Aequs IPO Hits 32x Subscription, 37% GMP Is the High Valuation Worth the Risk
Aequs IPO has created massive buzz in the market with incredible subscription numbers reaching 32 times. The Belagavi based aerospace manufacturing company is seeing unprecedented investor interest with retail investors leading the charge at 55 times subscription. But is this aerospace giant worth your investment or just another IPO frenzy that will fade away. Let us break down everything you need to know about this IPO.
The grey market premium is holding steady at 37% which translates to an expected listing price of rupees 170 per share. However the company is still making losses and faces serious challenges in its consumer business segment.
With global aerospace giants like Boeing and Airbus as clients Aequs has strong fundamentals but execution risks remain high. The question every investor is asking is whether the current valuation justifies the risks or if this is just exit liquidity for early investors.
Also Read: Vidya Wires IPO GMP Today: Should You Apply for 12% Listing Gain or Hold for Long Term Value?
Aequs Limited is a diversified precision engineering company based in Belagavi Karnataka. Founded in 2006 by Aravind Melligeri the company operates India’s only fully integrated aerospace manufacturing campus.
The IPO consists of fresh issue worth rupees 670 crore and offer for sale of rupees 251.81 crore totaling rupees 921.81 crore. The price band was set between rupees 118 to rupees 124 per share with minimum lot size of 120 shares.
The company manufactures precision components for major aerospace OEMs including Boeing Airbus Safran Collins Aerospace and Honeywell. Around 89% of revenue comes from aerospace business while 11% comes from consumer products like toys and durables for clients like Hasbro and FirstCry.
The fresh funds raised will primarily be used for debt repayment of rupees 433 crore capex of rupees 64 crore in subsidiaries and general corporate purposes.
The IPO opened on December 3 2025 and closed on December 5 2025. By the final day at 12:30 PM the issue was oversubscribed 32.12 times. Retail investors showed maximum enthusiasm booking their portion 55.96 times while non institutional investors bid 49.15 times their allocated quota.
Qualified institutional buyers were relatively cautious subscribing only 4.65 times their portion which raises questions about institutional confidence.
Employee quota was booked 25.71 times showing strong internal confidence in the company. The high retail and NII subscription indicates strong demand from smaller investors who are attracted by the aerospace growth story and grey market premium. However lower QIB participation suggests that large institutional investors remain skeptical about current valuations given the loss making status.
Grey market premium has remained stable throughout the bidding period. On day one GMP was rupees 46.5 which equals 37.5% premium over upper price band. On day two it slightly dipped to rupees 45.5 and on final day settled at rupees 46.
This stability in GMP despite high subscription indicates genuine demand rather than speculative buying. The implied listing price based on GMP is rupees 170.
Historically aerospace and defense IPOs have delivered strong listing gains. Similar companies like PTC Industries and Azad Engineering saw GMP premiums of 50% or more before listing.
However GMP is unofficial and unregulated market so actual listing price may vary based on market conditions on listing day. Investors should remember that high GMP does not guarantee listing gains especially if broader market sentiment turns negative.
Aequs operates a unique vertically integrated aerospace campus spanning machining forging assembly and surface treatment. This integration gives them cost advantages and quality control that standalone manufacturers cannot match.
The company supplies critical components for commercial aircraft including A320 B737 A350 and B787. Their client base includes some of the biggest names in aerospace with combined order backlog of 1.1 trillion dollars.
The aerospace segment generates 89% of total revenue with healthy EBITDA margins of 24.7%. However the consumer segment which contributes 11% revenue is struggling badly with negative 23.9% EBITDA margins. The capacity utilization in consumer segment is just 17 to 30% which is concerning. Despite these challenges the company plans to invest rupees 231 crore in consumer capex which many analysts question.
Aequs reported revenue of rupees 925 crore in FY25 which was flat compared to rupees 965 crore in FY24. The company made net loss of rupees 102 crore in FY25 compared to rupees 109 crore loss in FY23. In first half of FY26 the loss narrowed to rupees 17 crore showing some improvement. The losses are mainly due to high depreciation costs low capacity utilization in consumer segment and elevated interest costs.
The company has total debt which it plans to reduce significantly using IPO proceeds. Interest expense has been a major drag on profitability. Once debt is repaid many analysts expect the company to turn profitable within 12 to 24 months. However this turnaround depends on successful execution of growth plans and improvement in consumer segment performance which remains uncertain.
At upper price band of rupees 124 the post issue market cap is rupees 8316 crore. This translates to 9 times price to sales based on FY25 revenue. The valuation is premium compared to listed peers like Dynamatic Technologies which trades at 6 times price to sales. However Aequs management argues that their integrated manufacturing setup and strong client relationships justify higher multiples.
The price to book ratio stands at 9.94 times which is quite high for a loss making company. EV to EBITDA multiple for FY26 is estimated at 79 times which again looks expensive. Analysts are divided on whether this valuation is fair. Bullish analysts argue that aerospace sector tailwinds and debt reduction will unlock value while bearish analysts believe current financials do not justify such premium pricing.
Brokerage houses and analysts have mixed views on Aequs IPO. SBI Securities and Swastika Investmart have given subscribe rating citing high entry barriers strong OEM relationships and debt reduction benefits. Angel One recommends subscribe for long term investors with high risk appetite noting that the 9.94 times price to book reflects the strength of integrated ecosystem. They believe company can deliver good returns over 5 to 7 year horizon.
However some analysts are cautious. Hindu BusinessLine has suggested avoiding the IPO stating valuation looks stretched compared to current financials. IndMoney recommends subscribe with caution suitable only for investors with 5 to 7 year investment horizon. The key concern among bearish analysts is the heavy capex planned for loss making consumer segment and lack of profitability track record which creates execution risk.
Several risks need careful consideration before investing. First is financial volatility with company reporting losses and negative cash flows. The working capital cycle is also stretched with increasing number of days. Second risk is client concentration with top 5 clients contributing 66% of revenue. Any slowdown in orders from Boeing or Airbus due to geopolitical issues or production delays could severely impact revenue.
Third risk is execution related to capex deployment. The consumer segment turnaround remains unproven and investing rupees 231 crore in a loss making business segment raises red flags. Fourth is the cyclical nature of aerospace industry which is vulnerable to aviation slowdowns and forex fluctuations. Finally the OFS component which is 27% of total issue signals that promoters and private equity investors are partially exiting which could mean they believe current valuations are peak levels.
Despite risks there are strong growth drivers supporting Aequs story. India’s aerospace exports have grown 5 times from FY19 to reach rupees 58840 crore in FY25. The global aerospace market is expected to grow at 6% CAGR reaching 208 billion dollars by 2030. The China plus one strategy and Make in India initiative are creating opportunities for Indian aerospace manufacturers to grab market share from Chinese competitors.
Aequs has high entry barriers with AS9100 certifications and relationships with OEMs built over 10 plus years. These relationships are sticky and switching costs for clients are very high. The combined order backlog of Boeing and Airbus clients is 1.1 trillion dollars which provides long term revenue visibility. Post IPO debt reduction will significantly lower interest costs and could push company to profitability within next few quarters if operational improvements continue.
For short term investors looking for listing gains Aequs IPO appears attractive. The 32 times subscription and 37% GMP indicate potential for 30 to 40% gains on listing day scheduled for December 10. The aerospace theme and small issue size create favorable conditions for listing pop. Retail investors who get allotment may see quick returns if they book profits on listing day.
For long term investors the decision is more complex. Those with high risk appetite and belief in India’s aerospace growth story can consider applying. The integrated manufacturing campus client relationships and sector tailwinds provide strong foundation for future growth. However conservative investors should avoid or wait for post listing correction. It is advisable to monitor Q3 FY26 results to confirm profitability trend before taking long term position in stock.
The key is to assess your risk tolerance and investment horizon. If you are applying do not invest more than you can afford to lose. Remember that allotment chances are low given the high subscription especially in retail category. Those who do not get allotment can consider buying post listing if stock corrects to more reasonable valuations based on actual financial performance.
Tags: aequs ipo, aequs ipo subscription, aequs ipo gmp, aerospace manufacturing stocks, aequs ipo listing date, ipo december 2025
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