Azad Engineering Ltd Q2 FY26 – Aerospace Dreams, Gas Turbine Screams & a ₹6,000 Cr Order Book Lift-Off
1. At a Glance
Welcome to Hyderabad’s very own turbine and torque factory, Azad Engineering Ltd, where even the machines wear precision helmets and the margins try to imitate jet thrusts. With a market cap of ₹10,957 crore, stock price ₹1,697, and a P/E of 96.7×, this small-cap has clearly convinced the market that “defence” means defending valuations, not borders.
In Q2 FY26, Azad clocked ₹143 crore in revenue (up 28.1% YoY) and ₹33 crore in PAT (up 56.6% YoY). Its OPM at 36% can make even FMCG companies jealous, and its order book of ₹3,300 crore ensures the production lines will be busy till at least ISRO’s next Mars launch.
Exports now form 90% of revenue, debt-equity ratio sits at 0.20, and promoters still hold 55.4% stake, watching FII and DII interest rocket faster than an Air Force prototype.
2. Introduction
In a world where most mid-caps chase solar panels and EV batteries, Azad Engineering quietly builds the spinning hearts of turbines and aircraft engines. Founded in 1983 by the visionary Rakesh Choudhary, the company took four decades to become India’s secret weapon in precision manufacturing — supplying to giants like Siemens Energy, GE Vernova, Rolls-Royce, Mitsubishi, and Honeywell.
Yet, the beauty lies in the irony: Azad’s business is so complex that even ChatGPT had to revise thermodynamics before summarising it. They machine “3D rotating airfoils” that decide whether your power plant lights up or blows up.
The street often underestimates such firms because they lack flashy consumer brands — but here’s a company exporting 90% of its output to countries that still can’t pronounce “Chakan”.
The latest quarter shows the classic high-tech India story — revenue up 28%, profit up 57%, order wins from Mitsubishi (₹651 Cr), and new lean facilities inaugurated faster than political promises before elections.
So what happens when a small Hyderabad manufacturer becomes a global aerospace supplier? You get Azad Engineering — India’s own stealth stock.
3. Business Model – WTF Do They Even Do?
If you thought “airfoils” were something to put on your car, buckle up. Azad makes precision-forged and machined components for turbines used in power plants and aircraft — think blades, vanes, unison rings, housings, seals, and parts that tolerate thousands of degrees without melting like your mutual funds in 2020.
Two main engines drive the business:
Energy & Oil & Gas (78% of revenue in Q1 FY25) Their components breathe life into gas, thermal, and nuclear turbines. Customers? Only the top 5 global turbine OEMs that together control 70% of the world market. Names like Siemens Energy, Mitsubishi Heavy Industries, MAN Energy Solutions — basically, the Avengers of turbine tech.
Aerospace & Defence (19% of revenue in Q1 FY25) Here they supply the likes of GE Aerospace, Honeywell, Eaton — building parts for commercial jets, defence aircraft and even those sleek helicopters used by politicians to avoid traffic.
The company also manufactures turbojet engines for DRDO, proving that “Make in India” can actually mean “Fly with India.”
Revenue has grown 73% in Energy and 120% in Aerospace since FY22. From a ₹2000 Cr order book in FY23 to ₹3300 Cr in FY25, the backlog looks like Hyderabad’s traffic — never ending, but always moving.
💬 Commentary: Azad’s growth graph looks like a fighter jet take-off — steep, loud, and slightly scary. Operating margins hold steady at 36%, while net profit margins hit 23%. That’s what happens when your customers sign multi-year dollar contracts instead of haggling on WhatsApp.
5. Valuation Discussion – Fair Value Range Only
Let’s crunch without crashing.
(a) P/E Method: FY26E EPS = ₹20. Assigning a P/E band of 60–80× (for high-precision export manufacturers) ⇒ Fair Value = ₹1,200–₹1,600.
