Azad Engineering's Rs 740-Crore IPO Sees 80 Times Subscription, Check Latest GMP

Telangana-based Azad Engineering Limited has successfully closed its Rs 740-crore public issue with a subscription rate of 80.6 times during December 20-22. The engineering precision forged and machined components maker, catering to OEMs in energy, aerospace, defence, and oil & gas industries, witnessed significant interest from investors across categories.

Qualified institutional buyers (QIBs) spearheaded the subscription, seizing 179.66 times the allotted quota. High net-worth individuals and retail investors showed immense confidence, subscribing 87.55 times and 23.71 times their respective portions. Even employees were not far behind, bidding 14.69 times the reserved portion.

Investors are now eagerly awaiting the basis of the allotment of IPO shares, set to be finalized by today. Post this, they can check their share allotment status conveniently on either the BSE website or the IPO registrar's portal through a straightforward three-step process.

How to check on BSE

Select 'equity' in the issue type, and 'Azad Engineering Limited' in the issue name.
Enter either 'Application number' or 'PAN number'.
Check the box (I am not a robot) and click on the 'search' button.

How to check on the IPO Registrar's Portal:

Select IPO in the dropdown 'Azad Engineering Limited'.
Choose and enter either 'Application number', 'Demat account', or 'PAN'.
Enter 'captcha' and click on the 'submit' button.

Successful investors can anticipate their shares to be allotted in their demat accounts by December 27, with equity share trading scheduled to commence on the bourses on December 28, following the T+3 timeline.

Grey market enthusiasts are showing immense bullishness, as Azad shares are reportedly trading at a 75% premium over the upper price band. Analysts, speaking on anonymity, attribute this premium to the IPO's impressive subscription numbers, healthy financials, diversified product portfolio, and anticipated growth in the aerospace and defence sectors.

Azad Engineering has exhibited substantial growth in financials, boasting a Compound Annual Growth Rate (CAGR) of 43% in revenue and 33% in profit during FY21-23. The first half of FY24 witnessed an impressive jump in EBITDA margin from 22.9% in FY21 to 33%. Furthermore, the net debt-to-equity ratio is expected to reduce to 0.1x post the IPO.

Analysts from Motilal Oswal praise Azad's position in a high-growth niche segment with formidable entry barriers, a diversified product and client portfolio, and robust financials. They anticipate the company benefiting from industry tailwinds, particularly in aerospace and defence, which could positively impact its revenue mix.

While acknowledging that valuations are relatively high, Mehta Equities points out that the niche product profile, along with demand for mission and life-critical components, an 80% export revenue share, and a superior margin profile, justifies the higher valuation multiple.

The Azad IPO comprised a fresh issue of Rs 240 crore and an offer-for-sale (OFS) of shares worth Rs 500 crore. The price band for the offer ranged from Rs 499 to Rs 524 per share. The funds from the fresh issue will primarily be allocated to capital expenditure, debt repayment, and general corporate purposes, while the proceeds from the OFS will go to the selling shareholders.

Investors and market observers are now closely watching as Azad Engineering gears up for its market debut, armed with a robust IPO, promising financials, and a strategic plan for growth in the engineering sector.