Contract manufacturer Aequs experienced a sharp stock surge of up to 12%, reaching a record ₹271 per share, led by Nuvama’s initiation of coverage with a strong buy recommendation and a target price implying over 90% upside in the next year.
- Shares jump to a record ₹271 driven by Nuvama’s bullish call
- Expected 42% revenue CAGR and 84% EBITDA CAGR through FY29
- Expansion includes new aerospace engine component facilities and key cluster investments
What happened
Shares of Aequs surged by as much as 12% on the BSE to an all-time high of ₹271 after Nuvama Institutional Equities initiated coverage on the stock with a 'Buy' rating. The stock later trimmed gains but still traded over 6% higher at ₹257.60, boosting the company’s market cap to ₹17,276.35 crore (approximately $1.8 billion). The stock has appreciated about 87% year to date, reflecting strong investor confidence.
The rally followed Nuvama’s launch of a positive outlook, setting a 12-month price target of ₹444, implying a potential upside of more than 90% from the closing price prior to the upgrade. The brokerage underscored Aequs’ unique standing as India’s only vertically integrated aerospace special economic zone (SEZ), supplying critical components like machined aerostructures, landing gear, and engine parts to global aviation majors such as Airbus and Boeing.
Why it matters
Nuvama’s bullish stance centers on Aequs’ competitive advantage deriving from the aerospace sector’s longer program life cycles compared to pharmaceutical CDMOs, ensuring enduring revenue visibility. The company’s $889 million order book supports projections of a 42% compound annual growth rate (CAGR) in revenue and an 84% CAGR in EBITDA between fiscal years 2026 and 2029, highlighting robust anticipated financial performance.
The company’s strategic investments in aerospace engine components and development of an aerospace and defence cluster in Tamil Nadu signal confidence in expanding India’s domestic aerospace manufacturing capacity. However, Nuvama cautions that the consumer segment remains loss-making and that global peers typically generate EBITDA margins below management’s 20% guidance. Key risks include raw material delays, challenges in consumer division scaling, and Boeing’s uneven recovery.
What to watch next
Market participants will closely monitor Aequs’ progress in operationalizing its Hosur aerospace engine component facility, expected to begin shipments by 2028. The company’s ability to scale its consumer electronics business and realize margin improvements there will also be under scrutiny given current losses and longer maturation timelines for the plastics division.
Additionally, investors will track the implementation of its ₹4,000 crore aerospace and defence cluster project in Krishnagiri and the strategic partnership with NMB-Minebea India involving nearly ₹2,000 crore investments in Tiruvallur. Financial results beyond Q4 FY26, especially return to profitability and margin expansion, will be critical indicators of whether Aequs can meet the high growth ambitions highlighted by Nuvama.