AEQUS LIMITED IPO Explain

Aequs IPO Overview

India’s only vertically integrated aerospace precision components manufacturer in single SEZ raising ₹921.81 cr via fresh issue ₹670 cr + OFS ₹251.81 cr of 7.43 cr shares. Price: ₹118-124. Lot: 120 shares (₹14,880 min). Mainboard BSE/NSE.

Funds for debt repayment (₹433.17 cr), capex machinery (₹64 cr), M&A.

Founded 2006, 19 years old. Belagavi, Karnataka. 4,500+ aerospace products for Boeing, Airbus. Divisions: Aerospace (86%), consumer electronics, plastics, durables.

Lead: JM, IIFL, Kotak. Analyst: “Bright prospects”. Loss-making, high debt, complex structure. Competes with MTAR, Zen Technologies, Dynamatic.

IPO DETAILED INFORMATION

Issue Details

Parameter	Details
IPO Type	Mainboard
IPO Open Date	3 December 2025 (Tuesday)
IPO Close Date	5 December 2025 (Thursday)
Anchor Investor Date	2 December 2025 (Monday) – Completed
Allotment Date	8 December 2025 (Sunday) – Expected
Credit to Demat	9 December 2025 (Monday) – Expected
Refund Initiation	9 December 2025 (Monday) – Expected
Listing Date	10 December 2025 (Tuesday) – Tentative
Price Band	₹118 – ₹124 per share
Face Value	₹10 per share
Lot Size	120 shares
Min Investment (Retail)	₹14,880 (1 lot / 120 shares at upper band)
sHNI Investment	₹2,08,320 (14 lots / 1,680 shares) minimum
bHNI Investment	₹10,11,840 (68 lots / 8,160 shares) minimum
Issue Size	₹921.81 crore total (at upper band)
Fresh Issue	₹670.00 crore (72.7%) – 5,40,32,258 shares
Offer for Sale (OFS)	₹251.81 crore (27.3%) – 2,03,07,393 shares by institutional investors
Total Shares Offered	7,43,39,651 equity shares (7.43 crore)
Pre-IPO Placement	₹144 crore raised from institutional investors (reduced fresh issue from ₹720 cr to ₹670 cr)
Listing	BSE & NSE (Mainboard – Not SME!)
Post-Issue Market Cap	~₹3,600-4,000 crore (at upper price band)
P/E Ratio	NEGATIVE (Company loss-making in FY25!)
EPS	Negative (FY25: LOSS ₹102.35 cr)
Expected Listing Price	₹142-168 (14.5-35.5% gains expected)
GMP High	₹44 on Dec 2
GMP Low	₹18 on Nov 28

Issue Break-up

Category	Allocation	Percentage
QIB (Qualified Institutional Buyers)	75% allocation	75%
NII (Non-Institutional Investors)	15% allocation	15%
Retail Individual Investors	10% allocation	10%

Note: Mainboard IPO with 75% QIB allocation (highest possible) – indicates institutional focus. Only 10% retail allocation (lowest possible) – retail investors get smaller quota.

Objects of the Issue (Fund Utilization)

Fresh Issue Proceeds (₹670.00 crore gross / ~₹640 cr net after issue expenses ~₹30 cr) will be used for:

Repayment and/or Prepayment of Outstanding Borrowings – ₹433.17 crore (67.7%)
- Aequs Limited: ₹17.55 crore
- Three Wholly Owned Subsidiaries (through investment): ₹415.62 crore
  - AeroStructures Manufacturing India Private Limited: ₹174.82 crore
  - Aequs Consumer Products Private Limited: ₹231.16 crore
  - Aequs Engineered Plastics Private Limited: ₹9.63 crore
- Largest allocation – indicates heavy leverage across group
- Deleveraging parent and subsidiaries to reduce finance costs
Funding Capital Expenditure – Purchase of Machinery and Equipment – ₹64.00 crore (10%)
- Aequs Limited: ₹8.11 crore
- AeroStructures Manufacturing India (subsidiary) through investment: ₹55.89 crore
- Enhancing manufacturing capabilities
- Technology upgrades for precision engineering
Inorganic Growth Through Acquisitions – Unspecified amount
- Potential mergers & acquisitions
- Strategic acquisitions to expand capabilities
Strategic Initiatives and General Corporate Purposes – Balance amount (~22.3%)
- Working capital, contingencies, strategic investments

OFS Proceeds (₹251.81 crore):

Goes to selling institutional investors (not promoters)
Existing investors taking partial exit
Investors include: Amansa Investments, Amicus Capital, Steadview Capital, and others
2,03,07,393 shares (27.3% of issue) being sold

Pre-IPO Placement (₹144 crore):

Raised from institutional investors: SBI Funds Management, DSP India Fund, others
Reduced fresh issue size from ~₹720 cr to ₹670 cr

Strategic Focus:

Heavy deleveraging: 67.7% (₹433.17 cr) for debt repayment across parent and 3 subsidiaries
Modest capex (10% or ₹64 cr) for machinery
Acquisition strategy for inorganic growth
Largely a financial restructuring IPO vs pure growth-focused

Note: 72.7% fresh issue for company, 27.3% OFS by institutional investors.

Lead Managers & Registrar

Book Running Lead Managers (BRLMs – 3 Joint Lead Managers):

JM Financial Limited
- Website: www.jmfl.com
IIFL Capital Services Limited
- Website: www.iiflcap.com
Kotak Mahindra Capital Company Limited
- Website: www.investmentbank.kotak.com

Registrar:

Kfin Technologies Limited
Address: Selenium Tower-B, Plot No. 31 & 32, Financial District, Nanakramguda, Serilingampally, Hyderabad – 500 032, Telangana
Phone: 040-6716 2222, 040-7961 1000
Email: [email protected]
Website: https://ipostatus.kfintech.com/

Promoters & Management

Key Promoters (4 Promoters – 64.48% holding pre-IPO):

Mr. Aravind Shivaputrappa Melligeri – Founder & Promoter
- Visionary behind Aequs
- Driving aerospace manufacturing ecosystem
Aequs Manufacturing Investments Private Limited – Promoter (Corporate)
Melligeri Private Family Foundation – Promoter (Foundation)
The Melligeri Foundation – Promoter (Foundation)

Strategic/Institutional Investors (32.95% pre-IPO):

Amansa Investments
Amicus Capital
Steadview Capital
SBI Funds Management (pre-IPO investor)
DSP India Fund (pre-IPO investor)
Others

Company History:

Founded 2006 (19 years old)
Evolution: From small precision components maker to India’s only fully vertically integrated aerospace manufacturer in single SEZ
Milestone: Built largest aerospace product portfolio in India – 4,500+ products as of March 31, 2025
Expansion: Diversified into consumer electronics, plastics, consumer durables beyond aerospace
Infrastructure: Operating from single Special Economic Zone (SEZ) in Belagavi, Karnataka
Workforce: Not explicitly disclosed (estimated 2,000-3,000+ employees based on scale)

Company Contact:

Registered Office: No 437/A, Hattargi Village, Hukkeri Taluk, Belagavi, Bengaluru, Karnataka – 591243
Phone: +91 831 2499000
Website: www.aequs.com
CIN: U28999KA2006PLC040347

COMPANY OVERVIEW

📊 Company Introduction

Establishment & Background:

Founded in 2006 (19 years old)
Industry: Aerospace Precision Components Manufacturing & Contract Manufacturing
Unique Positioning: India’s only precision component manufacturer operating within a single Special Economic Zone (SEZ) with fully vertically integrated aerospace manufacturing capabilities
Headquartered & Manufacturing: Hattargi Village, Belagavi, Karnataka (SEZ)
Workforce: Estimated 2,000-3,000+ employees (not disclosed)

Business Model:

Vertically Integrated Precision Manufacturing Ecosystem specializing in aerospace components
Three Business Divisions:
1. Aerospace Segment (85.96% of FY25 revenue – ₹824.64 cr): Primary revenue driver
  - Engine Systems: Turbine components, compressor parts, combustion chamber elements
  - Landing Systems: Landing gear components, wheel assemblies
  - Cargo & Interiors: Cargo handling systems, interior panels, seat components
  - Structures: Airframe structural components, assemblies
  - Turning Parts: Precision-turned aerospace components
  - Advanced Metallurgy: High-end titanium alloy machining expertise
2. Consumer Electronics (6.62% revenue): Electronics manufacturing services
3. Plastics & Consumer Durables (7.42% revenue): Diversification beyond aerospace
Product Portfolio:

4,500+ aerospace products as of March 31, 2025 (largest in India!)
Precision components for major global aerospace OEMs
100% in-country value addition for select products
High-precision parts meeting stringent aerospace quality standards
Target Customers:

Global Aerospace Giants: Boeing, Airbus (indirect through tier-1 suppliers)
OEMs (Original Equipment Manufacturers): Major aerospace equipment manufacturers
System Integrators: Companies assembling complete systems
Consumer Electronics Brands: Contract manufacturing for electronics
Consumer Durables Manufacturers: Plastics and durable goods companies
Manufacturing Infrastructure:

Single Special Economic Zone (SEZ): Belagavi, Karnataka – one-stop integrated facility
Vertical Integration: Complete manufacturing ecosystem from raw material to finished precision components
Three Integrated Manufacturing Ecosystems: Aequs + Suppliers + Joint Ventures within SEZ
Advanced Capabilities: CNC machining, sheet metal fabrication, surface treatment, assembly
Technology: State-of-the-art precision engineering equipment, quality control systems
Revenue Model:

Contract manufacturing for global aerospace and consumer product companies
Long-term relationships with aerospace OEMs (multi-year contracts)
Export-oriented (SEZ benefits)
Diversified across aerospace, electronics, plastics

Market Position:

Positioned as India’s premier aerospace precision components manufacturer
Global aerospace components market: Multi-billion dollar industry
Indian aerospace & defense market: Growing at 8-10% CAGR with government Make in India push
Competing with global contract manufacturers and Indian players
Key Competitors: MTAR Technologies (₹5,000+ cr market cap), Zen Technologies, Dynamatic Technologies, Samtel Avionics
Unique Advantage: Only Indian company with fully integrated aerospace manufacturing in single SEZ
Client Roster: Exposure to Boeing, Airbus supply chains + consumer electronics giants
Export Focus: SEZ status provides tax benefits and export incentives

Operations:

Location: Hattargi Village, Belagavi, Karnataka (single SEZ)
Integrated Ecosystem: All manufacturing within one SEZ for efficiency
Subsidiaries: Multiple wholly owned subsidiaries:
- AeroStructures Manufacturing India Private Limited
- Aequs Consumer Products Private Limited
- Aequs Engineered Plastics Private Limited
Technology: Advanced CNC, titanium machining, precision engineering
Quality: Aerospace-grade quality systems (AS9100, NADCAP, others)

Company Strengths

India’s Only Fully Integrated Aerospace Manufacturer in Single SEZ – Unique Positioning:
- Unique competitive advantage: Only precision component manufacturer in India operating within a single SEZ with fully vertically integrated aerospace manufacturing
- Complete ecosystem: Aequs + Suppliers + Joint Ventures within one location
- 100% in-country value addition for select products
- Efficiency from single-location operations
- SEZ benefits: Tax incentives, duty exemptions, export focus
- High barriers to entry – difficult for competitors to replicate
Largest Aerospace Product Portfolio in India – 4,500+ Products:
- As of March 31, 2025: Maintained one of the largest aerospace product portfolios in India
- 4,500+ precision aerospace components
- Engine systems, landing systems, cargo, interiors, structures, turning parts
- Diversification within aerospace reduces single product dependency
- Cross-selling opportunities across aerospace clients
- Expertise in advanced metallurgy including high-end titanium alloys
Exposure to Global Aerospace Giants – Boeing & Airbus Supply Chains:
- Client roster includes: Global aerospace OEMs and tier-1 suppliers to Boeing, Airbus
- Participation in global defense and aviation supply chains
- Long-term contracts typical in aerospace (multi-year visibility)
- Repeat business from established relationships
- Quality certifications enabling participation in global supply chains
- Export-oriented business leveraging global aerospace growth
Strong Recent Performance – H1 FY26 Revenue +17%:
- H1 FY26: ₹537.2 cr revenue (+17% vs ₹459 cr H1 FY25)
- Aerospace segment: ₹473.95 cr (H1 FY26) showing growth momentum
- Trajectory improving after FY25 challenges
- Demonstrates demand recovery in aerospace sector
- Operational turnaround underway
Strong GMP (₹18-44) – 14.5-35.5% Expected Listing Gains:
- GMP of ₹18-44 as of Nov 28-Dec 2 (14.5-35.5% premium)
- High of ₹44 on Dec 2 (35.5% premium!)
- Latest: Subject to Sauda ₹3,800 per application
- Positive grey market sentiment despite losses
- Potential for significant Day 1 listing gains
- Investor confidence in turnaround story
Pre-IPO Institutional Backing – ₹144 Cr from Marquee Investors:
- Raised ₹144 crore in pre-IPO placement
- Marquee investors: SBI Funds Management, DSP India Fund, among others
- Institutional confidence in business fundamentals
- Validates growth story and turnaround potential
- Reduced fresh issue from ₹720 cr to ₹670 cr (dilution reduction)
Structural Aerospace Tailwinds – Global Supply Chain Restructuring:
- Global aerospace recovery: Post-pandemic demand returning (Boeing/Airbus order books strong)
- Supply chain re-orientation: Companies diversifying from China to India
- India’s aerospace push: Government focus on defense manufacturing, Make in India
- Commercial aviation growth: Expanding Indian airline fleets (Air India, IndiGo orders)
- Defense spending: Rising global defense budgets benefiting aerospace suppliers
- Multi-year tailwinds for aerospace precision components
Debt Reduction Focus – ₹433 Cr (67.7%) for Deleveraging:
- IPO proceeds: ₹433.17 cr (67.7%) allocated to debt repayment
- Deleveraging parent company and 3 subsidiaries
- Strengthening balance sheet for profitability turnaround
- Reducing finance costs to improve margins
- Post-IPO, company will be less leveraged
Mainboard Listing – Higher Liquidity & Institutional Access:
- Listing on BSE & NSE mainboard (not SME!)
- Higher liquidity and trading volumes
- Access to larger institutional investor base
- Potential index inclusion (Nifty 500, BSE 500 in future)
- Better exit opportunities for investors
- Higher visibility vs SME listings
Analyst Positive View – “Bright Prospects Ahead”:

Analyst Dilip Davda notes: “Though its aerospace division is making profits, other business continuing to make losses. Based on its recent financial data, the issue is priced at a negative P/E. Considering its global customer lists, the company has bright prospects ahead.“
SBI Securities: Suggests “Subscribe” – aerospace manufacturing, stable demand from Boeing/Airbus, improving margins, debt repayment may help profitability
Analysts recognize long-term potential despite near-term losses

Key Risks & Challenges

LOSS-MAKING COMPANY – FY25 Loss ₹102.35 Cr (619% Decline!):
- CRITICAL CONCERN: FY25 net loss: ₹102.35 crore vs FY24 loss: ₹14.24 crore – losses deepened 619%!
- Negative P/E – company is loss-making, traditional valuation metrics don’t apply
- H1 FY26 also posted loss: ₹16.98 crore
- Analyst notes: “Aerospace division is making profits, other businesses continuing to make losses”
- Consumer electronics and plastics divisions dragging down profitability
- Questions: When will company turn profitable? Can aerospace profits offset other losses?
- High risk for retail investors – investing in loss-making company
Revenue Decline FY25 – Top Line Dropped 3%:
- FY25 revenue: ₹959.21 cr (-2.95% vs ₹988.30 cr FY24)
- Revenue actually declined despite company scale
- Indicates demand challenges or execution issues
- H1 FY26 showing recovery (+17%) but needs sustained growth
- Volatility in top-line creates uncertainty
Heavy Debt Burden – ₹433 Cr (67.7%) for Repayment Across Group:
- IPO proceeds: ₹433.17 crore (67.7% – largest allocation) for debt repayment
- Complex debt structure: Parent company (₹17.55 cr) + 3 subsidiaries (₹415.62 cr total)
  - AeroStructures: ₹174.82 cr
  - Consumer Products: ₹231.16 cr (highest!)
  - Engineered Plastics: ₹9.63 cr
- Even post-IPO, company may remain leveraged
- Continuous finance costs impacting losses
- Subsidiaries heavily indebted – group-level risk
Non-Core Businesses Losing Money – Dragging Down Aerospace Profits:
- Analyst explicitly notes: “Though its aerospace division is making profits, other business continuing to make losses“
- Consumer electronics (6.62% revenue), plastics & durables (7.42% revenue) loss-making
- Aerospace profits (86% revenue) being eaten by non-core losses
- Questions: Why continue loss-making divisions? Divestment plans unclear
- Diversification strategy not paying off
- Management execution in non-aerospace segments questionable
Complex Corporate Structure – Parent + 3 Subsidiaries Creating Opacity:
- Complex holding structure with multiple wholly owned subsidiaries
- IPO funds flowing to subsidiaries (₹415.62 cr debt repayment + ₹55.89 cr capex)
- Consolidated financials mask individual subsidiary performance
- Difficult for retail investors to assess true value
- Inter-company transactions and transfer pricing concerns
- Corporate governance complexity
Customer Concentration Risk – Aerospace OEM Dependency:
- While specific concentration not disclosed, aerospace business inherently concentrated
- Dependent on Boeing/Airbus supply chains (indirect exposure)
- Loss of major aerospace OEM contract = severe revenue impact
- Long-term contracts but renewal risk exists
- Tier-1 supplier concentration likely high
- Customer bargaining power significant in aerospace
Execution Risk – Profitability Turnaround Uncertain:
- Major question: Can company achieve sustained profitability?
- H1 FY26 still loss-making (₹16.98 cr loss)
- Needs to fix consumer electronics and plastics businesses
- Debt reduction helps but not sufficient alone
- Volume growth and margin expansion required
- Operational efficiency improvements needed
- Timeline to profitability unclear – could take 2-3+ years
Aerospace Industry Cyclicality – Volatile Order Patterns:
- Aerospace components tied to commercial aviation and defense cycles
- Boeing/Airbus production rate changes directly impact demand
- Geopolitical tensions affecting defense spending
- Pandemic showed vulnerability – aviation collapsed 2020-2021
- Cannot sustain during industry downturns
- Long sales cycles and certification processes
High Capex Intensity – Capital Allocation Concerns:
- Only ₹64 cr (10% of IPO) allocated to capex
- But ₹433 cr (67.7%) going to debt repayment
- Questions: Is company under-investing in growth?
- Aerospace manufacturing requires continuous technology upgrades
- Competitors investing heavily in automation, Industry 4.0
- May fall behind technologically
Institutional Investor Exit – 27.3% OFS Signal:

₹251.81 crore (27.3% of issue) OFS by institutional investors
Existing investors (Amansa, Amicus, Steadview) taking partial exit
Why are early backers exiting if “bright prospects ahead”?
May signal reduced confidence or valuation concerns
Only 72.7% proceeds for genuine company use

Single Location Concentration – All Manufacturing in One SEZ:

Entire operations in single SEZ in Belagavi, Karnataka
Single point of failure risk:
- Natural disasters, fire, floods
- Labor disputes, strikes
- Power outages, equipment failures
- Regulatory issues, SEZ policy changes
Any disruption = complete production halt
Business continuity risk for global aerospace clients
Should have backup facilities

Low Retail Allocation – Only 10% for Retail Investors:

Retail investors get only 10% allocation (lowest possible in mainboard IPO)
QIB allocation: 75% (highest) – institutional focus
If over-subscribed, retail allotment will be tiny
Most shares going to institutions, not retail
Retail investors may face allotment challenges

CRITICAL WARNING: Aequs is a LOSS-MAKING COMPANY with FY25 net loss of ₹102.35 crore (619% deeper than FY24 loss ₹14.24 cr). H1 FY26 also loss ₹16.98 cr. Negative P/E – traditional valuation doesn’t apply. Revenue declined 3% in FY25. Analyst notes: “Aerospace division is making profits, other business continuing to make losses” – consumer electronics and plastics dragging down. Heavy debt (₹433 cr or 67.7% IPO for repayment). Complex structure (parent + 3 subsidiaries). POSITIVES: India’s only fully integrated aerospace manufacturer in single SEZ, 4,500+ products (largest in India), Boeing/Airbus supply chains, H1 FY26 revenue +17%, strong GMP (₹18-44, 14.5-35.5%), pre-IPO backing (₹144 cr from SBI/DSP), structural aerospace tailwinds, mainboard listing. Analyst verdict: “Considering its global customer lists, the company has bright prospects ahead.” SBI Securities: “Subscribe.” This is a turnaround bet – high risk, high reward potential for long-term investors willing to ride losses to profitability.

Disclaimer: This information is based on publicly available sources including SEBI RHP filings, analyst reports, and company disclosures. Investors should conduct their own research and consult with financial advisors before making investment decisions. Past performance is not indicative of future results.