Azad Engineering shares list 37% over IPO price

Aerospace and defence company Azad Engineering made a strong debut on the stock exchanges on Thursday, in sync with the broader market. The shares of Azad Engineering listed at ₹720 apiece on the NSE, a premium of 37.4% over the IPO price of ₹524. On the BSE, the shares of the aerospace components manufacturer debuted at ₹710, up 35.5% against the issue price.

Post debut, Azad Engineering shares touched a high and low of ₹727 and ₹701, respectively on the NSE, while the market capitalisation stood at ₹4,250 crore at the time of reporting.

The listing of the Hyderabad-based company was in sync with Street expectations. Ahead of the listing, Azad Engineering shares were commanding a grey market premium (GMP) of ₹200, indicating the listing to be around ₹724 (issue price + GMP), up 38% over IPO price. The GMP of the  company has seen a downward trend in the last few days after hitting a high of ₹440 on December 20.

“While this performance demonstrates strong investor interest, it falls short of the pre-listing excitement that anticipated a potentially higher rise. Azad Engineering's successful listing signifies its strong fundamentals and growth potential,” says Shivani Nyati, Head of Wealth, Swastika Investmart Ltd.

“For investors seeking exposure to the manufacturing sector with high growth potential, Azad Engineering offers a compelling opportunity, and existing investors in the IPO may consider holding their shares. However, a cautious approach is advised due to the full valuation and potential risks, and thus a stop loss of around ₹650 is recommended,” she says.

The ₹740 crore initial public offering (IPO) of Azad Engineering, which was a mixture of fresh issue worth ₹240 crore and an offer for sale worth ₹500 crore, received overwhelming response from investors. The issue was subscribed 83.04 times as it received 81.64 crore bids as compared to 9.83 lakh shares offered. The public issue, which opened between December 20-22, was subscribed 24.51 times in the retail category, 179.64 times in qualified institutional buyers (QIB), and 90.24 times in the non-institutional investors (NII) category. The company had reserved half of the issue for QIB, 15% for NII, and 35% for retail investors. Employees portion had reserved equity shares aggregating up to ₹4 crore. 

The lot size for the IPO was 28 shares and in multiple thereof. The minimum application amount for retail investors was ₹14,672 for one lot or 28 shares, while the maximum limit was ₹190,736 for 13 lots or 364 shares.

As per the DRHP filed with the SEBI, the company 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. Azad Engineering has four advanced manufacturing facilities in Hyderabad and Telangana, capable of producing high-precision forged and machined components with a total manufacturing area of approximately 20,000 square metres. 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.

For the first half of the fiscal year 2023-24, Azad Engineering reported revenue of ₹159 crore, while revenue for the entire FY23 was at ₹252 crore. The reported profit for H1 FY24 was ₹53 crore and that of FY23 was ₹72 crore. 

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)