| Origin | What it is | Who captures it | Time horizon |
|---|---|---|---|
| 1. Cost arbitrage | Lower manufacturing cost for build-to-print work the OEM has already engineered | Whoever has AS9100 + capacity, widely contestable | Now, but thin margin and price-competed |
| 2. Capacity substitution | Ageing, capacity-constrained Western hubs need a second source | Nadcap-accredited special-process holders | Now through the 2030s — the backlog is already booked |
| 3. Policy-forced localisation | Positive Indigenisation Lists, DAP offsets compel domestic sourcing on defence platforms | Whoever is qualified when the embargo date arrives | Set by the state's own timetable, not by demand |
| 4. Annuity conversion | Today's qualification becomes tomorrow's spares/aftermarket revenue, at a fatter margin | Whoever won the original-equipment qualification | Years after entry into service — mostly still ahead |
Global OEM sourcing diversification is a structural, multi-decade trend with a ~10-11 year backlog already booked and named commitments from Boeing, Airbus and Safran all pointing the same direction. India's certification base (Nadcap accreditations, AS9100 shops) is visibly deepening, not stalling. Domestic defence indigenisation adds a second, policy-guaranteed demand stream independent of global OEM cycles. The aftermarket annuity on today's qualification wins is mostly still ahead.
Most of the fourteen companies still earn most of their revenue from build-to-print or non-aerospace segments — the pure-play story is ahead of the disclosed financials for several names. Valuations for recently re-rated names (Unimech, Sigma Advanced, Aequs) already price in years of qualification success that has not yet happened. Customer concentration is severe at several small-caps (Unimech: >85% of revenue from three customers per CRISIL). And a single supply-chain, customs, or geopolitical shock could reprice the entire "sourcing diversification" thesis overnight.
