Aerospace component manufacturer Aequs Ltd. has received a 'Buy' rating from Nuvama Institutional Equities, which forecasts an impressive 82.90% upside potential for the stock over the next 12 months. This comes after Aequs shares have already seen a significant rally of 75.59% in the calendar year 2026 so far, closing at Rs 242.75 on Tuesday.
Nuvama's optimistic outlook for Aequs stock is rooted in the company's unique market position. Aequs is highlighted as India's only vertically integrated aerospace Special Economic Zone (SEZ), a strategic advantage that allows it to supply critical machined aerostructures, landing gear, and engine parts to major global Original Equipment Manufacturers (OEMs) like Airbus and Boeing.
India's First Pure-Play Aerospace Precision Manufacturer
The brokerage firm emphasized that Aequs is not just an aerospace supplier but also India's first genuine pure-play aerospace precision manufacturer. This distinction, according to Nuvama, represents a significant 'moat' built over time through strategic development, not solely through capital investment.
Aequs boasts a robust order book valued at $889 million. Nuvama projects this strong pipeline will fuel a 42% sales Compound Annual Growth Rate (CAGR) and an 84% EBITDA CAGR between fiscal years 2026 and 2029 (FY26–FY29E).
Valuation and Growth Projections
Nuvama's 12-month target price of Rs 444 for Aequs is based on a 30-year discounted cash flow (DCF) model. This model assumes a 16% weighted average cost of capital (WACC) and a 3% terminal growth rate. While free cash flow to the firm (FCFF) is expected to turn positive from FY33E onwards, significant planned capital expenditure of $350–450 million is anticipated to drive the company's next phase of expansion.
The brokerage also noted that Aequs is expected to leverage its balance sheet in FY27 without any indications of equity dilution. Furthermore, Nuvama believes that Aequs deserves a valuation premium compared to pharma contract development and manufacturing organisations (CDMOs), citing the enduring nature of aircraft programs versus the finite lifespans of pharmaceutical molecules.
Identified Risks
Despite the strong growth prospects, Nuvama also flagged several key risks to its investment thesis. These include potential supply chain disruptions, reliance on raw material imports, dependence on Chinese technology, customer concentration, execution risks within its consumer segment, and the inherent volatility in OEM production rates.