Shares of this small-cap defense stock, which specializes in aerospace components and turbine services, surged over 14 percent on Monday morning. The rise followed the announcement of a Long-Term Contract and Price Agreement (LTCPA) with Mitsubishi Heavy Industries Limited (MHI) of Japan for the supply of sophisticated rotating and stationary airfoils for advanced gas and thermal power turbine engines.
Price Movement
During Monday’s trading session, Azad Engineering Ltd’s stock reached a peak of Rs.1,670.00 per share, marking an increase of over 14 percent from its previous close of Rs.1,461.80. The stock has since pulled back slightly and is now trading at Rs.1,663.90. Year-to-date, it has delivered returns exceeding 144 percent.
What happened
On November 3rd, Azad Engineering Limited signed a Long Term Contract and Price Agreement (LTCPA) with Mitsubishi Heavy Industries Limited (MHI), Japan, to supply advanced rotating and stationary airfoils for gas and thermal power turbine engines, supporting MHI’s global power generation needs.
Valued at approximately $82.89 million (nearly Rs.700 crore), this 5-year agreement strengthens the strategic partnership between Azad Engineering and MHI.
Strategic Partnerships
In January 2024, Azad Engineering signed a long-term agreement with Rolls-Royce to manufacture components for its defense aircraft engines. This partnership is anticipated to drive significant revenue growth, with management forecasting a 25-30 percent increase in revenue for the current fiscal year.
Additionally, Azad Engineering has been chosen as the exclusive industry partner by the Defence Research and Development Organisation (DRDO) to produce Advanced Turbo Gas Generator Engines. This contract represents a critical expansion into propulsion systems, with initial deliveries projected to begin by early 2026.
Revenue Mix
Azad Engineering operates in various sectors, including aerospace, defense, and energy. According to its recent filings, the company derived 78 percent of its revenue from the Energy and Oil & Gas segment, followed by 19 percent from the Aerospace & Defence segment, and the remaining 3 percent from other segments.
Financial Performance
For the quarter ending June 2024, the company reported a net profit of Rs.17 crore, marking a 143 percent increase compared to Rs.7 crore in Q1 FY24. Revenue from operations rose to Rs.98 crore, up 29 percent from Rs.76 crore in the same period.
Shareholding Pattern
As of the September 2024 shareholding pattern, promoters hold a 65.90 percent stake in Azad Engineering Ltd., with Foreign Institutional Investors (FIIs) holding 9.74 percent, Domestic Institutional Investors (DIIs) at 5.74 percent, and retail investors owning 18.61 percent.
Before the IPO, Sachin Tendulkar invested Rs.5 crore in the company, an amount that rose to over Rs.31 crore post-listing and has continued to grow since then.
About the Company
Hyderabad-based Azad Engineering Limited is a precision engineering firm focused on producing essential components for sectors such as aerospace, defense, and energy.
Written by – Siddesh S Raskar
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