Unimech Acquires Hobel Bellows for ₹450 Crore, Bolstering Precision Engineering

Unimech Aerospace and Manufacturing Ltd has acquired Hobel Bellows for ₹450 crore, marking a significant expansion of its precision engineering capabilities.
Hobel Bellows, a specialist in metallic bellows and flexible tubing assemblies, reported revenues of ₹129 crore in FY26 and boasts EBITDA margins exceeding 50%.

The Transaction

Unimech Aerospace and Manufacturing Limited acquired Hobel Bellows Private Limited for ₹450 crore. The all-cash deal, funded through internal accruals, aims to bolster Unimech's position as a high-value precision engineering platform. Hobel Bellows brings specialized expertise in metal forming, hydroforming, and automated testing systems, significantly enhancing Unimech's product offerings into engineered assemblies and subsystems.

The acquisition is strategic, aligning with Unimech's vision to integrate complementary capabilities and expand into high-entry barrier segments like aerospace, defense, and nuclear industries. Hobel Bellows, with its strong financial track record, including EBITDA margins exceeding 50% and Return on Capital Employed (ROCE) above 50%, is expected to be margin accretive.

Hobel Bellows projects an annual growth rate of 15-17% over the next 3-4 years, tapping into a global bellows and tubing market valued at $2.6 billion. The deal was valued at 7x EV EBITDA, considered attractive given Hobel's robust financial performance.

Why It Matters

This acquisition moves Unimech up the value chain, from precision components to more complex engineered assemblies and subsystems. It strengthens the company's market position in specialized, high-difficulty segments. The integration is expected to drive future earnings growth and increase wallet share with existing high-profile customers in aerospace and defense.

Company Background

Unimech Aerospace and Manufacturing Ltd., established in 2016, has rapidly grown into a high-precision engineering solutions provider, primarily serving the aerospace, defense, energy, and semiconductor industries. The company went public in December 2024 after raising ₹2,500 crore in pre-IPO funding, a move that provided capital for strategic initiatives like this acquisition. Unimech holds AS9100 Rev D, ISO 9001 & ISO45001 certifications and derives over 90% of its revenue from exports, particularly to Europe and the US. The company also recently entered into a joint venture agreement for operations in Saudi Arabia.

Acquisition Benefits

• Enhanced Capabilities: Unimech gains specialized expertise in metal forming, hydroforming, and automated testing systems.
• Expanded Product Portfolio: The company can now offer engineered assemblies and subsystems, moving beyond individual precision components.
• Market Access: Strengthened position in high-entry barrier segments like aerospace, defense, and nuclear industries.
• Revenue & Margin Growth: Hobel's projected 15-17% annual growth and high margins are expected to boost Unimech's financial performance.
• Synergy Realization: Focus on cross-selling and deepening customer engagement for larger contracts.

Key Risks

Securing AS9100 certification is a critical initial task for Hobel Bellows post-acquisition to fully leverage opportunities in the aerospace market.

Peer Comparison

Unimech's strategic acquisition of Hobel Bellows positions it more directly against specialized precision engineering firms like MTAR Technologies. MTAR also caters to aerospace, defense, and nuclear sectors with high-precision components. While companies like Dixon Technologies and Kaynes Technology focus on broader electronics manufacturing services, Unimech's move reinforces its niche in high-complexity, high-value engineering for defense and aerospace, potentially differentiating it from broader EMS players.

Key Metrics

• Hobel Bellows reported ₹129 crore in revenue for FY26.
• The acquired entity, Hobel Bellows, achieved EBITDA margins exceeding 50% and ROCE over 50% pre-acquisition.
• Hobel Bellows is projected to grow at a CAGR of 15-17% annually for the next 3-4 years.
• The acquisition was valued at 7x EV/EBITDA based on Hobel's FY26 EBITDA.

What Investors Are Watching

• Progress on securing AS9100 certification for Hobel Bellows.
• Successful integration of Hobel Bellows' operations and realization of revenue and margin synergies.
• Unimech's ability to increase capacity utilization towards 85-90% before significant new capital expenditure.
• Clearance for the FTWZ facility, expected by end-May 2026.
• Management's continued focus on organic growth alongside synergistic expansion into high-value segments.