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Azad Engineering IPO Check Issue Size Price Band Lot Size and More

Introduction:

Recently, many Initial Public Offerings (IPOs) have received a strong positive reception from investors, largely driven by the current optimistic market outlook, appealing valuations, and the promise of substantial listing gains. As 2023 draws to a close, the momentum and enthusiasm in the primary market remain high, with numerous companies gearing up for strong listings on the bourses.

Azad Engineering Limited is one such company that has captured the interests of investors. The company is engaged in the manufacturing of niche, highly engineered-industrial products. It plans to raise up to Rs. 740 crores through its IPO, comprising a fresh issue and an offer for sale. The IPO opened for public subscription on Wednesday, 20 December 2023, and closes on Friday, 22 December 2023.

Keep reading to learn more details about the Azad Engineering IPO, including price band, lot size, latest grey market premium (GMP), subscription status, and more. 

About Azad Engineering Limited

Incorporated in 2008, Azad Engineering Limited specialises in producing niche product lines for the aerospace, defence, energy, and oil & gas sectors. The company is renowned for crafting complex, highly engineered, and life-critical components. The product portfolio includes 3D rotating air-foil segments for turbine engines, as well as essential components for both military and civilian aircraft, spacecraft, defence missiles, nuclear energy facilities, hydrogen and gas power systems, and various thermal power applications.

The company boasts a well-diversified client list across multiple industrial sectors. They include domestic and global Original Equipment Manufacturers (OEMs), such as Mitsubishi Heavy Industries, Simens Energy, Honeywell International Inc., General Electric, Eaton Aerospace, and Man Energy, among others. As of 30 September 2023, Azad Engineering Ltd. had four manufacturing facilities with a cumulative production area of 20,000 sq. feet in Hyderabad, Telangana.

Key Strengths of the Company

Below are the key strengths of Azad Engineering Ltd. as highlighted in the company’s Red Herring Prospectus (RHP):

  • The company is a renowned global player in the manufacturing of highly engineered, high-precision, and complex mission and life-critical components
  • The company’s manufacturing facilities are equipped with advanced and innovative infrastructures for developing diverse products
  • The company enjoys a well-diversified customer base and has long-standing relationships with its marquee clients
  • The company’s revenue from operations has more than doubled in the last two financial years

Key Risks or Weaknesses Highlighted

The key risks or weaknesses associated with Azad Engineering Ltd. include:

  • The company derives a significant portion of its revenue from the top five clients. Unfavourable relationships with them may adversely impact the business
  • All four manufacturing facilities are located in Hyderabad, Telangana. Any disturbance or political turmoil in this region may impact the company’s manufacturing capacity
  • The company operates in a highly competitive and regulated industry. Failure to keep up with the competitors can lead to a loss of business
  • The company is heavily reliant on third-party suppliers for the supply of raw materials, plants, equipment, and components
  • The company has seen negative cash flows in the past, and the trend may continue in the future as well
  • Fluctuations in foreign currency exchange rates may impact the company’s profit margin

Core Financials of the Company

Moving on to the financials, Azad Engineering Ltd. has shown steady growth for the last three years. The revenue from operations has more than doubled from Rs. 123 crores in FY21 to Rs. 252 crores in FY23. The company’s net worth has also increased robustly from Rs. 91 crores in FY21 to Rs. 204 crores in FY23. However, the profits have fallen for the last financial year, mainly due to a spike in manpower costs. 

Refer to the table below for detailed financials of the company for the last three years:

Particulars

For the Period Ended Sept 2023 As of and for FY Ended March 31
 
2023 2022 2021
Share Capital 10 2 2 2
Net Worth 231 204 120 91
Total Borrowings 325 301 197 88
Revenue From Operations 159 252 194 123
EBITDA Adjusted 53 72 62 28
Profit After Tax 27 8 29 12
Earnings Per Share (Diluted) 5 2 6 3
Return on Equity 10% 13% 17% 12%

Amount in Crores

Source – RHP dates 14 December on the SEBI website

Details of the IPO

As of 20 December 2023, Azad Engineering IPO is subscribed 4.06 times in the retail category and 3.41 times overall. The table below illustrates crucial IPO details:

IPO Date

20 December to 22 December 2023
Basis of Allotment 26-Dec
Listing Date 28-Dec
Face Value Rs. 2 per share
Price Band Rs. 499 to Rs. 524
Lot Size 28 shares
Total Issue Size Rs. 740 crores
Fresh Issue Rs. 240 crores
Offer For Sale Rs. 500 crores
Issue Type Book Built Issue
Listing At NSE, BSE

The final word

As of 20 December 2023, Azad Engineering IPO shares were attracting a GMP of Rs. 440 per share, which means you can expect a listing gain of around 84%. But before investing, you must analyse factors such as your risk tolerance capacity and the prevailing market conditions.

 

Related Articles:  How to Analyse an IPO | What is IPO Grading? | What is Cut Off Price In IPO Application 

 

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