Unimech Aerospace and Manufacturing Ltd IPO

A significant portion of its total revenue from operations i.e. 98.25%, 99.35%, 94.70% and 95.84% in the six months period ended September 30, 2024, Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively is attributable to the aerospace sector wherein its manufacture products pertaining to aero engine tooling and airframe tooling. Any adverse changes in the aerospace sector could adversely impact its business, results of operations and financial condition.

The company is dependent on its top five customers who contribute to 94.62%, 96.80%, 93.88% and 88.97% of its total revenue from operations in the six months period ended September 30, 2024, Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively and the loss of any of these customers or a significant reduction in purchases by any of them could adversely affect its business, results of operations and financial condition.

Its business works on a longer gestation period wherein, there is considerable time gap of 7 to 28 weeks between the receipt of order and the payment, thereby, affecting its working capital requirements.

Its business is dependent on exports and the performance of geographies where the company supply its products. 95.67%, 97.64%, 95.20% and 91.06% of the company total revenue from operations in the six months period ended September 30, 2024, Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively came from exports. Any adverse changes in the conditions affecting the industries in global markets in which its products are supplied, including its key markets such as United States and Germany, can adversely impact its business, cash flows, results of operations and financial condition.

A significant part of its operations i.e. 83.46%, 89.35%, 73.50% and 68.06% in the six months period ended September 30, 2024, Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively were conducted through its Material Subsidiary, Innomech Aerospace Toolings Private Limited ("Innomech"), and the company is dependent on the operating income and cash flows generated by Innomech. Any loss or reduction in the business attributable to its subsidiary, or a change in the company shareholding in Innomech, could have a material adverse effect on its business, prospects, results of operations, cash flows and financial condition on a consolidated basis.

The company has experienced negative cash flows from investing and financing activities in previous periods and cannot assure you that its will not experience negative cash flows in future periods. Negative cash flows may adversely affect its financial condition, results of operations and prospects.

Certain land on which its manufacturing facilities are located are leased to it by Karnataka Industrial Areas Development Board. If the company is unable to comply with conditions of use of such land or relocate its operations on commercially reasonable terms, there may be an adverse effect on its business, financial condition and operations.

The Offer Price, market capitalization to total income multiple and price to earnings ratio based on the Offer Price of the Company, may not be indicative of the market price of the Equity Shares on listing.

While the company has achieved substantial revenue growth and expanded manufacturing capacity in recent years, it's important to note that its historical growth rate is partially attributed to a relatively small revenue base. There is no assurance that its can sustain this high growth rate in the future. Market conditions, competitive pressures, and economic factors could impact its ability to achieve similar growth levels going forward. The company has experienced growth in recent years and may be unable to sustain its growth or manage it effectively.

Its business and profitability is substantially dependent on the availability and cost of the company raw materials, and any disruption to the timely and adequate supply of raw materials, or volatility in the prices of raw materials may adversely impact its business, results of operations and financial condition. The company depends on these third-party suppliers of raw materials and does not have firm commitments for supply or exclusive arrangements with any of its suppliers and are required to pay advances from time to time. The absence of long-term contracts or exclusive arrangements and nonrecovery of advances, exposes it to potential supply chain disruptions which could significantly impact its production capacity, leading to delays in order fulfilment and potential loss of revenue.