequs does not support directly. He further explained that the strategic shift by Hasbro away from new orders is a client-specific decision that is unlikely to impact the broader consumer business, which contributes around 11-12% of revenues and is expected to grow at around 50% annually.
“Our order book remains solid, and we will continue to execute our growth plans,” said Melligeri.
Furthermore, the company is investing in capacity expansion, including its toy manufacturing subsidiary, and remains confident in its capacity utilization. Melligeri emphasized that the company's focus remains on delivering existing commitments, with no immediate plans to alter current expansion strategies despite the recent developments.
With a market capitalization of approximately ₹12,450 crore, Aequs has seen its stock gain nearly 55% in recent months, reflecting investor confidence in its long-term prospects in aerospace manufacturing. The company continues to diversify its customer base and sectors, including consumer electronics and defense, paving the way for future growth.
