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Azad Engineering IPO Details: Launch Date, Share Price, Size, GMP & Review

Azad-Engineering-IPO-Details-Launch-Date-Share-Price-Size-GMP-&-Review

Azad Engineering Limited – About the Company

Azad Engineering Limited is the manufacturer and producer of aerospace components and turbine parts. The company manufactures and supplies such parts and components to the original equipment manufacturers (OEMs)in the oil and gas, defence, energy and aerospace industries.

Most of the products manufactured by Azad Engineering are produced with a highly complex level of engineering, that is intricately designed and vital or mission-critical oriented making the products unique and difficult to produce by the new rivals.

The headquarters and manufacturing units of Azad Engineering are situated in Hyderabad India with the capability to produce the high-precision forged and machined components and have a total production area of around 20,000 square meters.

The company is further looking to enhance the production capacity of its manufacturing units to meet the demand of its customers from domestic as well as international markets. It has a customer base that includes the USA, China, Europe, the Middle East and Japan.

Azad Engineering IPO Objectives

Out of a total issue size of Rs 740 crore, Rs 240 will be a fresh issue and the remaining Rs 500 will be offer-for-sale (OFS) by the promoters and shareholders of the company. Hence, the net proceeds of the fresh issue will be utilized for funding the capital expenditure of the company and repay the debts and borrowings of the company. Some part of the funds raised from the IPO will be also used for general corporate purposes.

Azad Engineering IPO Details:

IPO Open Date 20-Dec-23
IPO Close Date 22-Dec-23
Basis of Allotment 26-Dec-23
Listing Date 28-Dec-23
Face Value Rs 2 per share
Price Rs 499 to Rs 524 per share
Lot Size 28 Shares
Issue Size [.] shares
(aggregating up to Rs 740 crore)
Fresh Issue [.] Shares, aggregating up to Rs 240.00 crore
Offer For Sale [.] Shares, aggregating up to Rs 500.00 crore
Issue Type Book Built Issue IPO
Listing At BSE & NSE
QIB Shares Offered Not more than 50% of the Net Issue
Retail Shares Offered Not less than 35% of the Net Issue
NII (HNI) Shares Offered Not less than 15% of the Net Issue

 

Azad Engineering IPO Issue Price & Size

The issue price of Azad Engineering IPO is in the range of Rs 499 to Rs 524 per share with a lot size of 28 shares.  The total issue size of Azad Engineering IPO is Rs 740 crore, out of which Rs 500 will be offer-for-sale (OFS) by the promoters and shareholders of the company and the remaining Rs 240 will be fresh issue of equity shares by the company.

Azad Engineering IPO Launch Date

Azad Engineering IPO is launched and will be open on 20 Dec 2023, ending on 22 Dec 2023. The investors can bid or apply for the Azad Engineering IPO between 20 to 22 Dec. The basis of the allotment date is 26 Dec 2023 and shares will be credited into the demat account on 24 Dec 2023. The listing date of Azad Engineering IPO has been set on 28 Dec 2023

Azad Engineering Financial Statements:

Particulars (Rs in Million) FY24 (6M) FY23 FY22 FY21 CAGR
Revenue from Operations 1,587.47 2,516.75 1,944.67 1227.21 43.21%
Other Income 107.88 98.46 47.96 23.09
Total Income 1,695.35 2,615.21 1,992.63 1,250.30 44.63%
Operational Expenses 536.65 894.20 670.33 464.05
Other expenses 525.53 899.77 651.66 481.62
EBITDA 633.2 821.2 670.6 304.6 64.19%
EBITDA Margin% 39.89% 32.63% 34.49% 24.82%
Depreciation 98.43 165.83 133.14 88.73
Interest 218.60 523.82 136.16 53.54
Profit Before Tax 316.14 131.59 401.34 162.36  
Total tax 47.25 46.86 106.77 47.36
PAT 268.89 84.73 294.57 115.00 -14.16%
PAT Margin% 16.94% 3.37% 15.15% 9.37%  
EPS Basic (Rs) 5.43 1.79 6.49 2.53  

Sources: DRHP & RHP

Azad Engineering Financial Performance

The company has shown significant growth in revenue in the last three years, except for FY23, the net profit of the company has also grown well. In the first six months of FY24, our revenue stood at Rs 158.75 crore, while in full-year FY23 the revenue from operations was Rs 251.68 crore which grew at a CAGR of 43% during FY21 to FY23.

The EBITDA of the company was at Rs 63.32 crore in the first half of FY24 which has grown at a CAGR of 64% from FY21 and reached at Rs 82.12 crore in FY23. However, the EBITDA margins of the company have been improved from 24.82% in FY21 to 39.89% in FY23.

However, owing to the high interest cost in FY23, the net profit of the company was merely 8.47 crore which has shown negative growth in CAGR from FY21. But now thanks to lower interest costs in the first half of FY24, the profit after tax of the company touched to Rs 26.9 crore. The PAT margin of the company was 9.37% in FY21, while it fell down to 3.37% in FY23, but again in the first six months of FY24, it has improved well and achieved Rs 16.94%.

Azad Engineering IPO Promoters & Shareholding of the Company

As per the red hearing prospectus offer document, Rakesh Chopdar is the main promoter of the company holding 77.46% of the company. While, there are seven other members in the promoters group holding the remaining 1.14% in the company.

The public shareholding of the company stood at 21.39%, including a 9.13% stake in Piramal Structured Credit Opportunities Fund. For the promoter's and shareholders' details and their holdings and selling of equity shares see the table below.

S. No. Name of the Shareholder No. of Equity Shares held % of pre-Offer Shareholding
1 Rakesh Chopdar 42,241,800 77.46%
Promoter Group (other than the Promoter)
2 Kartik Chopdar 297,300 0.55%
3 Satwik Chopdar 148,650 0.27%
4 Jyoti Chopdar 144,000 0.26%
5 Deepak Chopdar 11,820 0.02%
6 Babita Shripal singh Sulhyan 12,000 0.02%
7 Ella Walia 6,000 0.01%
8 Amit Walia 6,000 0.01%
  Total 42,867,570 78.60%
       
S. No. Name of Selling Shareholders
1 Rakesh Chopdar 42,241,800 77.46%
2 Piramal Structured Credit Opportunities Fund 4,978,062 9.13%
3 DMI Finance Private Limited 652,350 1.20%
  Total 47,872,212 87.79%

Sources: DRHP & RHP

Promoter Rakesh Chopdar is selling Rs 204.97 crore worth of shares and investor Piramal Structured Credit Opportunities Fund Rs 260.85 crore shares in the OFS, while the other selling shareholder DMI Finance is divesting its stake of Rs 34.18 crore.

Why Invest in Azad Engineering IPO?

To invest in Azad Engineering IPO or any other listed company you need to analyse the various factors that affect its business and revenue growth. There is a certain competitive strength that helps a company to operate better than its competitors and grow its revenue and earnings. There are also risks associated with operating any business.

Also Read: What to Check Before Buying IPO: Things to Know & Is it Safe

You need to check all these things while applying for the IPO. And to do that you can perform the fundamental analysis and financials of the company. In respect of the same, we have highlighted here the strengths and weaknesses or risks discussed below.

Also Read: What are the Risk Factors Involved in Applying for an IPO

Strengths:

  • Azad Engineering is one of the key manufacturers of qualified product suppliers to global OEMs in the energy, and oil and gas, aerospace and defence industries. It is engineered for success and is a preferred name in the manufacturing of highly engineered, complex and mission and life critical high precision components for global OEMs despite growing competition from China, Europe, USA and Japan.
  • The has long-standing relationships with both Indian and global OEM companies, key strategic and globally preferred partners such as General Electric and Mitsubishi Heavy Industries, Ltd., with relationships of over 10 years.
  • The company has four manufacturing facilities in Hyderabad, Telangana India that are spread across approximately 20,000 square metres. All these units have a combined annual installed capacity of 642,310 hours per annum, annual actual production of 578,316 hours per annum and capacity utilization of 90 % per annum.
  • Further, to enhance its production capacity the company is also planning to set up two more manufacturing units at Tuniki Bollaram village in Siddipet district, Telangana and Mangampet village in Sangareddy district, Telangana. All these plants will have a total production area of 94,898.78 and 74,866.84 square meters respectively.
  • While company has also integrated manufacturing and supply chain solutions together with its scale of operations, technical know-how, value-added design and engineering expertise, allowing the company to cater for the various Indian and global OEMs.
  • Azad Engineering is operated and managed by an experienced promoter and management team with strong growing business strategies to leverage the industry-leading capabilities by continuing to diversify our customer base and increase penetration and wallet share with existing customers by entering into new component lines.
  • As part of its business Strategy Company is looking to augment its manufacturing capabilities, including by way of inorganic acquisitions, to better serve its existing or new customers and to build scale, while delivering state-of-the-art execution.
  • It also intends to continue to strengthen its capabilities across the focus industries by continuing to strengthen and expand its existing relationships with the current customers and by acquiring more strategic customers across the focus industries.
  • The company also intends to continue enhancing our operational efficiencies and exploit economies of scale, by better absorbing our fixed costs, while also reducing other operating costs to strengthen our competitive position.
  • At the financial end, Azad Engineering is doing well and registered a healthy CAGR growth of 43% in its revenue from FY21 to FY23. While the operating income of the company for the same period has grown very well at a CAGR of 64%. Though, in FY23 company earned lower profits due to higher operating and interest costs, in the first half of FY24, the company improved its operating margins and achieved the EBIDTA and PAT margins to 40% and 17% respectively.

Risks:

  • Azad Engineering is involved in the manufacturing and production of highly engineered, complex and mission and life critical precision components. Any kind of failure to compete effectively in the highly competitive global industry of high precision and mission-critical components manufacturing could have a material adverse effect on the business operations and financial condition growth of the company.
  • The company is also subject to strict compliance of quality requirements which results in incurring significant expenses to maintain the product quality. Any failure in maintaining the quality accreditations and certifications may negatively impact its brand and reputation which may adversely affect the business operations of the company.
  • The major revenue of the company is from the energy sector. And its business is dependent on the sale of these products to key customers. The loss of any of the key customers or loss of revenue from sales to key customers could not only have an adverse effect on business operations but also disturb the future prospects of the company.
  • As per the company, its contracts/ purchase orders may not be indicative of its future growth rate or new business orders we will receive in the future. Further, it may not realize all of the revenue expected from such contracts/ purchase orders.
  • The company is highly dependent on its Hyderabad, Telangana manufacturing units for the entire portion of our revenue from operations. Any disruption, breakdown or shutdown of our Hyderabad facility may adversely affect our business, results of operations, financial condition, cash flows and future prospects.
  • The company is also dependent on third-party suppliers for raw materials, plant, machinery and components, which are on a purchase-order basis. If these supplier not operative, or unable to deliver the products timely, or there is any kind of disruption, shortage, delay, and supply is affected due to unexpected reasons, there is volatility in the prices of raw materials, plant, machinery and components on which company rely may affect its business.
  • The markets in which the customers of the company are competing are characterized by sectors specific to the industries and their rapidly changing preferences and other related factors including lower manufacturing costs. Consequently, the company may be affected by any disruptions in the industry resulting in affected business operations.
  • As the company is proposed to expand the capacity of its new manufacturing facilities using the fund raised through this IPO are however subject to the risk of unanticipated delays in implementation and cost overruns.

 

Also Read: Types of Risks Associated with Investing in the Stock Market

Azad Engineering IPO Grey Market Premium (GMP)

The Grey Market Premium (GMP) is the price of shares with the premium over the upper band of the issue price. And this GMP is defined in the grey market as per the demand and supply of the shares. However, GMP is not a reliable factor to know the fair price of any unlisted company, as it keeps changing till the date of listing of the shares.

Also Read: What is Grey Market Premium in IPO: How is GMP Calculated &Reliable

As per the various online sources, the Grey Market Premium (GMP) of Azad Engineering is running at Rs 380, which is 72% above the upper price band of the IPO issue price of Rs 524. With this GMP the share price of Azad Engineering is likely to list at or around Rs 904 giving ample opportunity for the investors to take advantage of listing gains and book profits.

Also Read: What is Profit Booking in Stock Market: Rules & Best Strategy

Azad Engineering IPO Review &Valuation

According to the DRHP and RHP offer documents, in the last three financial years, the company has reported an average EPS of Rs. 3.48. While based on its NAV of Rs. 45.74 as of September 30, 2023, the issue is priced at a P/BV of 11.46. Based on its post-IPO NAV of Rs. 106.01 per share at the upper price band of IPI,the P/BV is 4.94.

Also Read: Benefits of Investing in the Stock Market: Advantages of Share Market

However, if considering the annualized FY24 earnings to post-IPO fully diluted paid-up equity capital of the company, then its upper band share price is valuated at a P/E of 57.58. At this level of P/E and while considering the bright prospects of the company ahead you can consider the share price of Azad Engineering is fairly priced.

As. According to the offer document its listed peers are MTAR Techno, Paras Defence, Dynamatic Techno and Triveni Turbine are trading at a P/E of 66.94, 81.46, 90.11, and 76.34 respectively, making Azad Engineering IPO an attractive bet. Hence, you can subscribe or apply to theAzad Engineering IPO with a medium to long-term investment point of view.

Also Read: What to Know Before Investing in Stocks: 10 Things to Consider

How to Apply for Azad Engineering IPO?

To apply for any IPO of the company is very easy if you have a trading account and a demat account. If you don’t have both or any of these accounts you apply here at Moneysukh to opena demat account and trading account with nonstop trading and investing facilities in equities, commodities and currency markets or in primary markets like IPOs.

Also Read: Trading or Investing Which is Better and More Profitable

Moneysukh is one of the best discount brokers in India offering the best trading platform and investing applications like Trade Radar and TradingView chart for fundamental analysis and technical analysis with Algo-trading facility at low pricing. Right now if you are looking to apply for an Azad Engineering IPO, follow the steps given below.

Also Read: How to Start Algo Trading in Moneysukh: A Best Algo Trading Platform

Steps to Apply for Azad Engineering IPO:

Step 1: Open your browser on the computer, laptop or smartphone.

Step 2: Now browse trade.moneysukh.com and log in with your User ID & password.

Step 3:Now find out the IPO section and click on the Azad Engineering IPO.

Step 4:Here you have to fill in the bidding-related details like price, quantity, and so on.

Note: Make sure at the time of bidding in IPO, always bid at the cutoff price and then before submitting your application. 

Step 5:Finally make the payment as per your lot size or quantity and submit your IPO application.

Also Read: Why You Should Invest in the Stock Market: Reasons & Benefits

How to Check Azad Engineering IPO Allotment Status?

The allotment procedure of Azad Engineering IPO is likely to be organized on 26 Dec 2023, and you can check the Azad Engineering IPO allotment status only from this date onwards. You can check allotment status on BSE, NSE and Moneysukh.

Also Read: How to check IPO allotment status on NSE, BSE through Moneysukh

If you have not allocated any shares in the allotment, your IPO application money will be refunded from 27 Dec 2023 onwards. And if you get the allotment, the shares will be allotted into your demat account by 27 Dec 2023, that is before the day of listing.

Also Read: How to Increase the Chances of IPO Allotment

If an IPO is oversubscribed many times, then the chances of getting the allotment of shares become very low for every investor. In an oversubscribed IPO, if you have applied in a retail category or HNI category the allotment procedure is organized as per the subscription into the different categories. So there is no such criteria to know who will get the allotment.

Also Read: How to Be a Good Investor or Trader to Buy Best Stocks in 2023

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