Shares of Azad Engineering Ltd. climbed more than 5% on Tuesday after Goldman Sachs maintained its ‘Buy' rating on the stock with a target price of Rs 3,315.
The stock was trading at Rs 2,862 apiece on the NSE at around 10:12 a.m. today, gaining 5.08% from its previous close at Rs 2,723.2. The stock has been surging amid muted markets today, with benchmark Nifty 50 falling close to 1% in the early session.
The brokerage view comes at a time when the company is expanding its manufacturing capacity for gas turbine components and deepening its relationship with GE Vernova.
Gas Turbine Expansion Remains Key Growth Driver
Goldman Sachs sees gas turbine expansion as an important factor driving Azad Engineering's growth over the medium term as the company expands its manufacturing capacity for GE Vernova's Gas Power business. Azad Engineering inaugurated two dedicated facilities at its Centre of Excellence and Innovation Centre in Tunikibollaram, Hyderabad.
Each facility spans 7,600 sq. m and will manufacture highly engineered rotating and stationary airfoils, along with specialised machined parts, for GE Vernova's global requirements. With the addition of these facilities, Azad Engineering now has three dedicated facilities for GE Vernova.
The new facilities dedicated to GE Vernova provide additional manufacturing capacity to support the customer's requirements as the business scales up.
The expansion also supports Azad Engineering's transition from being primarily a component supplier towards becoming a broader platform and integration partner. This could allow the company to participate in a wider range of opportunities across its existing customer relationships, as anticipated by the brokerage house.
Goldman Sachs Maintains 'Buy' Rating
Goldman Sachs has maintained its ‘Buy' rating on Azad Engineering and retained a target price of Rs 3,315.
Goldman Sachs also stated that the sizable order book of Azad Engineering offers multi-year revenue visibility as the company continues to expand its manufacturing capabilities.
The brokerage also stated that the company could also see additional opportunities from further product and customer qualifications. These qualifications can expand its addressable business beyond the existing order base and customer relationships.
Azad Engineering Share Price Movement
The stock has gained 88% over the past two years while rallying close to 75% in this calendar year.
However, over the past month, the stock remained muted, losing marginally by around 0.5%.
The stock is currently trading at a price-to-earnings multiple of 126.26 times, with a market cap of Rs 18,484.6 crore.
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