Azad Engineering - More Legs To The Rally: ICICI Securities

ICICI Securities Report

Azad Engineering Ltd. has received an order from Baker Hughes for the supply of high-complex and critical components. We believe that this is significant as it:

1. enables Azad to diversify its sector mix;

2. potentially could translate into adjacent revenue streams; and

3. would likely keep earnings growth momentum.

In our view, this is the second major order in Q4 FY24 after Rolls-Royce for defence engines and signifies that the development efforts made over several years are now getting monetised.

We also believe that there is a better possibility of our FY26E earnings per share of Rs 20 being achieved; hence, we raise our price/earning multiple to 80 times (earlier 70 times), valuing the company at Rs 1,600 (earlier Rs 1,400) on FY26E EPS. Retain ‘Buy’.

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