Azad Engineering IPO: Review, Valuation, Opening Date & GMP

Azad Engineering IPO - Complete Overview

Azad Engineering Limited is a leading manufacturer of aerospace components and turbines, serving original equipment manufacturers (OEMs) in the aerospace, defence, energy, and oil and gas sectors. Our highly engineered and mission-critical products, including 3D rotating airfoil portions of turbine engines, cater to global demand.

As of September 30, 2023, we have achieved revenue of Rs. 1,142.92 million from energy industry blade sales, with a customer base spanning the USA, China, Europe, the Middle East, and Japan. Operating from four advanced manufacturing facilities in Hyderabad, Telangana, covering approximately 20,000 square meters, we are known for precision forging and machining capabilities.

Currently employing 201-500 professionals, we are headquartered in Hyderabad, Telangana. With over 15 years of experience, we are a key player in the aerospace, defence, and energy industries, focusing on high-quality, cost-effective solutions for global OEMs. Our planned expansion includes two additional manufacturing units, reinforcing our commitment to excellence and innovation.

Azad Engineering IPO Overview

Azad Engineering IPO date is slated to be open for subscription from December 20, 2023, to December 23, 2023. This BSE, NSE IPO follows a Book Built Issue IPO.

Azad Engineering IPO price is fixed at Rs. 499 to Rs. 524 per share. The upcoming BSE, NSE IPO will be listed on December 28, 2023.

The total issue size of this IPO amounts to Rs. 740.00 CR. Within this total issue, 35% is issued to retail investors, and 15% is issued to other investors.

 

Detailed Video

 

Azad Engineering IPO Timetable (Tentative)

Events	Date
IPO Opening Date	20 December 2023
IPO Closing Date	22 December 2023
IPO Allotment Date	26 December 2023
Refund initiation	27 December 2023
IPO Listing Date	28 December 2023

 

Azad Engineering IPO Details

IPO opening & closing date	20 December to 22 December 2023
Face value	Rs. 2 per Share
Issue Price	Rs. 499 to Rs. 524 per Share
Lot Size	28 Shares
Price of 1 lot	Rs.14,672
Total Issue Size	[.] Shares (aggregating up to Rs. 740.00 Cr)
Offer for sale	[.] Shares of Rs. 2 (aggregating up to Rs. 500.00 Cr)
Fresh issue	[.] Shares (aggregating up to Rs. 240.00 Cr)
Listing at	BSE, NSE
Issue Type	Book Built Issue IPO
Registrar	Kfin Technologies Limited

 

 

Azad Engineering IPO Lot Details

Application	Lot	Shares
Minimum Lot Investment (Retail)	1	28
Maximum Lot Investment (Retail)	13	364
Minimum Lot Investment (HNI)	14	392
Maximum Lot Investment (HNI)	68	1,904

 

Azad Engineering IPO Reservation

QIB Shares Offered	50%
Retail Shares Offered	35%
Other Shares Offered	15%

 

Company Financial

(Amount in Crore)

Period	Sep 30, FY 23	FY 23	FY 22
Total Assets	636.63	589.21	404.32
Total Revenue	169.54	261.52	199.26
PAT	26.89	8.47	29.46
Reserve & Surplus	221.14	202.51	118.88
Total Borrowings	324.94	300.60	197.18

 

Revenue Distribution Product-Wise

The revenue distribution by product reflects a substantial focus on the energy sector, followed by aerospace and defence, with diversified contributions from scrap and other categories, emphasizing a strategic product portfolio.

( in % age)

Particulars	Jun 30, FY 23	Mar 31, FY 23	Mar 31, FY 22
Energy	88.75	87.03	84.88
Aerospace and defence	8.62	8.95	10.43
Oil and gas	0.00	0.02	0.00
Scrap	2.21	3.85	4.03
Others	0.42	0.15	0.66
Total	100.00%	100.00%	100.00%

 

Geographical Revenue Distribution

The company exhibits a diverse geographical revenue distribution, showcasing a robust performance in both domestic and overseas operations.

(Amount in Crores)

Particulars	Sep 30, FY 23	Mar 31, FY 23	Mar 31, FY 22
With in India	16.36	49.36	42.65
Outside India	142.37	202.30	151.81
Total	158.74	251.6	194.46

 

Revenue By Operations

The company consistently relies on a significant portion from core operations, with a minor share attributed to other operating income, maintaining stability in its revenue streams over the financial periods.

(Amount in % age)

Particulars	Sep 30, FY 23	Mar 31, FY 23	Mar 31, FY 22
Revenue from operations	93.64	96.24	97.59
Other Operating Income	6.36	3.76	2.41
Total Revenue from operations	100.00	100.00	100.00

 

The Objective of the Issue

The company intends to use the net proceeds for the following objectives.

• Supporting the Company's capital expenditure requirements.

• Repaying or prepaying specific borrowings obtained by the Company.

• Addressing general corporate needs and objectives.

 

Promoters and Management of Azad Engineering IPO

1. Rakesh Chopda

Pre-issue Promoter Shareholding	78.61%
Post-issue Promoter Shareholding

 

Azad Engineering IPO Lead Managers

• Axis Capital Limited

• ICICI Securities Limited

• SBI Capital Markets Limited

• Anand Rathi Securities Limited

 

 

Peers of Azad Engineering IPO

Azad Engineering Limited stands out from its peers with a lower face value, robust RoNw, and an impressive P/E ratio, emphasizing its competitive position in the market.

Name of the Company	RoNw	P/ E	EPS (Basic) (Rs.)
Azad Engineering Limited	4.23	293	1.79
MTAR Technologies Limited	16.72	67.85	33.62
Paras Defence and Space Technologies Limited	8.69	77.50	9.25
Dynamatic Technologies Limited	7.93	88.73	67.32
Triveni Turbine Limited	25.47	75.64	5.97

 

Evaluation

The IPO is priced in the range of Rs 499 to 524 per share.

Evaluation of P/E Ratio

- Considering the FY23 EPS of Rs 1.79 from the last year, the resulting P/E ratio is 293x.

- Taking into account the weighted EPS of Rs 3.48 for the last three years, the P/E ratio amounts to 150.58x.
  

Comparative Analysis with Listed Peers

- Dynamatic Technologies Limited has a P/E ratio of 88.73x (the highest).

- MTAR Technologies Limited has a P/E ratio of 67.85 x (the lowest).

- The industry's average P/E is 77.44x.

Consequently, the IPO Price range at a P/E of 293 x to 150.58x is considered highly overvalued.

Dividend Policy

The company hasn't paid dividends in past fiscal years. Whether we can pay them in the future depends on factors like profits, past dividend trends, capital needs, legal restrictions, and other relevant considerations evaluated by our Board.

 

IPO's Strengths

1. Specialized Manufacturing Expertise:Renowned for manufacturing highly engineered, complex, and mission-critical precision components for global OEMs in regulated industries such as energy, aerospace, and defence.

2.  Financial Stability: Demonstrated consistent growth in revenues and profitability, with strong return ratios and a low debt-to-equity ratio, showcasing financial resilience and prudent management.

3. Cost Efficiency and Innovation: Demonstrated efficiency in machining time reduction, maintaining a competitive edge against global competitors. Continuous pursuit of innovation and commitment to quality contribute to superior margins.

4. Long-standing Customer Relationships: Established enduring relationships with leading global OEMs like General Electric and Mitsubishi Heavy Industries, averaging over 10 years, showcasing trust, reliability, and satisfaction.

5. Global Market Presence: Serve as a critical supplier to global OEMs in the energy, aerospace, defence, and oil and gas industries, catering to a diverse range of applications and securing a significant market share.

6. Diversified Product Portfolio: Wide-ranging product offerings, including airfoils, blades, and other critical components for turbines and drilling tools, allowing for a broad market reach and revenue diversification.

7. Quality Certifications and Accolades: Hold certifications such as ISO 9001:2015, ISO/IEC 27001:2013, AS9100:2016, and pending ISO 14001:2018 and 45001:2018. Recognized with numerous awards from esteemed customers, highlighting consistent quality performance.

 

IPO's Weaknesses

1. Economic and Political Risks: The company faces challenges due to reforms, social unrest, and geopolitical uncertainties. Fluctuations in foreign exchange reserves and changes in government policies may impact financial conditions.

2. Operational and Market Risks: Operational disruptions from labour issues, civil unrest, and natural disasters pose threats. The ongoing COVID-19 pandemic and geopolitical tensions could adversely affect business operations and financial conditions.

3. Financial and Regulatory Risks: Macroeconomic factors, central bank regulations, and compliance with international business practices may impact the company's access to capital and increase borrowing costs. Adherence to the Competition Act poses regulatory challenges.

4. Market Volatility and Competition: Global financial instability and adherence to competition regulations contribute to increased volatility in Indian financial markets, affecting the company's business, financial condition, and future prospects.

5. Legal and Regulatory Compliance: Difficulty in enforcing judgments obtained outside India presents legal challenges, potentially impacting the company's ability to resolve disputes and navigate international legal systems.

6. Taxation Risks: Investors may face Indian taxes on capital gains from equity share sales. Changes in tax laws, stamp duty, and regulatory updates can affect investor returns and financial outcomes.

7. Dilution and Equity Issuance: Future equity issuances may dilute shareholder holdings, impacting market perception and potentially affecting the company's ability to raise capital. Shareholder actions, such as significant share sales, may impact equity prices.

IPO GMP Today

The Last GMP of Azad Engineering IPO was Rs.195.

Conclusion

Azad Engineering Limited's IPO presents a comprehensive overview of a leading manufacturer in the aerospace, defence, energy, and oil and gas industries. With a strong focus on precision components and a diverse product portfolio, the company has demonstrated financial stability, manufacturing expertise, and global market presence. While the IPO provides an opportunity for investment, potential investors should carefully consider the company's strengths, weaknesses, and valuation metrics before making informed decisions.

 

 

Finowings IPO Analysis

Hope you enjoyed the Finowings IPO Analysis. We tried our best to give every required detail about the company that you should know before applying to the IPO. 

You must consult your financial advisor before making any financial decisions. 

To Apply for the IPO, Click Here.

 

To Read the Prospectus of the Company Click Here to Download the DRHP.

 

 

Thank You for reading this blog.
Hope you loved the IPO analysis.
Please Comment Below with your feedback because Your feedback motivates us to deliver more such content.

 

Follow MUKUL AGRAWAL for the latest IPO news and reviews. You can connect with us on social media platforms like Twitter, Facebook, and Instagram. You can also subscribe to our YouTube Channel for the latest videos of the stock market.