The company is expanding its qualifications across four global aero-engine makers and has also entered into the technically challenging propulsion system and hot sections segments. FY27 onwards, the brokerage expects Azad Engineering to witness a meaningful acceleration in its top line.
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ICICI Securities Report
Given the higher-for-longer visibility, Azad Engineering Ltd.'s ascension to engine manufacturing, strong margins, and improving return on equities (as ramp-up phase starts), brokerage firm ICICI Securities have rolled over its target multiple to FY29 and arrived at a target price of Rs 3,200, based on 55 times FY29E earnings per share and has upgrade the stock to Buy from Add, and has raised its target price to Rs 3,200, implying a potential upside of 18%, from the reports current market price of Rs 2,723.
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The brokerage also highlighted that Azad has spent the past few decades building capabilities alongside capacity and now, it is time for the company to step up its execution phase amidst a very strong order book.
The company is further expanding its qualifications across four global aero-engine makers and has also entered into the technically challenging propulsion system and hot sections segments. FY27 onwards, the brokerage expects the company to witness a meaningful acceleration in its top line.
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The ATGG engine delivery is a highly consequential development, as the fundamental question has shifted from ‘Can Azad build it?' to ‘Can Azad execute and scale it?'.
Management has maintained its guidance of a 25%+ revenue CAGR with a 32-35% margin. However, ICICI Securities believes that, similar to FY26, the company is providing conservative estimates amidst the current geopolitical situation. The brokerage have built in a 33% revenue CAGR over FY26–29E, with margins holding at 37-38% (partially benefitting from INR depreciation).
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