Azad Engineering IPO: Key Insights & Details

azad engineering ipo

The buzz around Azad Engineering Limited’s IPO is palpable, and I’m here to dive into the details that every investor should know. With an issue size of a whopping ₹740 Cr, this IPO has caught the attention of the market, slated to list on December 28, 2023.

Investing in IPOs can be a thrilling venture, and Azad Engineering’s entry is no exception. Priced between ₹499 to ₹524 per share, it presents a significant opportunity for those looking to get in early on a company valued at a market cap of ₹30958 Cr. Stay with me as we unpack what this could mean for your portfolio.

Azad Engineering IPO Details

As we delve into the Azad Engineering IPO, it’s important to note that the company plans to raise approximately ₹740 Crore through this public offering. The IPO consists of a fresh issue amounting to ₹240 Crore and an offer for sale (OFS) of up to ₹500 Crore. The issue is a built-issue IPO, indicating that the book-building process will determine the price band.

The shares have a face value of ₹2 per share, and the price band has been set in the range of ₹499 to ₹524 per share. It’s also worth highlighting that investors can bid for a minimum lot size of 28 Shares, which translates to a financial commitment that varies with the final issue price.

Here’s a quick overview of the Azad Engineering IPO key numbers:

IPO Opening DateDecember 20, 2023
IPO Closing DateDecember 22, 2023
Price Band₹499 to ₹524 per share
Issue Size14,122,138 shares
Fresh Issue4,580,153 shares (aggregating up to ₹240 Cr)
Offer for Sale9,541,985 shares (aggregating up to ₹500 Cr)
Listing AtBSE, NSE
Lot Size28 Shares
Face Value₹2 per share

Preceding the IPO, Azad Engineering has a shareholding of 54,532,842 shares, expected to rise to 59,112,995 shares post-issue. The company’s anticipation of listing on esteemed platforms such as the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) speaks volumes about its readiness to embrace the scrutiny and expectations of public markets.

Potential investors should know that the shareholding structure will substantially change once the IPO concludes. This offering represents a significant opportunity for Azad Engineering to access capital markets, bolster its financial strength, and enhance its visibility in the industry. With assets being offered in terms of fresh issues and an offer for sale, investors can be part of a company’s growth story while some existing shareholders realize their investments.

Azad Engineering IPO Timeline

In unpacking the anticipated journey of Azad Engineering Limited’s IPO, let’s mark our calendars for the key dates investors should know. The public offering kicks off on December 20, 2023, and interested parties have a tight window until December 22 to submit their bids. The crucial cut-off time for UPI mandate confirmation on December 22 is 5 PM; missing this deadline could leave investors out of the running.

Post the bid closure, the basis of allotment will be announced on December 26. This step is pivotal as it determines who gets a slice of the pie and how many shares they get.

Once the allotment process wraps up, a swift turnaround follows with the initiation of refunds scheduled on December 27. This is a key date for those whose bids were unsuccessful or partially filled; they’ll see their funds released into their accounts.

Additionally, December 27 is also when successful investors will witness the credit of Azad Engineering shares to their Demat accounts. This seamless process marks the transition from hopeful bidder to official shareholder.

Finally, all eyes will be on the December 28, 2023, listing date, when Azad Engineering debuts on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). This day will anchor Azad Engineering’s position in the public market and likely influence the market’s perception of the company’s value.

IPO Open DateDecember 20, 2023
IPO Close DateDecember 22, 2023
Cut-off Time for UPI Mandate5 PM on December 22
Basis of AllotmentDecember 26, 2023
Initiation of RefundsDecember 27, 2023
Credit of Shares to DematDecember 27, 2023
Listing DateDecember 28, 2023

This timeline underscores the swift nature of the IPO process, reflecting both the efficiency of modern stock exchanges and the preparedness of Azad Engineering to embrace the public sphere. Each of these dates build upon each other, taking both the company and its potential investors towards a new chapter in Azad Engineering’s growth story.

Azad Engineering IPO Lot Size

When diving into the details of the Azad Engineering IPO Lot Size, it’s essential to grasp how lot size can impact your investment strategy. For those new to the IPO game, a lot size refers to the minimum number of shares an investor can apply for during an Initial Public Offering. In Azad Engineering’s case, the company has set an accessible lot size that caters to diverse investor profiles from small retail investors to high-net-worth individuals (HNIs).

The predetermined lot size is 28 equity shares, which is the baseline for any investor wanting to get a piece of Azad Engineering through their public offering. This lot size has significance because it helps determine the minimum and maximum investment thresholds across different investor categories. Here’s a quick breakdown of how that looks:

CategoryMin LotsMax LotsMin SharesMax SharesMin Amount (₹)Max Amount (₹)
Retail (Min)1132836414,672190,736
S-HNI (Min)14683921,904205,408997,696
B-HNI (Min)691,9321,012,368

Retail investors, who generally invest smaller amounts, can apply for a minimum of 1 lot and a maximum of 13 lots. On the other end of the spectrum, high-net-worth individuals are divided into two sub-categories: small and big. Small HNIs (S-HNIs) can go for at least 14 lots, whereas big HNIs (B-HNIs) start at 69 lots, with both categories scaling up to significant investment levels.

Azad Engineering IPO Promoter Holding

When assessing the stability and commitment of a company’s leadership, it’s crucial to consider the shareholding pattern, especially with regard to the promoter’s stake. For potential investors examining Azad Engineering’s IPO, this insight is significant. Interestingly, the pre-issue shareholding of Rakesh Chopda, the promoter, stands at an impressive 78.61%. This substantial figure signals a strong belief and vested interest in the company’s thriving future.

With Azad Engineering’s planned IPO, there’ll be a shift in the promoter’s shareholding. Post-issue, although the exact numbers will be finalized after the allotment, there’s a certain inevitably that the promoter’s stake will be diluted to some extent; this is a common consequence of public offerings. But it’s not just about percentages. The transition to public ownership through an IPO signifies a major milestone for the company, allowing it to inject fresh capital into accelerating its growth trajectory.

It’s worth noting that the promoter holding after the IPO will still represent a significant portion of the company’s equity, ensuring that their interests remain closely aligned with the success and governance of Azad Engineering. This alignment is essential for investors, as it assures them that the management continues to have skin in the game and is motivated to steer the company towards continued profitability and success.

Azad Engineering IPO Reservation

As an informed investor, it’s crucial to understand the share reservation criteria before diving into an IPO. Azad Engineering Limited has judiciously set aside shares according to investor categories for its IPO. This structured allocation ensures broad-based participation and aligns with regulatory guidelines.

Qualified Institutional Buyers (QIBs) play a pivotal role in the success of an IPO due to their financial muscle and clout. With Azad Engineering, I’ve noted that no more than 50% of the Net Issue is available to QIBs. This cap means that institutional investors have a significant but not overpowering slice of the pie, potentially leaving ample room for other investors to partake.

For retail investors like myself, who often seek more accessible opportunities to participate in potentially lucrative IPOs, Azad Engineering has earmarked no less than 35% of the Net Issue. The company’s commitment to retail investors is clear, indicating a strategy to establish a broad shareholder base and possibly stabilize post-listing market prices.

Moreover, the Non-Institutional Investors (NII) category, often including High Net-worth Individuals (HNIs), are not left out. At least 15% of the Net Issue has been allocated to NIIs. This allotment acknowledges the importance of these investors in contributing significant sums, albeit with a higher appetite for risk.

Investor CategoryShares Offered
QIB≤ 50% of Net Issue
Retail≥ 35% of Net Issue
NII (HNI)≥ 15% of Net Issue

For detailed insights into the potential investment strategies and how these could affect my approach to the IPO, I’ve been especially attentive to the shareholding pattern and lot sizes. With a minimum lot size of 28 shares and denominations thereafter, figuring out my entry point has been a methodical process. Retail investors like me are required to shell out at least $14,672, while NIIs face a steeper entry with minimum investments starting from $205,408 for sNII and $1,012,368 for bNII.

Azad Engineering Limited Financial Information

As I delve deeper into the financial health of Azad Engineering Limited, it’s essential to highlight that the company has shown a consistent growth in its assets base. Comparing the fiscal year ending on September 30, 2023 to that of March 31, 2021, there’s been an impressive growth from ₹256.05 Crore to ₹636.63 Crore.

The revenue trajectory for Azad Engineering also indicates a strong performance. There’s a clear upward trend from ₹125.03 Crore in March 2021 to ₹261.52 Crore by the end of March 2023, and even though there was a dip to ₹169.54 Crore by September 2023, such fluctuations are often part of any dynamic market environment.

Profit after tax, a crucial indicator of a company’s profitability, has varied over the past few years, peaking at ₹29.46 Crore in March 2022. As of the latest data from September 30, 2023, the profit after tax stands at ₹26.89 Crore, reflecting the company’s capacity to sustain its profit levels.

Period EndedAssetsRevenueProfit After Tax
30 Sep 2023636.63169.5426.89
31 Mar 2023589.21261.528.47
31 Mar 2022404.32199.2629.46
31 Mar 2021256.05125.0311.50

The company’s balance sheet remains solid, with reserves and surplus climbing steadily from ₹89.42 Crore in 2021 to ₹221.14 Crore as of September 2023. Nonetheless, total borrowings also increased, but this is often indicative of a company leveraging debt to fuel expansion, which in Azad Engineering’s case, is supported by its asset growth.

About Azad Engineering Limited

Azad Engineering Limited has built a reputable name in the manufacturing sphere, specializing in components that play a critical role in sectors like aerospace, defense, energy, and oil and gas. With precision forging and machining at the core of their capabilities, they have consistently delivered top-tier products to global Original Equipment Manufacturers (OEMs). Azad Engineering’s proficiency extends beyond just manufacturing; their in-house capabilities embrace engineering, design, material development, tooling, and a spectrum of finishing and assembly operations.

Their commitment to quality and continuous improvement is evident in their extensive client base which includes industry heavyweights such as General Electric, Honeywell, Mitsubishi Heavy Industries, Siemens Energy, Eaton Aerospace, and Man Energy. Since I started following the industry, Azad Engineering has continually expanded its reach, and now, its components are integral to advanced technological applications across the globe.

The company, in operation since 2008, boasts an impressive infrastructure with 4 manufacturing facilities in Hyderabad, spanning a generous 20,000 square meters of production space. This robust production capability enables them to meet the stringent requirements that characterize the markets they serve. It’s fascinating to note that their products have critical applications, from intricate 3D rotating airfoil sections for turbine engines to components for gas, nuclear, and thermal turbines that are vital in industrial applications, energy generation, defense, and even civil aircraft and spacecraft.

In the energy sector specifically, the high precision with which Azad Engineering crafts rotating and stationary 3D airfoils, blades, special machined parts, and combustion component assemblies is nothing short of impressive. Their commitment to innovation and quality has allowed them to be at the forefront of supplying specialized components not only within India but also to the US, China, Europe, the Middle East, and Japan. It’s clear that their global footprint in the manufacturing industry is both established and expanding.

Azad Engineering IPO Review

When evaluating the Azad Engineering IPO, it’s imperative to consider the investment analysts’ recommendations and the company’s financial soundness. Azad Engineering has received an ‘Apply’ recommendation, suggesting that it could be a promising addition to an investor’s portfolio. Notably, the company has demonstrated a steady growth in its top line, with a minor decline in the bottom line for FY23 mainly due to one-time adjustments in line with new accounting standards.

Their niche position in the market gives them a near-monopoly status, a fact that isn’t lost on savvy investors looking for companies with a strong competitive edge. This status, combined with the company’s solid track record and growth prospects, positions it as a potentially attractive bet for medium to long-term gains.

Financial Health Assessment

Analyzing Azad Engineering’s financial health reveals a mix of positive indicators. The company’s Price-to-Earnings (P/E) ratio stands at 292.07, an important figure for assessing the value of its shares relative to earnings. With a Return on Capital Employed (ROCE) of 12.99% and a Debt/Equity ratio of 0.46, Azad Engineering exhibits financial robustness and operational efficiency.

Key Financial IndicatorsValue
Price-to-Earnings (P/E)292.07
Return on Capital Employed12.99%
Debt/Equity Ratio0.46

It’s clear Azad Engineering’s financial metrics paint a picture of a company with manageable debt levels and a reasonable capacity to generate shareholder value from the capital employed in the business.

Market Performance and Expansion Plans

A critical aspect of analyzing this IPO revolves around the market performance and expansion trajectory of Azad Engineering. With significant revenue of Rs 114.292 crore in the energy sector and plans to expand their facilities, they are poised to enhance their production capabilities. The anticipated launch of additional manufacturing units represents a strategic move to meet the increasing demand from international markets including the USA, China, Europe, the Middle East, and Japan.

Azad Engineering IPO Strengths and Weaknesses

In examining Azad Engineering’s upcoming IPO, strong business fundamentals are immediately apparent. The company’s revenue trajectory is impressive, with a CAGR growth that speaks volumes about its solid performance. This growth has seen revenues leap from ₹124 crore in FY20 to a substantial ₹251.68 crore in FY23. With consistent growth and a net profit of ₹26.89 crore for 2023, these figures underpin the company’s profitability and strategic financial planning.

The business’ expertise in manufacturing mission-critical components for diverse high-demand industries—from aerospace to defense and energy—further solidifies its market position. The precision and complex engineering required in their products testify to a zero-defect manufacturing culture, which is crucial for their clientele. This meticulous approach to quality is about adhering to high standards and ensuring that these vital industries receive components they can rely on without fail.

Yet, investors must weigh these positives against certain considerations. Promoter holdings stand high at 88.24% pre-IPO, anticipated to dilute to 73.05% post-IPO, which might stir interest regarding the company’s post-IPO governance and control. Furthermore, the proposed price band at ₹499-525 per share may raise eyebrows against other market entrants, signaling a need for a keen assessment of valorous entry points for prospective investors. This strategic financial balance, peering through a magnifying lens on benefits and a wide-angled view of potential investor reservations, forms a holistic foundation for understanding the Azad Engineering IPO landscape.

With the company looking to raise approximately ₹740 crores, addressing a two-fold motive of infusing fresh capital and enabling a partial exit for existing stakeholders, the intention is to funnel these funds into strategic avenues that foster future expansion and technological advancement. This dynamic aligns well with the company’s documented growth patterns and position as a key player supplying major global OEMs.

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How to Apply for the Azad Engineering IPO

To apply for the Azad Engineering IPO online using Zerodha, follow these steps:

  1. Ensure you have a 2-in-1 trading account with Zerodha or another broker that supports the Azad Engineering IPO application process.
  2. Log in to your Zerodha account or the broker’s platform.
  3. Navigate to the IPO section and find the Azad Engineering IPO listing.
  4. Click the “Apply” button or follow the on-screen instructions to place your bid for the Azad Engineering IPO.
  5. Select the investor type and enter the required details, such as your UPI ID, quantity, and price.
  6. Ensure the quantity and price are within the issue price range and are multiples of the lot size.
  7. Click on the undertaking checkbox and submit your application.
  8. Accept the mandate on the UPI app when prompted.

These steps should help you apply for the Azad Engineering IPO online using Zerodha.

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