Independence Day Special Stock Analysis | CA Rachana Ranade

Summary

In this special video, the host discusses Azad Engineering Limited, a company manufacturing critical components for sectors like aerospace, defense, energy, and oil & gas. Highlighting its impressive IPO performance and all-time high stock price, the video delves into the company's business model, financials, and future outlook. It also addresses risks, such as high customer concentration and a high PE ratio, while providing technical analysis of the stock's performance. The host emphasizes this is not a stock recommendation but an educational content piece.

Takeaways

• 🚫 The speaker emphasizes that they do not provide stock tips or advisory services, only educational content.
• 📈 The company discussed, Azad Engineering Limited, had an impressive IPO with its stock price rising significantly within six months of listing.
• 🎓 The video is special for two reasons: it is released on the eve of Independence Day and the channel is close to reaching 5 million subscribers.
• 🎁 Special offers are provided to celebrate the upcoming milestone of 5 million subscribers, including discounts on courses and free access to an investment community.
• 🔍 Azad Engineering Limited is a manufacturer of critical engineering components used in Aerospace, Defense, Energy, and Oil & Gas sectors.
• 🛠️ The company specializes in creating complex and mission-critical parts like 3D rotating air foils and blades for turbine engines.
• 🌐 The majority of Azad Engineering's revenue comes from exports, indicating a strong international customer base.
• 📊 The company has shown robust financial growth with a high CAGR in revenue from operations and PAT, and improving PAT margins.
• 💡 The order book stands at 3,000 crores, which is substantial and indicates a strong future outlook for the company.
• 💰 The company plans to invest 120 crores in plant and machinery for capacity expansion, funded by the IPO proceeds and potentially additional debt.
• ⚠️ Key risks include a high customer concentration with the top customer accounting for over 20% of revenue and a high PE ratio which could be a concern in a market downturn.

Q & A

What is the main message of the video by Rachar Ranad?

The main message of the video is to provide an in-depth analysis of Azad Engineering Limited, a company that manufactures crucial engineering components for sectors like Aerospace, Defense, Energy, and Oil and Gas, while also celebrating the upcoming milestone of 5 million subscribers on Rachar Ranad's channel.

What is the significance of the name 'Azad Engineering Limited' in the context of the video?

The name 'Azad Engineering Limited' is significant because it is used as a play on the word 'Aadi', which means 'first' or 'independent' in Hindi, aligning with the video's release just before India's Independence Day.

What are the special offers provided by Rachar Ranad to celebrate the 5 million subscribers milestone?

The special offers include a 10% discount on any course using the coupon code '5 million', a 15% discount on all combo packages with the coupon code 'Tanga', and one month free access to the 'Invest in India' membership community for purchases above 20,000.

What is the business model of Azad Engineering Limited?

Azad Engineering Limited's business model revolves around manufacturing highly engineered, complex, and mission-critical parts such as 3D rotating air foils and blades for turbine engines, as well as vital components for gas, nuclear, and thermal turbines.

What are the main sectors that Azad Engineering Limited operates in?

Azad Engineering Limited operates in the Aerospace, Defense, Energy, and Oil and Gas sectors, with a focus on manufacturing crucial engineering components for these industries.

What is the significance of the 'zero parts per million defect requirement' for Azad Engineering Limited's products?

The 'zero parts per million defect requirement' signifies the extremely high level of precision and quality control required in manufacturing their components, given the critical nature of their use in applications like aircraft turbines where a defect could endanger lives.

How does the revenue split for Azad Engineering Limited look like according to the video?

According to the video, the majority of Azad Engineering Limited's revenue comes from exports, with 87.5% from exports for FY 24, and this percentage increases to 90.5% in Q1 FY25.

What is the Compound Annual Growth Rate (CAGR) of Azad Engineering Limited's revenue from operations and PAT from Financial Year 21 to 24?

The revenue from operations has grown at a CAGR of 40.6%, the adjusted iida has grown at a CAGR of 46.8%, and the PAT has grown at an average CAGR of 72.1%.

What are the future growth prospects and plans for Azad Engineering Limited as mentioned in the video?

The future growth prospects include an order book of 3,000 crores, expected topline growth of 25% to 30%, and plans for capacity expansion with an investment of 120 crores in plant and machinery from FY 2026.

What are some of the key risks associated with investing in Azad Engineering Limited as highlighted in the video?

Key risks include a high dependency on a few top customers, with the top customer accounting for 20.8% of the revenue and the top five customers accounting for 60%. Additionally, the company has a high P/E ratio of 142, which could be a concern during market downturns.

What is the current stock performance and technical analysis of Azad Engineering Limited as discussed in the video?

The stock has taken good support at the 38.2% Fibonacci retracement level and is also close to the pivot points support level. The stock is currently trading near its 50-day moving average, indicating potential consolidation or a decision point for the stock's direction.