Introduction
Azad Engineering is a Hyderabad-based precision engineering firm listed on the Indian stock market. The company specializes in manufacturing highly engineered, complex, and mission-critical components for sectors such as aerospace, defense, energy, and oil & gas.
Its product range includes advanced 3D rotating airfoils for turbine engines, critical components for defense and civil aircraft, spaceships, missiles, and various power generation systems. Azad serves prominent global OEMs and exports to over 16 countries [1].
Areas of Activity
- Aerospace & Defence: Supplies not precision-forged and machined parts for aircraft, missiles, and space applications
- Energy: Manufactures complex components for nuclear, gas, and thermal power turbines
- Oil & Gas: Provides critical components for upstream and downstream applications [2]
Recent Developments for Azad Engineering
- International Contracts:
- Signed a $53.5 million, six-year contract with GE Vernova’s Steam Power Services for advanced airfoils used in nuclear and thermal power plants which reinforces the company’s position in the global power generation supply chain [3]
- Secured a ₹700 crore long-term contract with Mitsubishi Heavy Industries (MHI) for producing critical components for MHI’s advanced gas turbines [4]
- Domestic Contracts:
- Won an order from BHEL to supply high-precision rotating airfoils for supercritical turbines [5]
- Capacity Expansion:
- The company operates four advanced manufacturing facilities in Hyderabad
- The company is planning to add two more facilities in Telangana
- The company aims for a tenfold increase in capacity over the next 4-5 years. The first phase of this expansion is being funded by IPO proceeds [6]
Growth Trajectory for the Company
- Fundraising:
- Plans to raise up to ₹1,000 crore through various channels (equity, debentures, QIP, etc.) to fund expansion, technological upgrades, debt repayment, strategic acquisitions, & new market entry [7]
- Partnerships:
- Long-term agreements with global giants like GE Vernova and MHI position
- Product Innovation:
- Focus on high-value, complex products such as advanced turbine airfoils and components for next-generation energy systems, including hydrogen and nuclear power [8]
- Employee Engagement:
- ESOP scheme to attract and retain top talent, aligning employee interests with the company’s long-term vision [9]
Stock Performance
The stock has given a return of ~130% since listing in December 2023.
The metrics for the stock are as follows:
- P/E : ~180 (super expensive)
- P/B: ~15 (very expensive)
- ROE: ~13-15% (Decent)
- EPS: ₹10-12 (Low)
- ROCE: 21-22% (Decent)
Future Outlook
Azad Engineering is working in an area which was earlier limited to the Indian Arm of MNCs or Public Sector Enterprises. Considering the emphasis of the company in growth in newer areas – the company does hold a lot of promise.
Having said that, the company is garnering the valuation which is way above expected or acceptable value. For any investor to see any decent upside, the company needs to show quarterly revenue growth above 20-25% per quarter to justify the valuation.
As a retail investor, it is best advised to keep the stock on the radar and enter at opportunities when there is meaningful correction (like ~30%) to expect an upside with a minimum holding of 5 years to reap the benefits of project realizations which are in the company’s order book.
Hope this helps
Happy Investing!
References:
- https://www.screener.in/company/AZAD/consolidated/
- https://in.linkedin.com/company/azad-engineering-pvt-ltd
- https://www.business-standard.com/markets/capital-market-news/azad-engineering-inaugurates-its-lean-manufacturing-facility-125042900859_1.html
- https://images.assettype.com/bloombergquint/2024-04/96d1a205-ee4d-4469-a547-8c7858495c59/DRChoksey_AEL_Plant_Visit_Note.pdf
- https://www.aviation-defence-universe.com/azad-engineering-signs-a-53-5-million-additional-long-term-supply-contract-with-ge-vernovas-steam-power-services/
- https://www.ndtvprofit.com/business/azad-engineering-reiterates-25-30-revenue-guidance-backed-by-rolls-royce-deal
- https://canvasbusinessmodel.com/blogs/mission/azad-engineering-mission
- https://www.indiratrade.com/blog/azad-engineering-secures-535-million-deal-with-ge-steam-power-a-strategic-leap-in-precision-manuf/9404
- https://www.angelone.in/news/azad-engineering-inaugurates-exclusive-manufacturing-facility-for-mitsubishi-heavy-industries-in-hyderabad
- https://ipocentral.in/multibagger-stock-azad-engineering-planning-big/
- https://www.business-standard.com/companies/news/azad-engineering-inks-54-mn-pact-with-ge-vernova-s-steam-power-services-125050400445_1.html
- https://forum.valuepickr.com/t/azad-engineering-a-stock-picker-s-dream/147652
- https://www.angelone.in/news/azad-engineering-secures-prestigious-order-from-bhel-for-advanced-airfoils
- https://images.assettype.com/bloombergquint/2024-04/96d1a205-ee4d-4469-a547-8c7858495c59/DRChoksey_AEL_Plant_Visit_Note.pdf
- https://www.tofler.in/azad-engineering-limited/company/U74210TG1983PLC004132
- https://ticker.finology.in/company/AZAD
- https://azad.in/about-us/
- https://www.angelone.in/stocks/azad-engineering-ltd
- https://www.sovrenn.com/knowledge/azad-engineering-company-profile-products-promoter-and-clients-2
- https://upstox.com/news/market-news/stocks/azad-engineering-share-price-jumps-7-7-on-452-crore-order-from-ge-vernova/article-165260/
- https://azad.in
- https://www.samco.in/knowledge-center/articles/azad-engineering-shares-surge-nearly-4-after-ge-vernova-contract-win/
- https://azad.in/clientele/
- https://www.azad.in/wp-content/uploads/2024/08/Covering_SignedInvestor-Presentation_compressed.pdf
- https://tradebrains.in/azad-engineerings-partnership-with-rolls-royce-and-its-position-in-aerospace-explained/
- https://www.ndtvprofit.com/business/azad-engineering-reiterates-25-30-revenue-guidance-backed-by-rolls-royce-deal
- https://manufacturing.economictimes.indiatimes.com/news/energy/azad-engineering-inks-53-5-million-pact-with-ge-vernova-for-airfoil-supply-in-power-industries/120890297
- https://exams.sreyas.ac.in/blank/Azad-Engineering-Limited-(AZAD)-to-Launch-New-Product-Line
- https://simplywall.st/stocks/in/capital-goods/nse-azad/azad-engineering-shares/future
- https://www.equitymaster.com/detail.asp?date=11%2F04%2F2024&story=11&title=Why-Azad-Engineering-Share-Price-is-Rising
- https://www.angelone.in/news/azad-engineering-secures-defence-contract-research-arm-drdo-ministry-defense
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- https://tradebrains.in/features/defence-stock-in-focus-after-announcing-10x-capacity-expansion-to-fulfill-4500-cr-orderbook/
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- https://gietuonline.in/video/Azad-Engineering-Limited-(544061)-Gets-Regulatory-Approval
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- https://azad.in/vision-and-mission/
- https://loginzed.msme.gov.in/video/What-is-the-short-term-outlook-for-Azad-Engineering-Limited-(AZAD)
- https://loginzed.msme.gov.in/app/What-is-the-future-upside-potential-of-Azad-Engineering-Limited-(AZAD)
- https://www.screener.in/company/AZAD/consolidated/
- https://www.outlookbusiness.com/corporate/azad-engineering-inks-54-million-pact-with-ge-vernovas-steam-power-services
- https://exams.sreyas.ac.in/video/Azad-Engineering-Limited-(AZAD)%E2%80%99s-Trend-in-2025
- https://www.moneycontrol.com/india/stockpricequote/aerospacedefence/azadengineering/AEL02
- https://www.nseindia.com/get-quotes/equity?symbol=AZAD
- https://groww.in/stocks/azad-engineering-ltd
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- https://www.goodreturns.in/company/azad-engineering/history.html
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- http://cbs.swalekha.in/video/Azad-Engineering-Limited-(AZAD)%E2%80%99s-Trend-in-2025
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