Why Aequs Expands Capacity Despite Q3 Loss in FY26

Aequs Limited is an Indian aerospace and manufacturing company that supplies precision components to global aircraft makers and defence companies. In the third quarter of FY26, the company reported strong revenue growth but also a higher net loss.

At first glance, this looks confusing. Why would a company increase production capacity, invest more money, and hire people when it is still making losses?

The answer lies in Aequs’ order book, industry demand, one-time costs, and long-term contracts. This article explains the real reasons behind Aequs’ strategy using verified facts and figures.

Growth Is Real, Loss Is Also Real: Q3 FY26 Numbers

In the third quarter of the financial year 2025–26 (Q3 FY26), Aequs reported:

• Revenue up 51% compared to the same quarter last year - ₹3,262 million (about ₹326 crore).
• Despite rising sales, net loss increased slightly to around ₹426 million (₹43 crore) on a consolidated basis.
• Aequs also reported significant one-time expenses, such as IPO costs and labour provisions, that pushed profits down.

So, on paper, there is growth in sales and operating earnings (EBITDA), but net profit remains negative because of high costs and investments.

Why Did the Net Loss Increase in Q3?

The higher Q3 loss was not caused by falling demand or weak customers. It was mainly due to exceptional and one-time expenses.

Key reasons for the loss:

• IPO-related expenses
• Aequs was listed on the stock market in December 2025
• Listing costs were booked in the quarter.
• Labour-related provisions
• Costs linked to employee benefits and regulatory changes
• Higher depreciation and interest
• New machines and facilities increase accounting costs.

These costs do not repeat every quarter. That is why EBITDA (core operating profit) rose sharply even though net profit stayed negative.

A Massive Aerospace Order Book Is Driving Expansion

The strongest reason Aequs is expanding capacity is its confirmed future orders.

• Aerospace order book: $USD 814 million
• These are long-term contracts, often spread across 5–10 years.
• Customers include global aerospace and defence OEMs

In aerospace manufacturing, companies must build capacity years in advance. If Aequs waits until profits turn positive, it risks:

• Missing delivery schedules
• Losing contracts to global competitors
• Failing audits from aircraft manufacturers

So expansion is not optional- it is necessary to execute existing orders.

Aerospace Demand Is Rising Globally

The global aerospace industry is in a strong recovery phase:

• Airlines are adding new aircraft to meet travel demand.
• Aircraft manufacturers are increasing production rates.
• Supply chains are shifting towards India for cost-efficient manufacturing.

Aequs benefits directly because:

• It is already an approved supplier.
• Aerospace contributes the largest share of its revenue.
• Orders are increasing faster than the current capacity.

This demand visibility gives the company confidence to invest despite short-term losses.

Capacity Expansion Is Already Supporting Growth

The results show that earlier capacity investments are already working.

• Revenue rose 51% YoY.
• EBITDA margins improved sharply
• Consumer and other manufacturing segments also grew strongly.

This means new plants and machines are not idle. They are already being used to fulfil orders.

Defence and UAV Manufacturing: A New Growth Engine

Aequs is also expanding beyond civil aerospace.

Key strategic move:

• Entry into UAV (drone) manufacturing through partnerships
• Focus on defence and strategic sectors.
• Aligned with India’s push for defence indigenisation

Defence manufacturing has:

• Longer approval cycles
• High entry barriers
• Better long-term margins

However, it requires upfront investment, which again affects short-term profits but supports future growth.

Strengthening Financial Position After IPO

Aequs recently completed its initial public offering (IPO) in December 2025. The IPO proceeds provide funds for:

• Capacity expansion
• Debt repayment
• New equipment and technology investment

Following the IPO, Aequs reported a net cash-positive position, meaning it has more cash than debt, which strengthens its balance sheet.

This financial strength gives the company confidence to invest in long-term growth, even if short-term profits are affected.

Why Capacity Expansion Comes Before Profit

In capital-intensive industries like aerospace:

• Capacity comes first
• Profit comes later

Aequs must invest now because:

• Aircraft programs run for decades.
• Suppliers are locked in early.
• Failure to scale means losing future revenue permanently.

In simple terms:

If Aequs does not expand today, it will not earn tomorrow.

What This Means for the Business

Aequs’ current strategy shows:

• Confidence in long-term demand
• Visibility of future revenue
• Focus on execution, not quarterly optics.

Short-term picture

• Losses continue due to expansion and one-time costs.

Medium-to-long-term picture

• Rising revenues
• Improving operating margins
• Strong aerospace and defence positioning

Is This a Risky Strategy?

Yes, but it is a calculated risk.

Risks

• Delays in aircraft programs
• Slower defence orders
• Global supply chain disruptions

Supports

• Confirmed order book
• Global customer base
• Improved cash position
• Rising EBITDA

The company is betting on execution discipline, not speculation.

Final Summary

Conclusion

Aequs is expanding capacity despite a Q3 loss because the loss does not reflect weak demand. It reflects investment, one-time costs, and accounting effects. With a large aerospace order book, rising global demand, defence diversification, and a stronger balance sheet after its IPO, Aequs is positioning itself for future scale rather than short-term profit comfort. In aerospace manufacturing, companies that invest early survive. Aequs has clearly chosen that path.