Solid start | Azad Engineering lists at Rs 720, over 37% premium to IPO price

The stock began trading at Rs 720 on the NSE and Rs 710 on the BSE, while its IPO price was Rs 524.

Sachin Tendulkar-backed Azad Engineering saw a strong start on bourses on December 28, listing at 37.4 percent premium against its issue price. The stock began trading at Rs 720 on the NSE and Rs 710 on the BSE, while its IPO price was Rs 524.

The strong listing comes on the back of good interest shown by investors in the company's Rs 740-crore public issue. Qualified institutional buyers took the lead, buying 179.66 times the allotted quota. At the same time, high net worth individuals (non-institutional investors) and retail investors picked shares 87.55 times and 23.71 times the portions set aside for them, respectively.

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Incorporated in 1983, Azad Engineering Limited is a manufacturer of aerospace components and turbines. The company supplies its products to original equipment manufacturers (OEMs) in the aerospace, defence, energy, and oil and gas industries. The company has four manufacturing facilities in Hyderabad, Telangana, India.

Most analysts are positive on the company's long-term contracts, a stable customer base, and strong visibility on revenue.

Azad Engineering experienced financial volatility, witnessing a 71.2 percent year-on-year decline in net profit, amounting to Rs 8.5 crore for the quarter ending March FY23. This decline was attributed to a weak operating margin and elevated finance costs.

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Despite this, revenue from operations for the same period grew 29.4 percent, reaching Rs 251.7 crore. EBITDA increased by 16 percent to Rs 72.3 crore, however, the margin saw a decrease of 330 basis points, settling at 28.7 percent compared to the preceding fiscal year.

Of the fresh issue proceeds, the company will spend Rs 60.4 crore for buying plant and machinery, and repay debts amounting to Rs 138.19 crore. Its borrowings stood at Rs 154.2 crore as of September 2023. The remaining amount will be used for general corporate purposes.