Azad Engineering’s Vishnu Malpani Confident Of Meeting 25-30% Revenue Guidance

Azad Engineering is well positioned to achieve 25–30% revenue guidance for the current financial year after the Rolls-Royce deal, according to Vishnu Malpani, Whole-Time Director of the company. The Hyderabad-based firm is making several strategic changes and investments in a new plant dedicated to producing critical components for Rolls-Royce's defence platforms.

In January, the company entered into a long-term agreement with Rolls-Royce to manufacture and supply components for defence aircraft engines. The British luxury car maker is also a leading engine maker for the military transport market.

According to Malpani, the company is embarking on the ambitious project as part of a long-term contract with the giant.

“We have onboarded Rolls-Royce for their defence platforms, and we are working towards making some very critical parts that have come to India for the first time. This is a long-term contract, and we are in the process of development. We are setting up a dedicated plant for them, and over the next year, we will start our development process and should begin delivering most of these rotating critical parts by next year,” Malpani told NDTV Profit.

Malpani added that the new plant is part of a broader investment plan supported by funds raised during the company's recent IPO. He said, “This investment was part of the Rs 240 crore we raised during the IPO. About Rs 100 crore will be deployed in infrastructure, supporting the plant we are setting up for our customers, while Rs 200 crore will be used to create capacity to meet our projections for the next two years.”

Malpani said the growth guidance is achievable in the long term after the deal with Rolls-Royce.

“We are providing guidance of 25 to 30% because we believe this is achievable for a long period. While we aim to exceed these numbers internally, our street guidance is set at 25% to 30%. Regarding profit margins, whether it's EBITDA or PAT percentages, we have maintained consistency. Our EBITDA is consistently in the range of 34% to 35%, and we expect it to remain between 33% and 36% for the foreseeable future,” Malpani said.

He emphasised the importance of the partnership, stating, “We believe that our relationship with Rolls-Royce will become very significant over the next few years. Looking at our growth with GE and Mitsubishi, we expect Rolls-Royce to follow a similar, if not larger, trajectory because the aerospace industry is vast.”

Commenting on the growth path for the company in the next five years, Malpani said, “We use a 5C strategy internally—customers, contracts, capacity, capability, and consistency. Our growth strategy is built around these 5Cs, and our investments in business, plant, machinery, and infrastructure are aligned with how each of these parameters evolves.”

“Currently, we serve the energy industry, including gas turbines, nuclear turbines, and steam-based turbines. We are approved by EDF (Electricité de France), which manages major nuclear plants in France. This quarter, aerospace accounted for about 20% of our revenue. Additionally, our oil and gas vertical, which is under qualification, is expected to experience significant growth,” Malpani added.

The company will be able to demonstrate multi-fold growth this year, including a similar rise in the oil and gas vertical in the next financial year as well, according to Malpani.