Nuvama Institutional Equities has initiated coverage on Aequs Ltd. with a ‘Buy' rating and a target price of Rs 444 per share, implying an upside of over 90% from the stock's prevailing market price.
The brokerage said Aequs' vertically integrated aerospace operations, a solid $889 million order book and the potential turnaround of its consumer electronics business could drive a sharp earnings expansion over the next three years. Nuvama expects Aequs to deliver sales and EBITDA compound annual growth rates of 42% and 84%, respectively, over FY26-29.
Nuvama described Aequs as India's only vertically integrated aerospace special economic zone, supplying machined aerostructures, landing gear and engine parts to global original equipment manufacturers including Airbus and Boeing.
The company's $889 million contracted order book provides revenue visibility and stands at 7.4 times revenue coverage, according to the brokerage. Its manufacturing ecosystem spans machining, forging, surface treatment and assembly, while 5,654 stock-keeping units add to the business moat.
Nuvama said the long life of aircraft programmes is a key valuation anchor. Boeing's 737 programme has been running for 58 years, while the Airbus A320 has operated for 38 years, giving qualified suppliers long-term revenue visibility.
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Consumer Electronics Could Drive EBITDA Surge
The consumer electronics business is currently loss-making, with a gross block of Rs 830 crore operating at 23% utilisation. Nuvama expects economics to improve sharply as capacity utilisation rises. At 40% utilisation, revenue could increase while fixed costs rise by less than 10%, turning the current volume challenge into a margin opportunity, the brokerage said.
Nuvama expects consumer electronics to outperform its other segments over time, aided by the appointment of MR Ravi Kumar Assudani, who was associated with Apple for 16 years, as head of engineering.
The brokerage expects free cash flow to turn positive in FY27 as the company's $350–450 million capital expenditure programme delivers its next phase of growth. Nuvama has valued Aequs using a 30-year discounted cash flow model with a 16% weighted average cost of capital and a 3% terminal growth rate, arriving at its Rs 444 target price.
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