Raymond Shares Rally 230% In Six Months: How Aerospace Is Reshaping Its Growth Story

Raymond shares have surged more than 230% in six months, touching Rs 1,160 on September 24, as investors assess the company's growing exposure to aerospace and defence manufacturing. The rally has coincided with a shift in its business mix towards higher-margin aerospace operations, alongside strong quarterly earnings and plans to expand manufacturing capacity.

The company also received a boost after its board approved the issuance of convertible warrants to Minerva Ventures Fund at Rs 645 per warrant.

Raymond reported revenue from operations of Rs 606 crore in Q1 FY27, up 15.6% year-on-year. EBITDA increased 14% to Rs 100 crore, while net profit rose 50% to Rs 31 crore. The company reported a net cash surplus of around Rs 129 crore at the end of the quarter.

Its total EBITDA margin stood at 15.9%, with aerospace delivering significantly higher margins than its other businesses.

Raymond operates through two businesses: JK Maini Precision Technology, which focuses on precision technology and auto components, and JK Maini Global Aerospace, which operates its aerospace and defence business.

Aerospace Drives Mix

Raymond's aerospace business is emerging as an important growth driver. Although smaller than its precision technology and auto components operations, it is growing faster and generating higher margins.

Together, the two businesses give Raymond exposure to automotive, industrial, aerospace and defence original equipment manufacturers (OEMs).

In Q1 FY27, aerospace and defence revenue increased 40% year-on-year to Rs 123 crore. EBITDA rose 25% to Rs 26 crore, with margins at 21.2%, compared with 13.8% for the precision technology and auto components business.

The growing contribution from aerospace could gradually change Raymond's earnings mix, as higher-margin operations account for a larger share of revenue.

Management has committed to a baseline annual organic growth rate of 25% for the aerospace division, although recent performance has exceeded that benchmark.

Raymond supplies components to the world's three largest aircraft engine manufacturers, which collectively account for 88% of the global aircraft engine market.

The company has built its aerospace business around complex components, with engine-critical parts generating more than 75% of divisional revenue.

Commercial aviation accounts for 86% of aerospace revenue, while defence and other aviation contribute the remaining 14%. Exports account for 76% of segment revenue, with Europe contributing 51% and the US 25%.

Raymond has developed more than 1,300 precision aero-engine parts, including over 350 components for LEAP engine variants.

The LEAP engine programme is a multi-billion-dollar commercial jet engine development project by CFM International, a 50:50 joint venture between GE Aerospace and Safran Aircraft Engines.

Order Book Visibility

Long-cycle aerospace programmes provide Raymond with multi-year revenue visibility. The LEAP programme contributed Rs 110 crore to its aerospace revenue between April 2025 and February 2026.

Raymond has an aerospace order book of more than Rs 5,960 crore, spread over 10 years, and an active request-for-quotation pipeline of Rs 1,632 crore. Its three largest engine OEM customers account for 40% to 45% of the order book.

Once a component completes qualification and enters regular production, suppliers can remain part of the programme for several years. This creates visibility over future revenue.

The aerospace division also adds more than 100 new engine stock-keeping units (SKUs) annually. As these components move from development into mass production, EBITDA margins are expected to stabilise towards 25%.

The global aircraft production cycle provides another source of demand. A commercial aircraft backlog of more than 16,000 planes represents an estimated 12 to 15 years of production visibility.

As aircraft manufacturers increase output, demand extends across engine manufacturers and their component suppliers.

Qualified Indian suppliers could benefit from this expansion as global OEMs diversify their supply chains. The China+1 strategy has encouraged companies to shift manufacturing capacity outside China, with India emerging as a major beneficiary.

Raymond is using its existing precision-engineering capabilities to participate in this shift.

Defence Opportunity

Raymond is also expanding its presence in India's defence supply chain.

The Indian government mandates that at least 75% of defence procurement be sourced domestically from Indian manufacturers. This indigenisation requirement creates opportunities for qualified domestic suppliers as defence platforms move towards local sourcing.

The policy expands the addressable market for Raymond's two engineering businesses.

The company has commenced mass production of precision defence components and secured its first build-to-specification orders from leading defence aerospace OEMs. These orders could provide an additional growth avenue for its engineering operations.

Auto Components

Precision engineering underpins Raymond's aerospace operations, with its machining and manufacturing capabilities extending to aero-engine and structural components.

JK Maini Precision Technology reported revenue of Rs 444 crore in Q1 FY27, up 11.5% from Rs 398 crore a year earlier. EBITDA increased 45.5% to Rs 61 crore, while margins stood at 13.8%.

The business reported its highest quarterly revenue. Export growth, a better product mix, operating leverage and cost-reduction measures supported margin expansion.

International markets contributed around 61% of segment revenue during the quarter, providing exposure to global automotive and industrial sourcing trends.

JK Maini's product portfolio includes automotive drivetrain and powertrain components, ring gears, industrial consumables, tools and hardware.

The company holds a 55% market share in India's passenger vehicle ring gear market and a 65% share in steel files. These businesses provide a revenue base as Raymond expands its newer operations.

Its auto components business also serves internal combustion engine, hybrid and electric vehicle platforms.

JK Maini has secured hybrid transmission component engagements with European OEMs. It has also received new component and assembly nominations from a European advanced drivetrain technology company.

The company plans to launch an automotive aftermarket product line in Q2 FY27. The initiative could create another revenue channel by leveraging its existing manufacturing capabilities and OEM relationships.

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Rs 1,000 Crore Capex

Raymond's expansion plans are central to its next phase of growth. Existing operations are running at around 85% to 90% utilisation, leaving limited room for sustained volume growth without additional capacity.

The company has planned a five-year capital expenditure programme of around Rs 1,000 crore.

Of this, approximately Rs 510 crore is earmarked for aerospace and defence, while around Rs 430 crore is allocated to precision technology and auto components.

The expansion includes a greenfield facility near Bengaluru airport, with commercial production targeted for late 2027. Management expects the new automotive capacity to make a meaningful revenue contribution from FY28.

Raymond has indicated an asset-turn target of around 2x to 2.5x for the new automotive business.

The pace at which the company utilises its new assets will therefore be important in determining the returns from its expansion programme.

Execution Risks

Raymond shares trade at a price-to-earnings multiple of 46 times, compared with 84 times for its closest peer, Sansera Engineering, following the sharp rally.

With the valuation reflecting expectations of future growth, investors will track earnings expansion, margin improvement and the ramp-up of new manufacturing capacity.

The company also faces risks from its long-cycle aerospace programmes, dependence on exports, customer concentration, raw material price volatility and geopolitical developments.

Execution of the greenfield expansion will be another key factor.

The next phase of Raymond's growth will depend on how effectively it converts its aerospace order book, defence opportunities and additional manufacturing capacity into revenue and earnings.

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