IMAP India: Industrials Update April 2025

Recent News

• April 25 saw significant global turmoil as the US imposed - then suspended (partly) - tariffs on a wide range of goods. Currently, there is a 10% levy on products from most countries. China has been hit with a 145% tariff; China retaliated with 125% tariffs on US goods
• Uncertainty on trade policies weighed in on global markets - Crude oil prices declined (from ~US$ 70 in March per barrel to ~ US$63), weakening of the US dollar (by ~3-4% against major global currencies), rise in bond yields (from 3.99% to 4.42% on 10-Yr bills) and corrections in equity markets (average fall of 3-5%)
• The global uncertainty led IMF to revise downwards GDP growth rates for FY26 – from 3.3% to 2.8% for the world; China from 4.6% to 4%, US from 2.7% to 1.8% and India from 6.5% to 6.2%
• India’s manufacturing PMI grew to 58.4 in April from 58.1 in the previous month; a PMI over 50 signifies growth

Selection of Recent Transactions

DATE     TARGET                                            ACQUISITION

Apr '25   Botlab Dynamics                             The drone manufacturer raised $10mn in a fundraise led by Dharna Capital 

Apr '25   Jupiter International                        ValueQuest Advisors invested $58mn in the solar cell manufacturer

Apr '25   Rebel Foods                                     Qatar Investment Fund invested $25mn in the cloud kitchen unicorn

Apr '25   Goldi Solar                                         Havells invested $70mn in the solar EPC player

Apr '25   Garuda Aerospace                            The drone manufacturing company raised $11mn in a fundraise led by Venture Catalysts

Apr '25   Sedemac Mecthatronics                   The Infosys Family office Catamaran invested an undisclosed sum in the Auto comp manufacturer 

Aerospace Precision Manufacturing - a much sought-after vertical

Precision manufacturing in the aerospace sector requires high-quality, intricate components that meet stringent safety and performance standards – this is due to their critical nature, where even minor errors can lead to significant safety risks. Qualifying for aerospace manufacturing therefore, requires manufacturers to meet stringent industry standards and obtaining certifications such as AS 9100, NADCAP & others. Components for Aerospace are also typically categorized into 3 classes - Class A (most critical – e.g. critical engine parts, landing gear, etc.), Class B, and Class C based on their criticality to safety and functionality.

The majority of precision manufacturing in this sector is concentrated in North America and Europe - driven by giants such as Boeing, Airbus, Dassault, Safran, GE, Lockheed Martin, Rolls Royce and their extensive supplier ecosystems. India, with the presence of HAL, has seen an ecosystem develop in and around Bangalore, which is now increasingly being tapped by the global players. Relatively low volumes combined with stringent quality requirements necessitate high-end precision machinery, additional heat/surface treatments, rigorous documentation and testing processes. This in turn enables higher margins for companies in this space.

The demand for aerospace components is fueled by broader growth in the aerospace industry. Of the current global fleet of ~28,000 commercial aircraft, ~5,500 are expected to be retired between 2024-2028. Additionally, the global fleet of defense aircrafts at ~31,000 is expanding amid rising geopolitical tensions. The global aerospace precision engineered component market is forecasted to grow from $126bn in 2024 to $190bn in 2028. 

Domestically, rising incomes combined with government support on policy & infrastructure (150 new airports), has led to a sharp rise in passenger traffic; driving airlines to place large aircraft orders (currently Indigo, Air India & Akasa together have ~2,000 aircraft on order). Potential for domestic manufacturing & MRO combined with increased sourcing from India for global markets is driving the order book positions of domestic aerospace component companies. IPOs of Azad Engg & Unimech Aerospace and transactions in Maini Precision, JJG Aero and Rangsons Aero indicate the high degree of investor interest in this sector.