Stock of this Dec 2023 listed IPO has more than doubled since debut

Azad Engineering hit a new high of Rs 1,400 in an otherwise range-bound market owing to healthy outlook on Monday.

Shares of Azad Engineering (AEL) hit a new high of Rs 1,399.95, as they rallied 5 per cent on the BSE in Monday’s intra-day trade in an otherwise range-bound market owing to healthy outlook. For the third straight day, the stock of heavy electrical equipment manufacturer was locked in the 5 per cent upper circuit, with only buyers seen at the counter.

Till 11:26 am; a combined 501,383 equity shares changed hands and there were pending buy orders for 45,214 shares on the NSE and BSE. In comparison, the S&P BSE Sensex was up 0.07 per cent at 73,855.

Since listing on December 28, 2023, the market price of AEL has now more than doubled or zoomed 107 per cent from Rs 677.10. Currently, the stock price of AEL quoted at a whopping 167 per cent premium over its issue price of Rs 524 per share. A sharp rally in AEL stock has been on account of healthy earnings and signing of the agreement by Rolls-Royce.

On January 29, AEL informed stock exchanges that Rolls-Royce signed a long term contract of 7 years with the company to produce/Supply critical engine parts for their defence /military aircraft engines.

AEL is one of the key manufacturers of qualified product lines in the aerospace and defence, energy and oil and gas industries, manufacturing highly engineered, complex and mission and life-critical components.

After achieving a topline growth of 43 per cent (CAGR FY21-23), AEL delivered 49 per cent year-on-year (YoY) revenue growth in both Q3FY24 and 9MFY24. The company said this growth was marked by a 3x YoY growth in the company’s Aerospace & Defense segment, which has been built based on its extensive experience in the Energy segment.

In the coming years, the management expects the Aerospace & Defense business to contribute to the company's revenues on par with the Energy segment, with Oil & Gas coming in second.

AEL caters to highly regulated industries with significant entry barriers. In fact it requires a stringent qualification process taking up to 30-48 months for onboarding a new vendor. It derived 90 per cent of its revenue from exports to global OEMs, backed by long-term contracts.

The company has a well diversified customer base spread across various geographies such as the US, Europe, Japan, Middle East, United Kingdom and China. The company has existing relationships with both Indian and global OEMs.

The company's long-standing customer base comprises leading product OEM companies, key strategic and globally preferred partners such as General Electric and Mitsubishi Heavy Industries Ltd., with whom they have an average relationship of over 10 years. Other key customers include Honeywell International, Siemens Energy, Eaton Aerospace and MAN Energy Solutions.