Azad Engineering IPO subscribed 80.59 times on final day; GMP rises

The initial public offering (IPO) of aerospace and defence company Azad Engineering has been subscribed 80.59 times on the third and final day of the bidding process.

The ₹740 crore public issue comprising a fresh issue worth ₹240 crore and an offer for sale worth ₹500 crore opened for subscription on December 20, 2023, and closed today i.e. December 22, 2023. The price band for the issue was set at ₹499-524. The company had put 1,48,29,659–1,41,22,137 shares of the face value of ₹2 apiece on offer. The company's post-issue market will be ₹2,961-3,097 crore.

The bid lot for the IPO was 28 shares and in multiple thereof. Of the entire issue, 50% was booked for QIBs, 35% for retail investors and 15% for NIBs. The employee reservation was fixed at 76,335 equity shares aggregating up to ₹4 crore. The company will make its debut on the stock market on December 28, 2023.

The latest consolidated bid data on the National Stock Exchange (NSE) shows the qualified institutional buyers (QIBs) quota was subscribed 179.66 times, with 50,46,38,624 shares bid against 28,08,852 on offer.

The non-institutional investors (NII) category was subscribed 87.54 times. As many as 18,95,91,976 shares were bid for against 21,70,108 on offer in this category.

The quota for retail individual investors(RIIs) was subscribed 23.69 times. The company received bids for 11,69,51,044 against 50,63,585 on offer. The employee quota was also subscribed 14.64 times as bids were placed for 11,15,352 shares against 80,160 on offer in this category.

In total, the company received bids for 81,57,47,044 shares against 1,01,22,705 on offer, thus subscribing 80.59 times. 

In the unregulated grey market, Azad Engineering shares are selling at ₹375 plus premium (GMP), up from ₹370 on Thursday. Considering this, at the upper price band, the listing price for the Azad Engineering IPO could be ₹899 apiece.

The company has already raised about ₹221 crore from anchor investors at the allocation price of ₹524 per share.

The company says it is one of the key manufacturers of qualified product lines, supplying to 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. 

Tt 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 defects requirement. Its products include 3D rotating airfoil, blade portions of turbine engines and other critical components for gas, nuclear and thermal turbines used in industrial applications or energy generation, and defence and civil aircraft, and spaceships.

Azad Engineering's revenue in the first half of the fiscal year 2023-24 stood at ₹159 crore. Its revenue in FY23 was ₹252 crore. The reported profit was ₹53 crore in H1 FY24 and ₹72 crore in FY23. In terms of valuation, 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.

Azad Engineering has four advanced manufacturing facilities in Hyderabad, Telangana, India, capable of producing high-precision forged and machined components with a total manufacturing area of approximately 20,000 square metres.