Upcoming Defence Stock Listing: Azad Engineering IPO To Open On December 20: Latest GMP, Key Pointers

The master blaster of the cricket world, Sachin Tendulkar-backed Azad Engineering is the next hot IPO to step into the primary market. The company will launch its Rs 740 crore worth IPO on December 20 and will be available for subscription till December 22. The proposed equity shares in the IPO will be listed on both BSE and NSE. This IPO will be in the aerospace and defence segment which has a positive outlook.

The IPO comprises of fresh issues worth Rs 240 crore and an offer for sale (OFS) of up to Rs 500 crore.

Under the offer for sale, selling shareholders will be Rakesh Chopdar who will offload up to Rs 204.96 crore worth of shares, followed by Piramal Structured Credit Opportunities Fund's shares sale of up to Rs 260.85 crore, and DMI Finance who will sell nearly Rs 3.42 crore.

The Price Band of the Offer has been fixed from Rs 499 per Equity Share to Rs 524 per Equity Share. Bids can be made for a minimum of 28 Equity Shares and multiples of 28 Equity Shares thereafter.

Ahead of the IPO, as per Investors Grain, Azad Engineering IPO's last GMP is Rs 440, last updated Dec 19th 2023 01:59 PM. With a price band of 524.00, Azad Engineering IPO's estimated listing price is Rs 964 (cap price + today's GMP). The expected percentage gain/loss per share is 83.97%.

Should you subscribe to Azad Engineering IPO?

In its IPO note, SBI Securities said, "The company is valued at FY23 P/E multiple of 387.2x and 68.6x

reported PAT and adjusted PAT respectively, at the upper price band on post-issue capital. The company is a preferred manufacturer of mission and life-critical components serving highly regulated industries with significant entry barriers. It supplies to OEMs with high global market penetration and has long-standing and deep customer relationships."

Further, the brokerage's note said that the revenues grew at a CAGR of 43% between FY21-FY23 achieving an adj. RoCE of ~21.2%. It commands an industry-leading adjusted EBITDA margin of ~31.6% as of FY23.

Meanwhile, Axis Capital has highlighted the key strengths of the company. These are:

- Engineered for success and a preferred name in the manufacturing of highly engineered, complex, and mission and life

- Critical high-precision components for global OEMs growing competition from China and Eastern Europe;

- Supplying to OEMs with high global market penetration;

- Long-standing and deep customer relationships;

- Advanced manufacturing facilities with a diverse range of products and solutions with a focus on innovation and cost competitiveness.

Azad Engineering is one of the key manufacturers of qualified product lines supplying global original equipment manufacturers (OEMs) in the energy, aerospace and defence, and oil and gas industries, manufacturing highly engineered, complex and mission and life-critical components.

The company manufactures complex and highly engineered precision forged and machined components that are mission and life-critical and hence, some of the products have a zero parts per million defectsrequirement. The company compete with manufacturers from China, Europe, USA and Japan.