Mumbai: Raymond Ltd.’s shares have surged more than 230% in six months, touching ₹1,160 on September 24, as investors increasingly focus on the company’s expanding aerospace and defence manufacturing business. The rally has come alongside stronger quarterly earnings, a sizeable aerospace order book and plans to invest about ₹1,000 crore in additional manufacturing capacity.

The company’s aerospace and defence business recorded 40% year-on-year revenue growth in the first quarter of FY27, while its order book in the segment stood at more than ₹5,960 crore spread over 10 years. Raymond has also outlined a five-year capital expenditure programme of around ₹1,000 crore, with more than half earmarked for aerospace and defence.

Raymond records stronger Q1 performance

Raymond reported revenue from operations of ₹606 crore in Q1 FY27, an increase of 15.6% year-on-year. EBITDA rose 14% to ₹100 crore, while net profit increased 50% to ₹31 crore.

The company ended the quarter with a net cash surplus of around ₹129 crore. Its overall EBITDA margin stood at 15.9%, with the aerospace business delivering considerably higher margins than its precision technology and auto components operations.

Raymond currently operates its engineering activities through JK Maini Precision Technology, which focuses on precision technology and automotive components, and JK Maini Global Aerospace, which handles aerospace and defence operations.

The changing contribution from these businesses is becoming important to Raymond’s overall earnings profile, particularly as aerospace generates higher margins and is growing faster than the company’s other engineering operations.

Aerospace revenue rises 40%

Raymond’s aerospace and defence revenue rose 40% year-on-year to ₹123 crore in Q1 FY27. EBITDA increased 25% to ₹26 crore, while the segment recorded an EBITDA margin of 21.2%. This compares with a 13.8% margin for the precision technology and auto components business.

The company supplies components to the world’s three largest aircraft engine manufacturers, which together account for about 88% of the global aircraft engine market.

Raymond has developed more than 1,300 precision aero-engine components, including over 350 components for LEAP engine variants. Engine-critical parts account for more than 75% of aerospace division revenue.

Commercial aviation contributes about 86% of aerospace revenue, while defence and other aviation activities account for the remaining 14%. Exports make up about 76% of the segment’s revenue, with Europe contributing 51% and the US 25%.

Large aerospace order book provides visibility

Raymond’s aerospace business benefits from long-cycle aircraft programmes, which can provide revenue visibility over several years once components qualify and enter regular production.

The company has an aerospace order book of more than ₹5,960 crore spread across 10 years. It also has an active request-for-quotation pipeline worth ₹1,632 crore.

Its three largest engine OEM customers account for around 40%-45% of the aerospace order book. The LEAP engine programme alone contributed ₹110 crore to aerospace revenue between April 2025 and February 2026.

Raymond adds more than 100 new engine stock-keeping units every year. The company expects aerospace EBITDA margins to stabilise towards 25% as more components move from development into mass production.

The broader aircraft manufacturing cycle also offers a potential demand tailwind. A commercial aircraft backlog of more than 16,000 planes represents an estimated 12-15 years of production visibility, according to the company’s assessment.

China+1 strategy creates opportunity

Global aerospace manufacturers are increasingly looking to diversify supply chains, creating opportunities for qualified Indian component suppliers.

Raymond is using its existing precision-engineering capabilities to participate in this shift. The company’s aerospace operations are focused on complex components, while its established relationships with global OEMs provide a platform for further expansion.

Management has committed to a baseline annual organic growth rate of 25% for the aerospace division, although recent growth has exceeded that level.

Defence business expands

Raymond is also increasing its participation in India’s defence manufacturing supply chain.

The company has commenced mass production of precision defence components and secured its first build-to-specification orders from leading defence aerospace OEMs. These projects could provide another avenue for growth alongside commercial aerospace.

The company’s two engineering businesses can potentially benefit from increasing domestic sourcing requirements as defence platforms increasingly incorporate locally manufactured components.

Auto components remain important

While aerospace is becoming a larger part of the growth story, Raymond’s precision technology and auto components business remains a significant revenue contributor.

JK Maini Precision Technology reported Q1 FY27 revenue of ₹444 crore, up 11.5% from ₹398 crore a year earlier. EBITDA increased 45.5% to ₹61 crore, with the margin reaching 13.8%.

The company attributed the improvement to export growth, a better product mix, operating leverage and cost-reduction measures. International markets accounted for around 61% of segment revenue during the quarter.

The business supplies drivetrain and powertrain components, ring gears, industrial consumables, tools and hardware. It also serves internal combustion engine, hybrid and electric vehicle platforms.

Raymond has secured hybrid transmission component engagements with European OEMs and received additional component and assembly nominations from an advanced drivetrain technology company in Europe.

₹1,000 crore expansion plan

Raymond’s existing manufacturing operations are running at around 85%-90% utilisation, leaving limited capacity for sustained volume expansion.

To support future growth, the company has planned capital expenditure of approximately ₹1,000 crore over five years. Around ₹510 crore is earmarked for aerospace and defence, while roughly ₹430 crore is planned for precision technology and auto components.

The expansion includes a greenfield facility near Bengaluru airport, with commercial production targeted for late 2027. Raymond expects the new automotive capacity to make a meaningful contribution to revenue from FY28.

The company has indicated an asset-turn target of around 2-2.5 times for the new automotive business, making the pace of capacity utilisation an important factor for future returns.

What investors will watch

The sharp rise in Raymond shares has pushed the stock’s price-to-earnings multiple to around 46 times, according to NDTV Profit, compared with 84 times for peer Sansera Engineering.

With the valuation reflecting expectations of continued growth, investors will be watching earnings expansion, margin improvement and the execution of the company’s new manufacturing projects.

Raymond also faces risks including customer concentration, dependence on exports, raw material price volatility, geopolitical developments and the long qualification cycles associated with aerospace programmes.

The company’s next phase of growth will therefore depend on how effectively it converts its large aerospace order book, defence opportunities and planned capacity expansion into sustained revenue and earnings.