Azad Engineering Limited has received the final observations from the Securities and Exchange Board of India (SEBI) for its proposed initial public offering (IPO). As a significant player in the aerospace and defense, energy, and oil and gas industries, Azad Engineering manufactures highly engineered and mission-critical components supplied to global original equipment manufacturers (OEMs).
The company’s precision forged and machined components are known for their complexity and mission-critical nature, with some products requiring a “zero parts per million” defects requirement. The final observation letter from SEBI was received on December 14, 2023, following the filing of the Draft Red Herring Prospectus (DRHP) on September 29, 2023.
Azad Engineering’s IPO consists of a fresh issue of up to ₹240 crore and an offer for sale (OFS) of equity shares, totaling up to ₹500 crore, resulting in a total issue size of ₹740 crore. The OFS includes equity shares worth ₹170 crore by Rakesh Chopdar, ₹280 crore by Piramal Structured Credit Opportunities Fund, and ₹50 crore by DMI Finance Private Limited. The net proceeds from the offering will be utilized for funding capital expenditure, repayment/pre-payment of certain borrowings, and general corporate purposes.
Leading financial institutions such as Axis Capital Limited, ICICI Securities Limited, SBI Capital Markets Limited, and Anand Rathi Advisors Limited serve as the Book Running Lead Managers to the issue.
Competing with manufacturers from China, Europe, the USA, and Japan, Azad Engineering’s clientele includes global OEMs like General Electric, Honeywell International Inc., Mitsubishi Heavy Industries, Ltd., Siemens Energy, Eaton Aerospace, and MAN Energy Solutions SE.
The company plays a crucial role in the global supply chain for OEMs and has witnessed substantial revenue growth, increasing from ₹124 crore in FY20 to ₹252 crore in FY23, with a remarkable adjusted EBITDA margin of 31.61 percent in FY23.
Azad Engineering stands out as one of the fastest-growing manufacturers, exhibiting a Compound Annual Growth Rate (CAGR) of 27 percent between FY20 and FY23, and boasts one of the highest EBITDA margins among key players in machined components for the industries it serves.
