Welcome to our in-depth exploration of Azad Engineering Limited, a key player in the production of components for energy turbines and aerospace & defence aircraft.  The company recently made waves in the financial markets with its IPO with an astonishingly high Price-to-Earnings (PE) ratio of 292x! The stock has rallied 23 percent, from the day it got listed on December 29, 2023. As of 31st January 2024, the PE of the company stands at 646!

Just recently, Rolls-Royce, a leading provider of power and propulsion solutions, announced a partnership with Azad Engineering to manufacture intricate defence aero-engine parts within India. As we delve into the intricate details of Azad Engineering Limited, we’ll investigate whether this seemingly high valuation aligns with the company’s underlying business prospects.

Azad Engineering Limited

Business Overview

Azad Engineering Limited started its core business in 2008. It is involved in the energy turbine and aerospace & defence components market. It is also a manufacturer of oil & gas components.

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The Company has been in operation for 15 years and has substantial experience as a tier 1 supplier of high-precision forged and machined components in the energy, aerospace and defence industries with sales in 15 countries. It has also manufactured and delivered 3.09 million units between Fiscal 2009 to Fiscal 2023 at an overall level.

Azad Engineering Limited: segments

Energy Industry

Azad Engineering Limited’s key customers are in the power and industrial turbine industry. The company supplies precision, forged and machined components for energy turbines (which are used in industries & power plants with different fuel types such as gas, nuclear and coal). Moreover, these components are high-precision and mission-critical. So the company makes sure that it meets the “zero parts per million” defects requirement.

Azad Engineering Ltd. supplies components to the following 5 manufacturers of turbines (General Electric, Siemens Energy AG, Mitsubishi Power Ltd., Ansaldo Energia S.P.A., Bharat Heavy Electricals Limited (BHEL), Triveni Turbines Ltd, Harbin Turbine Co. Ltd., Dongfang Electric Corporation, Shanghai Electric Power Generation Group, Baker Hughes, Solar Turbines). In the Financial year 2023, this segment contributed around 87.03 per cent of the total revenue.

Aerospace & Defence Industry

The company provides components to the aviation sector such as engine airfoils and other precision, forged and machined components. The company’s products are largely utilised in commercial and defence aircraft, spacecraft, and other defence systems to provide propulsion, actuation, hydraulics, and flight control. They also meet the zero parts per million defect requirement.

The company has supplied critical components for various aircraft platforms such as B737, B737 Max, B747, B777, B777X, A320, A350, A355, A350 XWB, Gulfstream G550. In the Financial year 2023, this segment contributed around 8.95 per cent of the total revenue.

Oilfield Industry

The components supplied to the oilfield industry by the company include drill bits and slips which are used in drilling equipment and are part of the exploration and production phase. The company has supplied components to one of the global manufacturers of drilling equipment. In the Financial year 2023, this segment contributed around 0.02 per cent of the total revenue.

Current and Upcoming Manufacturing Facilities

The company has four advanced manufacturing facilities in Hyderabad, Telangana, India. This facility is capable of producing high-precision forged and machined components. It also has a total manufacturing area of approximately 20,000 square metres.

The company further has two manufacturing facilities in the pipeline at ( a ) Tuniki Bollaram village in Siddipet district, Telangana and (b) Mangampet village, Sangareddy district, Telangana, with a total manufacturing area of 94,898.78 square metres and 74,866.84 square metres, respectively. The company intends to finance the construction and development of these facilities through internal accruals.

Azad Engineering Limitedfinancials

Most of the company’s revenue is derived from exports to global OEMs, backed by long-term contracts and for a six month period ended September 30, 2023, 89.69 percent of the total revenue was from contracts with customers located outside India. For Fiscal 2023, the exports and domestic sales contributed around ₹2,023.08 million and ₹493.67 million, respectively. The total income has grown at a CAGR of 44.63% from ₹1,250.30 million in Fiscal 2021 to ₹2,615.21 million in Fiscal 2023.


In FY22, the company posted a commendable ROE of 24.3%, which significantly declined by 83% to 4.15% in FY23. Likewise, the ROCE experienced a decrease of 23.5%, dropping from 16.95% in FY22 to 12.99% in FY23.

The company’s significant debt load is evident from its Debt to Equity ratio of 0.96. However, there was a 5.8% reduction in the Debt to Equity ratio from 1.02 in FY22 to 0.96 in FY23.

What makes the company stand out in its field?

There are significant entry barriers in Azad Engineering Limited as the costs associated with the energy aerospace and defence industries are very high due to the stringent quality checks and certifications that are required to qualify as a supplier which makes finding a manufacturing partner a lengthy process for many years for OEMs. The company believes that it would ideally take 15-20 years for a new player in the industry to reach the position it currently occupies in the market.

On the other hand, having substantial experience as a tier 1 supplier of highly complex forged and machined project and life-critical components in the energy aerospace and defence industries, the company has made itself an established supplier to global OEMs operating in highly regulated industries.

As mentioned earlier, Rolls-Royce has entered a seven-year contract with Azad Engineering Limited, based in Hyderabad, to manufacture and deliver crucial engine components for their military aircraft engines. 

This agreement enables Azad Engineering to produce and supply intricate parts for defence aircraft engines, thereby integrating into Rolls-Royce’s global supply network for complex components essential for their advanced aero engines, as per the company’s announcement.


In conclusion, Azad Engineering Limited emerges as a significant player in precision engineering, particularly in energy turbine and aerospace & defence sectors. With over 15 years of experience, Azad Engineering is a trusted tier 1 supplier, delivering high-quality forged and machined components globally.

With collaboration with industry giants like Rolls-Royce, it showcases the company’s presence in the global supply chain. However the effect of this expansion plan to improve the company’s operating margin in the future is yet to be seen. So, what do you think about the future of Azad? Share your thoughts in the comments section below!

Written by Nalin Suriya S

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