Global aerospace presents a massive, rapidly growing addressable market, expected to expand from ₹1.2 lakh crore in 2023 to ₹2.2 lakh crore by 2029, as per Azad Engineering.
Global air traffic is also projected to double by 2029, serving as a major tailwind for the sector.
The aerospace industry is expanding for several other reasons. Two companies (Boeing and Airbus) control more than 90% of the market share. Currently, the industry has a backlog of 15,000 aircraft, approximately 84% of which are narrow-body aircraft, such as the Airbus A220, A320, and Boeing 737.
Rising defence spending, with a strong focus on modernization, advanced aircraft, and missile manufacturing, is another tailwind for the industry. As such, here are three hidden gems benefitting from the opportunity.
#1 Raymond: The LEAP engine specialist
Raymond, a part of the Raymond group, is the aerospace business.
The company's aerospace business is housed in JK Maini Global Aerospace (JKMGAL), a subsidiary of Raymond. This company supplies mission-critical parts to global OEMs and Tier 1 suppliers, such as Airbus and Boeing.
JK Maini Global: Serving the Boeing-Airbus Duopoly
JKMGAL manufactures aircraft components, having developed over 1,200 precision aero-engine parts for more than 25 global clients. It is a preferred partner to the top three global aircraft engine manufacturers, who collectively command an 88% global market share.
This business is a 'low volume, high mix' model and is witnessing tremendous growth. Revenue grew 34% year-on-year to ₹273 crore in 9MFY26. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) rose 34% to ₹57 crore, with margins at 20.9%.
Aerospace and Defence Segment Financials
Complex Engine Parts is the segment's biggest revenue generator, accounting for over 75% of total revenue. An excellent example of their capabilities is the manufacturing of nozzle guide vanes and the 6th and 7th stages of the low-pressure turbine for the LEAP 1A engine.
JKMGAL can produce 8,000 units of these per year using Rene 77 material, employing advanced techniques such as vacuum brazing, 5-axis grinding, EDM, and TIG welding. Structural and system components accounted for the remaining 16% and 6% of revenue, respectively.
Its revenue mix is heavily export-oriented, with 60% derived from Europe, followed by the US (21%) and India (17%). To further expand its global footprint beyond traditional Western markets, the company recently participated in the Dubai Airshow 2025 to explore new opportunities with customers in the Middle East.
The LEAP engine specialist: Scaling high-margin complex parts
A major driver of their growth is their participation in the high-volume LEAP engine programs (1A/B/C), for which they supply 300-350 different types of parts. The LEAP engine program comprises multiple high-volume, advanced aircraft engines extensively used by world-renowned aerospace companies such as Airbus and Boeing.
The aerospace industry has high barriers to entry and needs long-term commitment, which provides JKMGAL with strong clarity regarding its operational outlook. Customer agreements typically last 5 to 10 years. Thanks to these long-term contracts and a continuous pipeline of new product approvals, its order book averages around 2.5 to 3 times its current earnings.
When Raymond secures a contract for a new component, the OEM typically allocates 35% of the market share to testing. And customers consistently increase this allocation to 65% when quality is strong, and 100% on-time delivery is achieved. Currently, more than 50% of their components have already surpassed this 65% mark.
Revenue Visibility: Long-Term contracts and the ₹500 crore capex plan
To meet growing demand, the company plans to undertake a substantial capital expenditure of approximately ₹500 crore over the next five years. This amount will be utilized to establish an aerospace manufacturing facility in Andhra Pradesh, thereby ensuring significant long-term expansion and cost-related benefits.
#2 Sansera Engineering: Transitioning from Auto to Aerospace
Sansera Engineering, a traditional manufacturer of automotive components, is now venturing into the defence sector as well. Defence-related operations constitute a crucial part of its rapidly expanding ADS (Aerospace, Defence, and Semiconductor) vertical.
To capitalize on the impetus India is giving to indigenous defence manufacturing, the company is actively expanding its defence capabilities. Sansera has allocated a dedicated manufacturing facility for this sector. Given the rapidly increasing order volume within the ADS division, management is also actively seeking to acquire land.
The ADS Pivot: Accelerating beyond traditional automotive parts
The company manufactures complex, mission-critical aerospace structural components using its precision engineering expertise. Its key aerospace products include actuation gimbals, door beams, door fittings, bottom panel liners, and actuator housings.
Exclusive Airbus partnership: Powering aeromedical evacuation systems
Sansera's clientele includes world-renowned aircraft OEMs and Tier-1 suppliers. A major achievement for the company is a long-term contract with Airbus Defence and Space, valued at approximately ₹160 crore.
Sansera has been selected to provide manufacturing, supply, and support for the 'Airborne Intensive Care Transport Module.' This is a key system used for aeromedical evacuation in light and medium-category transport aircraft. Notably, Sansera is the only Indian supplier selected by Airbus for this program.
Sansera also supplies a large volume of parts for the first ship set of doors for the A220 aircraft, and production is currently ramping up to align with customer schedules. Management states that aircraft manufacturers are currently booking orders faster than they can deliver them, leading to a heavy reliance on Indian suppliers to secure resources and trained manpower.
A ₹3,800 crore lifetime backlog: Scaling capacity for FY30 targets
The aerospace division is currently experiencing explosive financial growth. ADS revenue surged more than 4X year-on-year in Q3FY26. In 9MFY26, revenue from ADS surpassed ₹215 crore. It is on track to achieve the revenue target of ₹300-320 crore in FY26, and ₹500-600 crore revenue in FY27. By FY30, it expects to execute ₹1,200-1,300 crore annually from the existing backlog.
Shifting Revenue-Mix
Operational Ramp-Up: The September 2026 facility expansion
The strongest indicator of its strength is its cumulative unexecuted lifetime order backlog, which stood at ₹3,800 crore as of December 2025. The current facility will hit its maximum revenue capacity of ₹600 crore next year. To handle the steep ramp-up, Sansera has planned ₹250 crore in capex over the next few years. A plant is expected to be live by September 2026.
#3 Azad Engineering: The Global Tier-1 Powerhouse
Azad Engineering supplies products, including actuator assemblies and hydraulic system components, which are essential to flight control and landing gear systems. The Aerospace and Defence Segment is the key growth engine for the company, accounting for 18% of total revenue in FY25.
Partnering with Rolls-Royce, Honeywell, and Pratt & Whitney
Azad is an established global Tier-1 supplier to major commercial aircraft manufacturers and engine OEMs. These relationships are based on years of engineering validation, and there exist high barriers to entry. Azad supplies critical components for various aircraft platforms manufactured by Boeing, Airbus SE, and Gulfstream.
About Azad Aerospace Division
Azad has recently signed a 'Master Terms Agreement' and a 'Purchase Agreement' with Pratt & Whitney for the development and manufacturing of aircraft engine components. Notably, the company's India head has indicated plans to significantly increase component supply from India.
Azad is progressing on contracts for highly engineered critical rotating components. Management emphasized that Azad works with Safran as a global supplier benchmarked against global standards, rather than relying solely on domestic offset policies.
Azad started working with Rolls-Royce in 2024 and signed a long-term agreement to produce components for Civil Aircraft Engines. Initial supplies are expected to commence in FY27. It has also received a phase 1 business award worth US $16 million (about ₹108 crore) to manufacture and supply highly complex components for Honeywell Aerospace.
Defence Modernisation: Import Substitution for UAVs and Anti-Ship Missiles
The company is also developing strategic jet engines for use in defence UAVs, drones, and anti-ship missiles. These engines serve as import substitutes under the Government of India mandate, representing a massive market potential.
Sustaining 30% growth with a ₹6,500 crore order book
Looking ahead, management has reiterated its top-line revenue growth guidance of 30% for FY26, with a long-term EBITDA Margin of 33-35%. This is supported by a massive order book of over ₹6,500 crore and an increasing backlog from OEMs.
Azad Engineering Financials
From a financial perspective, its revenue in 9MFY26 increased 31.8% year-on-year to ₹433 crore, while its EBITDA margin improved to 36.9%. Net Profit surged by 55.3% year-on-year to ₹97 crore. This growth was driven by the aerospace and defence sector (which grew 31.2%). Exports contributed 92.9% to the total revenue.
The Investor's Dilemma: Growth vs. Valuation
Return ratios, including Return on Capital Employed (ROCE) and Return on Equity (ROE), are muted across three companies. Raymond is recently listed post demerger, so return ratios are yet to show their true numbers.
In terms of valuation, Raymond is trading at a discount relative to both its median and industry multiples, whereas Sansera is trading at a premium compared to both. Azad is trading at a significant premium relative to its historical levels and to the industry.
| Peer Comparison (X) | |||||
| Company | EV/EBITDA | 3Y Median EV/EBITDA | Industry EV/EBITDA | ROCE (%) | ROE (%) |
| Raymond | 9.5 | 12.8 | 12.4* | 1.6 | 7.5 |
| Sansera | 22.5 | 14.4 | 12.4 | 13.4 | 10.5 |
| Azad | 85.9 | 59.2 (2.3Y) | 18.5 | 12.2 | 8.6 |
Source: Screener.in (Auto Sector (Not Realty) Number is Taken)
India's aerospace and defence opportunity is expanding rapidly, driven by rising air traffic, aircraft backlogs, and defence modernisation. Raymond, Sansera, and Azad are positioning themselves to benefit through long-term global OEM contracts and expanding order backlogs.
However, despite strong visibility into growth, valuation premiums and muted return ratios remain key considerations for investors. Whether they can continue to lead the aerospace and defence race remains to be seen. Meanwhile, add them to your watchlist and stay tuned.
the above article is only for educational purpose and not of trading advice
No comments:
Post a Comment