After 76% YTD rally, brokerage sees another 83% upside in this stock

Shares of aerospace company Aequs Ltd surged 4.66 per cent on Tuesday to close at Rs 242.75. At this level, the stock has rallied 75.59 per cent in the calendar year 2026 so far.

Nuvama Institutional Equities has initiated coverage on Aequs with a 'Buy' rating. Sharing its rationale behind the call, the domestic brokerage noted that the company is India's only vertically integrated aerospace SEZ, supplying machined aerostructures, landing gear and engine parts to global OEMs such as Airbus and Boeing.

"Aequs is also India's first genuine pure-play aerospace precision manufacturer — a moat built over time, not via capital alone," it said.

The brokerage highlighted that Aequs has a solid $889 million order book, which, in its view, warrants a 42 per cent sales CAGR and 84 per cent EBITDA CAGR over FY26–FY29E.

Citing these factors, Nuvama began coverage on the stock with a 12-month target price of Rs 444, implying a potential upside of 82.90 per cent from Tuesday's closing level of Rs 242.75.

On valuation, Nuvama said its 30-year discounted cash flow (DCF) model assumes a 16 per cent weighted average cost of capital (WACC) and 3 per cent terminal growth. It expects free cash flow to the firm (FCFF) to turn positive from FY33E onwards, as $350–450 million of planned capital expenditure drives the company's next phase of growth.

The brokerage also expects Aequs to leverage its balance sheet in FY27, while noting that there are no indications of equity dilution (equity raise) during FY27.

Further, Nuvama said Aequs deserves a valuation premium over pharma contract development and manufacturing organisations (CDMOs), noting that, unlike molecules, aircraft programmes do not expire.

With that being said, the brokerage flagged supply chain disruptions and raw material dependence, dependence on Chinese technology, customer concentration, execution risk in the consumer segment, and OEM production rate volatility as the key risks to its investment idea.