Aerospace foray strengthens long-term growth case
Belrise Industries has entered into an agreement to acquire 100% stake in Chester Hall Precision Engineering Holdings Limited, a UK-based precision engineering company engaged in the design, development and manufacture of components for aerospace, aviation, space and defence applications. The target brings niche capabilities in precision machining of aero-structures, engine components and satellite parts, along with established relationships with marquee global OEMs. The acquisition is valued at GBP 13.2mn (~INR 1.63bn), implying ~6.1x FY26E EV/EBITDA, with a deferred/earn-out component, and it is likely to close within 20 business days of signing of the agreement, subject to customary conditions (or as mutually extended). Prima facie, the transaction appears strategically positive, enabling further diversification into aerospace and defence segments. It is likely to be EPS- and RoCE-accretive from day one. Overall, while near- term financial impact could be marginal (2% of FY27E/FY28E EPS), the acquisition strengthens long-term growth optionality. We maintain BUY with a TP of INR 225 (25x FY28E EPS).
▪ About the target company: Chester Hall Precision Engineering Holdings Limited is a UK-based precision engineering company engaged in the design, development, engineering, manufacture, assembly, supply and sale of parts, components and systems for aerospace, aviation, space and defence applications. Along with its operating subsidiary, the company specialises in precision machining of aero-structures, aero-engine components and satellite parts, working with advanced alloys such as titanium and high-grade aluminium. It has established relationships with marquee global customers, including the world’s largest aircraft and space OEM and a leading aircraft engine OEM. It also operates as a single-source supplier across multiple programmes, supported by strong certifications and engineering capabilities.
▪ Rationale for the acquisition: The acquisition of Chester Hall Precision Engineering Holdings aligns with Belrise’s strategic objective to diversify into aerospace, aviation, space and defence, while strengthening its global footprint. The target brings niche capabilities in precision machining of aero-structures, engine components and satellite parts, along with established relationships with marquee global OEMs. This move enables Belrise to expand into a high-entry- barrier and technology-intensive segment.
▪ Contours of the acquisition: Belrise, through its step-down wholly owned subsidiary, has entered into a share purchase agreement to acquire 100% stake in the UK-based entity for a consideration of GBP 13.2mn (~INR 1.63bn), with a deferred and earn-out component linked to performance. The target reported revenue of ~GBP 19.9mn in CY24, with steady growth over the past three years, and is expected to generate ~GBP 18.5mn revenue and ~GBP 2.1mn–2.2mn EBITDA in CY25E. The deal implies a valuation of ~6x EV/EBITDA and is expected to close within ~20 business days, subject to customary conditions.
▪ Our view: We view the acquisition as strategically positive, as it enables Belrise to diversify beyond auto into aerospace and defence segments, characterised by higher margins, long product cycles and strong entry barriers. The target’s established customer base, certifications and precision engineering expertise provide a strong platform for global scaling. However, given the relatively small size of the target, the impact on consolidated revenue and earnings is likely to remain marginal in the near term (2% of FY27E/FY28E EPS). Execution, integration and scaling within a new domain remain key monitorables.
