Bumper Listing: Azad Engg Makes Debut On D-Street, Sachin Tendulkar Backed Firm Soars 37%

Shares of Azad Engineering, endorsed by cricket legend Sachin Tendulkar made a stellar debut on Dalal Street. The aerospace components and turbines manufacturer is listed at Rs 720 per share on the NSE, a remarkable 37.40% premium over the issue price of Rs 524 per share. Simultaneously, on the BSE, the stock debuted at Rs 710 per share in Thursday's trade.

There were strong signals from the grey market, where Azad Engineering's stock commanded a premium of Rs 205, implying a listing price of Rs 729 per share. Analysts had already predicted a premium of over 50% owing to the company's promising growth trajectory. The company specializes in manufacturing highly engineered, complex, and life-critical components for niche industries like aerospace and defence.

Ahead of the listing, analysts had advised investors who secured allocations to adopt a long-term perspective. They emphasized viewing any temporary dips in the stock value as opportunities to accumulate shares. The consensus among experts is that Azad Engineering, with its specialized product profile, is well-positioned to capitalize on the government's Make in India initiative and its established trust in 15 years of business operations.

The public issue, valued at Rs 740 crore, witnessed a robust response from investors, achieving an overwhelming 80.6 times subscription by the closing date. Among the categories, qualified institutional buyers (QIBs) led with a staggering 179 times subscription, followed closely by non-institutional investors (NIIs) at 87 times. The retail segment also showed strong interest, recording a 23.7 times oversubscription.

The funds raised, totalling Rs 740 crore, included a fresh share sale of Rs 240 crore and an offer-for-sale (OFS) of up to 95,41,985 equity shares.

Azad Engineering plans to allocate the proceeds from the fresh issue to fund capital expenditure (CAPEX), repay outstanding loans, and cover general corporate expenses. Promoter Rakesh Chopdar, through the OFS, divested shares worth Rs 204.97 crore, while Piramal Structured Credit Opportunities Fund offloaded shares valued at Rs 260.85 crore. DMI Finance concluded the OFS with shares worth Rs 34.18 crore.

As of now, the promoters retain a 78.61% stake in the company, with Rakesh Chopdar holding 77.46%. The public shareholding accounts for 21.39%, including a 9.13% stake held by Piramal Structured Credit Opportunities Fund. Notably, sports icons Sachin Tendulkar, PV Sindhu, Saina Nehwal, and VVS Laxman are among the minority shareholders.

In the fiscal year 2023, Azad Engineering reported a 31% YoY increase in revenue from operations, reaching Rs 261 crore. However, the net profit for the same period experienced a 71% decline, settling at Rs 8.4 crore. The company's revenue demonstrated a commendable CAGR of 43% between FY21 and FY23, with a corresponding CAGR of 49% in PAT margin during the same period.

Azad Engineering occupies a prominent position as a key manufacturer of qualified product lines for global original equipment manufacturers (OEMs) in the energy, aerospace, defence, and oil and gas industries. The company specializes in the production of precision-forged and machined components that are mission and life-critical, often requiring zero parts per million defects.

Azad Engineering faces off against manufacturers from China, Europe, the USA, and Japan. Its client roster boasts global OEMs such as General Electric, Honeywell International Inc, Mitsubishi Heavy Industries Ltd, Siemens Energy, Eaton Aerospace, and MAN Energy Solutions SE.

With a successful subscription, promising financials, and endorsements from cricket legends and other eminent investors, Azad Engineering seems poised for a strong debut on Dalal Street. Investors and market enthusiasts are keeping a watch as the company prepares to compete in the aerospace and defence manufacturing space.