Azad Engineering is coming up with an IPO. The offer consists of a fresh issue of shares worth INR 240 crores and an offer to sell 500 crores of existing equity shares. The company will use the raised funds for capital expenditure, debt repayment, and general corporate purposes.
Azad Engineering IPO – Important Details
| Azad Engineering IPO Date | December 20, 2023 to December 22, 2023 |
| Azad Engineering IPO Listing Date | December 28, 2023 |
| Azad Engineering IPO Price | INR 499-524 per share |
| Azad Engineering IPO Lot Size | 28 Shares |
| Azad Engineering IPO Total Issue Size | INR 740 crores |
| Azad Engineering IPO Basis of Allotment | December 26, 2023 |
| Azad Engineering IPO Initiation of Refunds | December 27, 2023 |
| Azad Engineering IPO Credit of Shares to Demat | December 27, 2023 |
| Azad Engineering IPO Issue Type | Book Built Issue IPO |
| Azad Engineering IPO Listing At | BSE, NSE |
Azad Engineering IPO – Company Profile
Azad Engineering is a crucial manufacturer in the energy, aerospace, defense, and oil and gas industries. They produce highly engineered, mission-critical components with a “zero parts per million” defects requirement. Their global customers include significant OEMs like General Electric, Honeywell, Mitsubishi, Siemens, Eaton, and MAN Energy Solutions.
They specialize in precision-forged and machined components, including 3D rotating airfoils for turbines in industrial energy generation, defense aircraft, and spacecraft. Their products, made from exotic alloys, meet stringent requirements for turbines, aircraft, and oil and gas exploration equipment. They supply critical components to major commercial aircraft manufacturers and contribute to various defense systems.
They are a technology-driven manufacturer specializing in complex forged and machined components for energy, aerospace, and defense industries. Their extensive experience and stringent qualification processes position us as a preferred supplier to global OEMs, ensuring high margins and recognition for their critical, zero-margin-for-error components. The demanding entry barriers, including a lengthy 15-20 years qualification process, highlight their competitive advantage and industry leadership.
Azad Engineering IPO – Fundamental Analysis
Azad Engineering Ltd’s financial review shows revenue growth, rising liabilities, fluctuating profits, and a declining RoNW. Consider further research before considering investment in their IPO.
Revenue Growth:
There has been consistent revenue growth from 2021 to 2023, indicating positive sales performance.
Equity and Liabilities:
The company’s equity and liabilities have increased significantly, indicating substantial expansion but potentially higher financial risks due to increased liabilities.
Profit After Tax:
The Profit After Tax (PAT) showed a substantial increase from 2021 to 2022 but declined in 2023, indicating some inconsistency in profitability.
Return on Net Worth (RoNW):
The RoNW surged from 12.56% to 25.37% from 2021 to 2022 but dropped significantly to 4.23% in 2023. This suggests declining efficiency in generating profits from shareholders’ funds.
Earnings Per Share (EPS):
The Diluted EPS rose significantly from 2.53 to 6.49 from 2021 to 2022 but dropped to 1.79 in 2023, indicating fluctuating earnings.
Debt Equity Ratio:
The company’s Debt Equity Ratio increased over the years, indicating a higher dependency on debt for funding operations.
Current Ratio:
The company’s current ratio remained relatively stable and healthy, ensuring that the company can cover its short-term liabilities with its short-term assets.
Interest Coverage Ratio:
The declining trend in the Interest Coverage Ratio indicates increased financial risk and the company’s ability to cover interest expenses with earnings has weakened.
Gross Profit Margin:
The company’s Gross Profit Margin has been consistently high, indicating efficient cost management.
Azad Engineering Ltd IPO Financial Information
| Particular | As at 31 March 2021 | As at 31 March 2022 | As at 31 March 2023 |
| Revenue (₹ in Million) | 1,227.21 | 1,944.67 | 2,516.75 |
| Equity (₹ in Million) | 908.92 | 1,200.07 | 2,039.88 |
| Expenses (₹ in Million) | 1,087.94 | 1,591.29 | 2,483.62 |
| Profit and Loss After Tax (₹ in Million) | 162.36 | 401.34 | 131.59 |
| RoNW (%) | 12.56 | 25.37 | 4.23 |
| NAV per Equity Share (₹) | 20.02 | 25.58 | 42.30 |
| Diluted EPS only (₹) | 2.53 | 6.49 | 1.79 |
| Total Assets (in million) | 2,560.45 | 4,043.21 | 5,892.08 |
| Total Liabilities (in million) | 1,651.53 | 2,843.14 | 3,852.20 |
| Debt Equity Ratio | 0.97 | 1.64 | 1.47 |
| Current Ratio | 1.12 times | 1.13 times | 1.91 times |
| Interest Coverage Ratio | 3.60 | 3.60 | 1.06 |
| Gross Profit Margin (%) | 88.75 | 89.32 | 88.02 |
Azad Engineering Ltd IPO Peer Comparison
Azad Engineering Ltd’s IPO figures are notable: moderate Total Income (₹2,615.21M), RoNW (4.23%), and EPS (₹1.79). However, it trails behind in P/E ratio and faces tough competition compared to its peers like MTAR Technologies, Paras Defence, Dynamatic Technologies, and Triveni Turbine.
| Company | Total Income (₹ in million) | Face Value per Equity Share (₹) | P/E | EPS (Basic) (₹) | EPS (Diluted) (₹) | RoNW (%) | NAV per Equity Share (Basic) (₹) |
| Azad Engineering Limited | 2,615.21 | 2 | NA | 1.79 | 1.79 | 4.23 | 42.30 |
| MTAR Technologies Limited | 5,932.28 | 10 | 67.85 | 33.62 | 33.62 | 16.72 | 201.13 |
| Paras Defence and Space TechnologiesLimited | 2,306.50 | 10 | 77.50 | 9.25 | 9.25 | 8.69 | 10.60 |
| Dynamatic Technologies Limited | 13,255.30 | 10 | 88.73 | 67.32 | 67.32 | 7.93 | 79.47 |
| Triveni Turbine Limited | 12,901.73 | 10 | 75.64 | 5.97 | 5.97 | 25.47 | 23.83 |
Azad Engineering IPO Objective
Azad Engineering plans to invest in manufacturing, enhance technology, and innovate products. They allocate INR 138.18 crores to repay borrowings, reduce debt, and maintain a favorable debt-equity ratio. The remaining funds serve general corporate purposes and business expenses.
- Funding capital expenditure requirements of the company: Azad Engineering plans to sustain investments in their current manufacturing facilities, enhancing equipment and technologies for producing their product portfolio. This involves spending INR 60.39 crores on equipment purchases, reflecting their commitment to operational excellence and product innovation.
- Prepayment, in part or whole, of certain borrowings availed by the company: The company plans to allocate NR 138.18 crores from net proceeds to partially or fully repay identified borrowings and accrued interest, reducing outstanding debt, minimizing servicing costs, maintaining a favorable debt-equity ratio, and facilitating further business growth through internal accruals or additional loans as needed.
- General Corporate Purposes: The company plans to use the net proceeds for general corporate purposes, including investments by the company’s investment policy and meeting exigencies, salaries, and meeting expenses incurred by the company in the ordinary course of business.
Azad Engineering IPO Risks And Challenges
Azad Engineering’s business is significantly reliant on its top 5 customers, accounting for nearly 63% of FY 2023 revenue. Dependence on Hyderabad facilities and vulnerabilities to order cancellations, supplier issues, and manufacturing challenges pose risks. Quality control efforts aim to mitigate potential defects and reputational damage.
- The business is dependent on the sale of the products to key customers. In FY 2023, almost 63% of the revenue was generated from top 5 customers.The loss of any of the key customers could have a material adverse effect on the business, results of operations, financial condition, cash flows and future prospects.
- The company is highly dependent on Hyderabad, Telangana facilities for the entire portion of the revenue from operations. Any disruption, breakdown or shutdown of the Hyderabad facility may adversely affect the business, results of operations, financial condition, cash flows and future prospects.
- The company’s revenue faces vulnerability to order cancellations, delays, and uncertainties in supplier processes. Unforeseen events, contract terminations, and price reductions create challenges. Business pipeline projections may not accurately predict future revenues, impacting overall business prospects.
- The company encounters potential issues in manufacturing complex, customer-specific products for industries like energy and aerospace. Despite quality control efforts, defects could lead to claims, affecting the business’s reputation and financial stability. Seeking protection through contracts and insurance may only partially mitigate these potential problems.
Azad Engineering Ltd IPO – Industry & Market Potential
Natural gas, considered a transitional fuel, reduces CO2 emissions compared to coal or oil. While it aids in emission reduction, it still emits greenhouse gases. Divergent views exist, with some advocating a direct shift to cleaner fuels while others propose advanced technologies for emission mitigation.
India’s growing development activities increase power needs. Gas power capacity, including natural gas and LNG-based plants, plays a crucial role. With lower emissions and higher efficiency, these plants align well with peak load demands and contribute to the renewable energy mix, addressing power demands.
The turbine manufacturing industry has a two-tiered structure comprising prominent players (OEMs) engaged in turbine research, development, design, manufacturing, and assembly. Downstream manufacturing companies specialize in supplying critical components to the OEMs.
Azad Engineering Limited IPO – Type of Offer
Azad Engineering plans a fresh issue of shares, seeking INR 240 crores for capital expenditure, debt repayment.and general corporate needs. Additionally, the company proposes an offer for sale, intending to sell INR 500 crore existing shares.
- Fresh Issue: The company will issue new shares to raise capital, aiming to collect INR 240 crores. The company intends to utilize the proceeds from the fresh issue for the prepayment of certain outstanding borrowings availed by the company and general corporate purposes.
- Offer for sale: Azad Engineering is offering to sell 500 crore existing shares. The following are the details of the existing shareholders who are also the promoters selling the shares:
| Name of the promoter selling shareholder | Maximum number of offered shares for sale (in million) |
| Rakesh Chopdar | 2,049.65 |
Azad Engineering Ltd IPO Offer Size
Azad Engineering is launching an IPO involving a fresh issue of INR 240 crores and selling 500 crore shares. The company will allocate the funds for capital expenditure, debt repayment, and general corporate purposes.
Azad Engineering Ltd IPO Allotment Structure
Azad Engineering Limited IPO allocation designates 50% to Qualified Institutional Buyers (banks, mutual funds, insurance), 15% to Non-Institutional Investors (corporates, high-value individuals), and 35% to Retail Individual Investors (individuals with smaller investments), which complies with SEBI regulations. Also a portion of the issue is reserved for eligible employees.
- Qualified Institutional Buyers (QIB): As per SEBI regulations, 50% of the shares offered through the IPO will be reserved for Qualified Institutional Buyers. These include entities such as banks, mutual funds, and insurance companies.
- Non-Institutional Investors (NII): 15% of the shares will be reserved for Non-Institutional Investors. These typically include corporate bodies or individuals investing more than Rs.2 lakhs.
- Retail Individual Investors (RII): The remaining 35% of the shares will be allotted to Retail Individual Investors. These individual investors apply for shares with a total value of less than Rs.2 lakhs.
- Eligible Employees: A portion of the offer is reserved for the employees.
How to apply for an Azad Engineering Limited IPO?
To apply for the Azad Engineering IPO through Alice Blue, you would typically follow these steps:
1. Open a Demat and Trading Account: If you don’t have one already, you would need to open a Demat and trading account with Alice Blue.
2. Check for IPO Details: Once your account is active, you can check for Azad Engineering IPO details in the IPO section of the Alice Blue platform.
3. Place the Bid: Enter the number of shares you wish to buy and place your bid within the IPO’s price band.
4. Submit the Application: Confirm all your details and submit your application.
You can apply for the Azad Engineering IPO at Alice Blue [M1] in just a few clicks!
Check Allotment Status: Post the allotment process; you can check the allotment status to see if you have received any shares.
Please note that the allotment of shares is not guaranteed and will depend on the demand for the IPO.
How to Check Azad Engineering Limited IPO Allotment Status on Alice Blue?
Checking the allotment status of an IPO in Alice Blue is usually straightforward. Please follow these general steps:
1. Log in to your Alice Blue Account: You can do this through the Alice Blue website or their trading app.
2. Navigate to the Portfolio or IPO Section: This might differ based on the layout of Alice Blue’s platform, but generally, you can find the status of your IPO application under the ‘Portfolio’ or ‘IPO’ section.
3. Find the IPO Allotment Status: Look for a sub-section called ‘IPO Allotment Status’ or something similar. This is where you can see the status of the IPOs you have applied for.
4. Select the Azad Engineering Limited IPO: If you have applied for multiple IPOs, there might be a dropdown menu or lists where you can select the IPO you are interested in. Select the Azad Engineering IPO.
5. Check the Status: The status of your application should be displayed here. If the shares have been allocated to you, it would be mentioned here.
If you face any issues, it’s recommended to contact Alice Blue’s customer support for detailed assistance.
Apart from Alice Blue, there are other ways to check the allotment status of the Azad Engineering Limited IPO:
Registrar’s Website: Visit the website of KFin Technologies Limited, the registrar of the Azad Engineering Limited IPO. On the homepage, look for the ‘IPO Allotment Status’ option. You must enter your PAN and application number or Demat account number to check your allotment status. Click on the ‘Submit’ button to view your IPO allotment status.
NSE and BSE: You can also check the allotment status on the official websites of the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). You would need your application number and PAN to check the status.
Please note that the allotment status will only be available after the allotment process has been completed, a few days after the IPO window closes.
Azad Engineering Limited IPO Offer Registrar
The registrar for the Azad Engineering Limited IPO is KFin Technologies Limited. They are responsible for ensuring the IPO allotment and refund processes are carried out smoothly.
Contact information of the registrar:
KFin Technologies Limited
Selenium, Tower-B, Plot 31 & 32, Financial District
Nanakramguda, Serilingampally
Hyderabad, Rangareddi 500 032
Telangana, India
Tel: +91 40 6716 2222 / 1800 309 4001
E-mail: [email protected]
Website: www.kfintech.com
Azad Engineering Limited IPO FAQs
1. What is the allotment date of the Azad Engineering IPO?
The allotment of Azad Engineering’s IPO date is December 26, 2023.
2. What is the price band of Azad Engineering IPO?
The price band of the Azad Engineering IPO is INR 499-524 per share.
3. What is the size of the Azad Engineering IPO?
Azad Engineering Limited’ is launching an IPO. This offering comprises a fresh issue of shares worth INR 240 crore and an offer to sell INR 500 crore existing equity shares. The company will allocate the funds for capital expenditure, debt repayment, and general corporate purposes.
4. What is the listing date of the Azad Engineering IPO?
The listing date of Azad Engineering IPO is December 28, 2023.
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