Shares of Aequs Ltd. plunged as much as 18% on Tuesday, October 27, after the aerospace and consumer components manufacturer reported a sharp decline in operating profitability and a wider loss for the September quarter, despite strong revenue growth.
The company reported a 45% year-on-year increase in revenue to ₹409 crore for Q2 FY27, compared with ₹282 crore in the year-ago period. However, its net loss widened to ₹52.3 crore from ₹21 crore, while earnings before interest, tax, depreciation and amortisation (EBITDA) declined 51.7% to ₹14 crore from ₹29 crore.
The EBITDA margin contracted to 3.37% from 10% a year earlier, reflecting pressure on operating profitability.
Revenue growth was supported by a sharp ramp-up in the consumer business. However, supply-chain constraints delayed production, while elevated depreciation and finance costs continued to weigh on the bottom line.
The aerospace segment reported revenue of ₹322 crore in the September quarter, taking first-half revenue to ₹637 crore, up around 42% year on year.
The consumer segment recorded revenue of ₹87 crore in Q2 FY27. Revenue for the first half stood at ₹168 crore, compared with ₹63 crore in the corresponding period last year.
Aequs management commentary
During its post-results commentary, Aequs management withdrew its earlier timeline for achieving EBITDA breakeven in the consumer business by Q4 FY27 and did not provide a revised date. The company continues to target consumer capacity utilisation of 40–50% by the fourth quarter of FY27.
Management reiterated its ambition to grow the business four to six times by FY31 and said the consumer business is expected to turn profit-after-tax positive in FY30.
The company’s order book increased 9% sequentially to $1.1 billion, with execution typically spread over five to seven years. Management said it does not expect order book-related risks in the near term.
Aerospace capacity utilisation reached 69%, rising to 76% at its India operations. Aerospace inventory is expected to normalise around Q1 FY28, with the company targeting approximately 120 inventory days.
Aequs expects capital expenditure for FY27 to be materially lower than its earlier guidance of ₹660 crore. Management indicated that full-year capex is now targeted at around ₹500 crore, with expenditure in the second half expected to be broadly similar to the approximately ₹160 crore spent in the first half.
The company is shifting a greater share of its capital expenditure towards aerospace. Management also said it is unlikely to raise additional capital before FY28.
Promoters have committed ₹650 crore through preferential warrants. The company is not currently looking to add 3D-printing capabilities.
What Aequs CEO Aravind Melligeri told CNBC-TV18
Speaking to CNBC-TV18, Aequs’ Aravind Melligeri said the aerospace order book had expanded by more than 30% over the past three quarters to $1.1 billion.
He said the company did not have a revised timeline for consumer business breakeven. Melligeri also reiterated the revised capex target of around ₹500 crore for the year, adding that investment would increasingly be directed towards aerospace.
On order visibility, he said the company did not anticipate near-term order book risks. Melligeri also disclosed that Aequs had signed three agreements with Safran over the preceding couple of weeks.
He added that production ramp-ups in the company’s business can occasionally lead to delays, given the nature of its operations.