Fund Raise Of ₹700 Crore Will Be Used As Growth Capital & For Building Infra: Azad Engineering

Summary

Azad Engineering has raised ₹700 crores through QIP, which will be used for infrastructure development and fueling future growth. The company’s order book has surged from ₹2,000 crores to ₹6,000 crores, thanks to its focus on critical mission and life-path supplies. Despite concerns about potential tariffs, Azad is confident in its competitive edge, being 25-30% more competitive than China and other global players. With a projected 25-30% revenue growth for FY25, the company is focused on execution, maintaining margins between 33-35%, and leveraging its order book to drive future success.

Takeaways

• 😀 Azad Engineering raised 700 crores via QIP for infrastructure and growth capital.
• 😀 The company has seen significant growth, with their order book increasing from 2,000 crores to 6,000 crores in the last 12 months.
• 😀 Azad Engineering has been working with OEMs for over 10 years and has focused 75% on qualifications, leading to more orders now.
• 😀 The 700 crores raised will be used to build infrastructure and fuel the company's future growth plans.
• 😀 Azad Engineering is confident that U.S. tariffs will benefit their business due to their competitive edge over China and other geographies.
• 😀 Despite concerns about tariffs, Azad's order book is expected to grow, driven by strong customer demand for increased capacity.
• 😀 For FY25, Azad Engineering expects a growth rate of 25-30%, maintaining the guidance given to the market.
• 😀 In the third quarter, Azad’s margin saw a slight dip of 100 basis points, but they remain confident about future margins staying in the 33-35% range.
• 😀 The company has delivered strong financial results, with a 32% growth in revenue and a PAT margin of 18.6% in the first nine months.
• 😀 Azad Engineering's focus remains on execution, with an order book to sales ratio of about 12x, ensuring continued growth and capacity building.
• 😀 Despite market fluctuations, Azad Engineering maintains strong investor confidence, with its stock being well-regarded.

Q & A

What was the purpose of the QIP fundraise by Azad Engineering?

Azad Engineering raised 700 crores through QIP to fuel future growth by building infrastructure and enhancing capacity to meet increasing demand from customers.

How did Azad Engineering's order book grow over the past year?

Azad Engineering's order book grew significantly from around 2,000 crores in December 2023 to approximately 6,000 crores in December 2024, reflecting a surge in contracts due to completed qualifications and strengthened relationships with customers.

How has Azad Engineering's focus on qualifications impacted its revenue growth?

Azad Engineering focused 75% of its efforts on qualifications and 25% on revenue generation. As qualifications were completed, the company saw a surge in demand, leading to increased revenue growth.

What percentage of Azad Engineering's business comes from the United States?

Azad Engineering derives over 30% of its business from the United States.

How might tariffs in the U.S. impact Azad Engineering's business?

Azad Engineering is confident that U.S. tariffs on countries like China and Mexico will not negatively impact its business. The company is already more competitive than these regions and expects demand to increase due to tariff-related shifts in the market.

What is Azad Engineering's expected revenue growth for FY25?

Azad Engineering expects to achieve a 25-30% revenue growth for FY25 compared to the previous year.

How has Azad Engineering managed its margins despite challenges?

Azad Engineering reported a decrease in margins from 36% to 35%, but the company remains confident in its guidance and believes margins will stabilize in the 33-35% range moving forward.

What is the expected order book to sales ratio for Azad Engineering?

Azad Engineering's order book to sales ratio currently stands at about 12x, indicating strong future growth potential.

What is Azad Engineering’s strategy to sustain growth?

Azad Engineering's strategy focuses on execution, with a strong emphasis on delivering on the 6,000 crore contracts already signed and building capacity to support future growth.

Will Azad Engineering's growth be impacted by potential tariff hikes in other countries?

No, Azad Engineering's competitiveness remains strong due to its low tariff rates compared to other geographies, and it is poised to benefit from tariff hikes affecting competitors in other regions.