Aequs Q1 FY27: Revenue surges, but the turnaround still depends on consumer utilization

Aequs Limited opened FY27 with its strongest top-line growth in recent quarters, reporting revenue from operations of INR 3,955 million in Q1 FY27, up 55% year on year and 8% sequentially. Aerospace continued to anchor the business with INR 3,222 million of segment revenue, while the Consumer segment scaled to INR 734 million and expanded its share of consolidated revenue to 19% from 10% a year ago.

But the quarter also showed the cost of ramping new assets. Reported EBITDA fell to INR 215 million, a 46% decline year on year, and PAT remained a loss at INR 532 million. Management argued that reported profitability was distorted by a sharp drop in other income versus Q4 FY26, and asked investors to track operational EBITDA excluding other income. On that basis, operational EBITDA improved from INR 42 million in Q4 FY26 to INR 148 million in Q1 FY27, driven by a narrowing Consumer loss.

Growth was broad-based, but profitability was uneven

Aeqvs reported two very different operating profiles in Q1 FY27.

Aerospace, which contributed 81% of Q1 revenue, grew 40% year on year. The company added 86 new parts during the quarter, taking the aerospace portfolio to 5,740 SKUs. The aerospace order book crossed USD 1 billion to USD 1,004 million, up 13% sequentially, which management described as a validation of long-term program scale and customer trust.

Consumer revenue nearly tripled year on year to INR 734 million and rose 16% sequentially. Management noted that utilization in the Consumer segment was still low at 22% in Q1 FY27, but emphasized improving throughput and product mix. The Consumer EBITDA loss narrowed to INR 361 million from INR 473 million in Q4 FY26, an improvement of INR 112 million QoQ.

The consolidated profitability picture was impacted by three clear factors visible in the reported financials. First, other income reduced to INR 67 million from INR 279 million in Q4 FY26. Second, depreciation remained very high at INR 453 million because of the expanded Consumer Electronics asset base. Third, the Consumer segment continued to operate at low utilization, limiting fixed-cost absorption.

Aerospace momentum strengthened with new wins and an order book milestone

The quarter’s most important strategic datapoint was the aerospace order book crossing USD 1 billion. Management stated that this number did not yet include contracts signed at the Farnborough airshow and indicated the new wins should reflect in the next quarter’s order book.

A key highlight was the company’s first contract for fully assembled Airbus A320 wheels with Safran Landing Systems. Management described the agreement as a 15-year contract and said it enables a fully end-to-end manufacturing flow in India, using India-sourced aerospace-qualified aluminium. The company clarified on the call that it will manufacture the aircraft wheel without tyres and that the wheel is assembled from two halves with additional assembly steps, all intended to be executed within Belagavi.

In operating terms, Aerospace segment EBITDA was INR 731 million in Q1 FY27, up 35% year on year, though lower sequentially compared to Q4 FY26 due to higher other income in Q4. Segment ROCE remained strong and stable at 21.69% in Q1 FY27 versus 21.96% in Q1 FY26.

Management also signaled potential acceleration of aerospace capex to match customer timelines, noting that the order book growth implies a need to keep adding capacity. The company stated it is adding machines on a continuous basis.

Consumer: the inflection hinges on utilization and cost absorption

Consumer remains the primary drag on consolidated profitability, but it also represents the largest operating leverage opportunity. The investor presentation reported Consumer utilization at 22% in Q1 FY27, compared with 70% utilization in Aerospace. Consumer segment ROCE was -24.77% in Q1 FY27, worsening from -7.45% in Q1 FY26.

Management reiterated a clear milestone: Consumer EBITDA breakeven by Q4 FY27. On the call, management stated it expects utilization to reach 40% to 50% by Q4 FY27. This trajectory is critical because the fixed-cost base is already largely in place. The company also indicated that some planned Consumer capex may not be committed if utilization ramp does not materialize.

The company did not provide a revenue split within Consumer between consumer electronics, toys, and consumer durables, stating it evaluates the segment at an overall level and that some assets may be shared.

Cash flow and balance sheet: leverage improved, but cash generation is still weak

Aequs ended Q1 FY27 with cash and cash equivalents of INR 2,340 million and additional bank balances of INR 537 million. Net debt to equity improved to 0.34x in Q1 FY27 from 0.88x in Q1 FY26.

However, operating cash flow was negative. Cash flow from operations was INR -414 million, driven by a working capital outflow of INR -653 million. Capital expenditure in the quarter was INR 830 million, resulting in a net cash movement of INR -702 million.

Management said net working capital days improved slightly from 127 days at the end of FY26 to 125 days in Q1 FY27, calculated on an annualized quarterly revenue basis.

On capex, management guided to total FY27 capex of about INR 660 crores across aerospace and consumer. For the longer term, the company reiterated a five-year capex plan of USD 350 million to USD 400 million from FY27 to FY31. Management also discussed the Hosur aerospace ecosystem, stating the first facility is expected to commence in the second half between September to March timeframe of FY27 to FY28, with revenues expected from FY29, and an investment of INR 1,900 crores over 10 years.

A notable operational risk highlighted in the call was raw material sourcing. Management stated about 99% of raw material is imported and that qualified Indian sources for aerospace-grade materials remain limited.

Takeaways from Q1 FY27

Aequs delivered strong revenue growth in Q1 FY27 and strengthened its aerospace platform with an order book milestone and new program wins. At the same time, the company’s financial profile is still being shaped by underutilized Consumer assets and high depreciation.

The next few quarters will likely be judged on two execution markers that management itself emphasized: sustained aerospace growth with margins above 20% and a visible utilization ramp in Consumer toward the targeted 40% to 50% range by Q4 FY27. If the Consumer ramp plays out as guided, the company’s stated milestones of Consumer EBITDA breakeven by Q4 FY27 and consolidated PAT breakeven by H1 FY28 will become more credible. If not, the gap between revenue growth and profitability could persist longer than investors expect.