Can Aequs Build A Consumer Engine Under Its Aerospace Wings?

Earlier this week, listed manufacturing company Aequs reported its Q1 FY27 earnings. As usual, most of the investor attention focused on the headline numbers – ₹53.2 Cr in net losses against a net profit of ₹3.6 Cr in the year-ago period, and a 55% YoY jump in operating revenue to ₹395.6 Cr. 

Better known for its core aerospace business, Aequs manufactures components for the likes of giants such as Airbus, Boeing, Safran and Collins Aerospace. This segment generates most of its top line and largely drives the value behind Aequs’ ₹15,000 Cr market cap. 

Yet, a more interesting story lurked deeper in the company’s numbers. Aequs’ consumer electronics business generated 19% of its overall top line during the quarter, more than double its revenue share a year ago. So, what’s exactly happening at Aequs?

The company is diversifying beyond its aerospace roots and is doubling down on its consumer electronics vertical. Under this business, Aequs manufactures a diverse range of products, including portable computers, smart devices, wearables, toys, consumer durables and cookware.

This emerging business line contributed ₹73.4 Cr to Aequs’ revenue in June 2026 quarter and generated an EBITDA loss of ₹36.1 Cr, nearly 24% lower QoQ. However, losses remained elevated at 4X compared to Q1 FY26. 

During the Q1 FY27 earnings call, the management attributed the losses to operational costs recognised from the vertical. These expenses were capitalised on its balance sheet in the year-ago period as the consumer business had yet to commence commercial operations at the time. 

Simply put, costs incurred while setting up a business are “capitalised” on the balance sheet, meaning they are recorded as investments rather than expenses (which is what happened in Q1 FY26). Now since commercial operations commenced in Q1 FY27, expenses were recognised directly in financials, which widened the vertical’s losses.

“In the near term, our focus is on steadily scaling the existing product portfolio, improving utilisation across our operations. As the business matures, we intend to deepen our customer relationships by broadening the component portfolio and progressing towards integrated kit supply,” said Aequs managing director Rajeev Kaul during the earnings call. 

The Consumer Electronics Flywheel

Over the next five years, Aequs projects that consumer electronics could contribute 40-60% of its total revenue. The company also expects the segment to achieve breakeven on an EBITDA-basis by Q4 FY27, and on a profit after tax (PAT)-basis by FY30. 

Aequs also envisions that both of its consumer and aerospace businesses would both generate similar EBITDA margins of around 18-20%. 

As a result, the listed manufacturing company is leaving no stone unturned to scale this emerging consumer bet. Of the company’s planned ₹660 Cr capex for FY27, it plans to invest around ₹500 Cr into the consumer vertical to ramp up capacity and widen product portfolio. 

Furthermore, in March, it signed a ₹2,856 Cr MoU with the Karnataka government for significant expansion of its consumer electronics manufacturing capacity in the state’s Hubballi. 

It’s clear that Aequs is betting majorly on its consumer business as a major growth driver in the coming years. However, questions remain. 

Aequs’ Cautious Optimism

While Aequs continues to remain bullish on its consumer electronics business, the segment is operating at a relatively low capacity utilisation rate of around 23% as of Q1 FY27. But its projection of EBITDA breakeven by Q4 FY27 rests on the assumption that it can drive that figure up to 40-50%. 

This raises the question of why Aequs intends to spend hundreds of crores on ramping up its production capabilities even as its existing capacity remains idle. 

In response to a similar question during the company’s previous Q4 FY26 earnings call, CEO Aravind Melligeri had said that the build out would enable Aequs to capture growing demand, adding that not scaling up could lead to losing customers.

“This additional capital is basically, driven by clear customer demand and the opportunity to capture the meaningful share of the customer India manufacturing requirement,” Melligeri had said then.

While investing in capacity expansion to capture future demand is a fair justification, juggling scale-up alongside increasing its utilisation rate could be a tall order. 

Notably, the management said that its capex commitments could be rebalanced towards the aerospace business if the company isn’t able to ramp up capacity utilisation of its consumer vertical in line with expectations. 

That said, the work appears cut out for Aequs as it looks to tap into the consumer electronics business to crack profitability at the group level and build alternate revenue streams. Whether it achieves this, only time will tell.

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