Azad Engineering Limited, a leading manufacturer of aerospace components and turbines, is gearing up for an initial public offering (IPO) scheduled for December 20, 2023 to December 22, 2023. In this article: Azad Engineering IPO Details, positive aspects, risk factors, reviews.
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Azad Engineering IPO details
| IPO start date | December 20, 2023 |
| IPO deadline | December 22, 2023 |
| IPO listing date | December 28, 2023 |
| Type of problem | Book Built Issue IPO |
| face value | 2 rupees per share |
| IPO price range | 499 rupees to 524 rupees per share |
| lot size | 28 stocks |
| Exhibition location | BSE and NSE |
| Total issue size | Rs. 740 million dollars |
| Latest issue | Rs. 240 million |
| OFS | Rs. 500 million |
Azad Engineering Co., Ltd.
Headquartered in Hyderabad, Telangana, India, the company is a leading supplier of highly engineered, complex, mission-critical components to original equipment manufacturers (OEMs) in the aerospace, defense, energy, and oil and gas industries. We have established ourselves as a company. .
financial snapshot
As of September 30, 2023, Azad Engineering Limited reported revenue of Rs 1,142.92 crore, primarily from sales of blades for the energy industry. In terms of the company’s financial performance, from the fiscal year ended March 31, 2023 to the fiscal year ended March 31, 2022, profit after tax (PAT) decreased by -71.24%, while sales increased by 31.24%.
Purpose of IPO
Net proceeds from an IPO include both new issues and OFS.
- OFS to sell to shareholders
- New issuance is used for company capital expenditures, repayments/prepayments of certain borrowings, and general corporate purposes.
Azad Engineering IPO Price Evaluation
- IPO price range is from Rs 499 to Rs 524 per share
- PER analysis
- Considering last year’s FY2023 EPS of Rs 1.79, the P/E ratio is 293 times.
- Considering the weighted EPS of Rs 3.48 over the last three years, the P/E ratio is 151x.
- Annualized by taking into account EPS for the six months to September 2023, the P/E ratio is 48x.
- Comparison with listed peers
- Dynamatic Technologies Limited is trading at a P/E ratio of 89x (highest)
- MTAR Technologies Limited has a P/E ratio of 68x (lowest).
- Industry average P/E is 77x
- Therefore, an IPO price range of 293x to 151x P/E is expensive.
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Positive factors for investing in Azad Engineering IPO
- International presence: Serving diverse international markets including the US, China, Europe, the Middle East and Japan, Azad Engineering has established itself as a critical link in the global supply chain for OEMs.
- Increased revenue: The company has shown solid revenue growth, increasing from ₹1,240 million in FY2020 to ₹2,516.75 million in FY2023, representing a compound annual growth rate (CAGR) of 27%.
- High EBITDA margin: Azad Engineering has the highest EBITDA margin among the leading companies in machined parts, with a profit margin of 31.61% for fiscal year 2023.
- A visionary approach: With a vision to revolutionize the global precision manufacturing industry, Azad Engineering aims to contribute to India’s evolving manufacturing ecosystem with cutting-edge technology.
- Notable investors: Street Azad Engineering IPO RHP Cricket icon Sachin Tendulkar, badminton champion Saina Nehwal and VVS Laxman have reportedly invested in Azad Engineering Limited, further proving the company’s appeal and potential in the market. are doing.. However, the IPO price they paid was lower and the benefits would repeat after listing.
Risk factors for investing in this IPO
- Issue price too high: Excluding financial performance for the six months ending September 2023, the IPO price is expensive compared to last year and the weighted average EPS over the past three years.
- IPO proceeds include OFS. IPO proceeds include both OFS and new issues. His OFS portion of the IPO proceeds will go to the selling shareholders and the company will receive no benefit.
- Customer dependencies: This business is highly dependent on key customers, and the loss of these customers or sales revenue could adversely affect the company’s financial stability.
- Operational dependencies: Relying on the Hyderabad facility for our entire revenue stream poses risks. Disruption, failure or outage of these facilities could adversely affect our operations.
- Global competition: In our highly competitive global industry, our inability to compete effectively could have a material adverse effect on our business, results of operations and financial condition.
- Supply chain risks: Reliance on third-party suppliers for raw materials, plant, machinery and components creates risks related to performance, delivery and price fluctuations.
- Market disruption: Rapid changes in preferences in the industry-specific areas that Azad Engineering serves, combined with industry disruption, pose a potential threat to the business.
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Azad Engineering IPO – Should I subscribe?
Azad Engineering Limited’s IPO provides an opportunity to invest in a company with a strong global presence, solid revenue growth, and a forward-thinking approach to precision manufacturing.
However, investors should carefully consider the identified risks, including customer and business dependencies, global competition, and supply chain vulnerabilities, before making investment decisions.
The issue price is high.
Investors who understand the advantages and disadvantages can invest in such IPOs.
Suresh KP is the founder of Myinvestmentideas. He is a NISM Certified Investment Advisor and he is a NISM Certified Research Analyst. He has been analyzing financial markets for the past 20 years. He can be reached at suresh@myinvestmentideas.com.
