This article first appeared on GuruFocus .
Release Date: November 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Unimech Aerospace And Manufacturing Ltd ( NSE:UNIMECH ) reported a better-than-expected performance in Q2 FY26 despite facing challenges from US export tariffs.
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The company is strategically investing in expanding capacity through new facilities and strengthening its order book, aligning with the growth in the global aerospace market.
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India is emerging as a key hub in the global aerospace manufacturing value chain, providing significant opportunities for Unimech Aerospace And Manufacturing Ltd ( NSE:UNIMECH ).
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The company secured a significant order win for road support equipment under the LE engine program, marking one of the largest orders in recent times.
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Unimech Aerospace And Manufacturing Ltd ( NSE:UNIMECH ) is actively evaluating acquisition opportunities and joint ventures to align with its long-term growth agenda.
Negative Points
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The company is facing headwinds from US export tariffs, which have led to a slowdown in order pickups from US customers.
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Gross margins have slightly decreased due to higher costs of goods sold and increased employee costs related to capacity investments.
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The company has revised its revenue growth guidance, indicating that achieving the earlier target of 40% growth for FY26 is not practical.
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Capacity utilization remains low at 55% due to the focus on first article inspections and qualification orders, impacting overall efficiency.
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The geopolitical challenges and tariff implications have resulted in a shift in customer operating models, leading to longer lead times for order confirmations.
Q & A Highlights
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Q: Can you clarify the margin dip observed quarter-on-quarter and year-on-year? Do you expect further declines due to tariffs? A: (Unidentified_2) We initially projected EBITDA margins of 30-32% for the year, and currently, they stand at 30% for H1. If geopolitical issues and US tariffs persist, margins may drop by 2-3%. However, if sales stabilize, we aim to maintain margins around 30%.
Q: Considering the tariff effects, what is the revised guidance for the company's growth plan? A: (Unidentified_6) We are not issuing any new guidance for the top-line at this time due to ongoing tariff-related challenges. We expect more clarity on margins and growth by the next quarter.
Q: Are there any updates on the nuclear segment tenders? A: (Unidentified_2) Many nuclear tenders are yet to be announced. We expect announcements by the end of the year, but currently, there are no updates.
Q: Once the tariff situation is resolved, how quickly can you return to previous growth momentum? A: (Unidentified_6) In the aero tooling business, even if tariffs are reduced, some tariffs might remain. However, any reduction will positively impact revenues. In the precision segment, supply chain disruptions have affected us, but we aim to achieve our growth target of 1,000 crore by FY29.
Q: Can you provide more details on the semiconductor business and its potential? A: (Unidentified_6) The semiconductor space holds significant potential. We are working on several FAIs, and once approved, we expect orders to start flowing by the beginning of the next calendar year.
Q: How are the additional costs from tariffs being distributed between you and the customer? A: (Unidentified_6) Discussions on tariff sharing with customers are ongoing, but no definitive agreements have been reached due to the uncertainty around tariffs. This uncertainty is causing a slowdown in revenues.
Q: Why is the current capacity utilization at 55%, and when do you expect it to improve? A: (Unidentified_6) The low utilization is due to serving qualification orders in new segments, which do not fully utilize machine capacity. We expect utilization to improve by 7-10% points by mid-next year as we secure more orders.
Q: What is the strategic rationale behind diversifying into precision and nuclear segments despite lower margins? A: (Unidentified_4) Diversification builds resilience against market fluctuations. While aero tooling offers high margins, precision and nuclear segments provide long-term visibility and stability, ensuring we remain competitive and resilient.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
