Azad Engineering stock: Up 105% from its 52-week low! ICICI Securities sees more legs to the rally
Shares of Azad Engineering have recovered over 105 per cent return from its recent lows. It hit its 52-week high of 1,465 on March 5, 2024, and a 52-week low of Rs 641.95 on January 17, 2024.
- Mar 11, 2024,
- Updated Mar 11, 2024 6:26 PM IST
ICICI Securities, in its recent report, has maintained its 'Buy' rating on Azad Engineering stock with a target price of Rs 1,600 per share(earlier Rs 1,400). It noted that Azad Engineering has received an order from Baker Hughes for the supply of high-complex and critical components.
The brokerage firm believes that this is significant as it enables Azad to diversify its sector mix; potentially could translate into adjacent revenue streams; and would likely keep earnings growth momentum. This is the second major order in the fourth quarter after Rolls-Royce for defence engines and signifies that the development efforts made over several years are now getting monetised.
ICICI Securities also mentioned that the management is making efforts to deepen engagement with existing customers by developing new components. Given the vast market potential and significant cost advantage compared to peers across various geographies, it believes that Azad is at a vantage point.
Additionally, the new 95,000m2 facility would ensure that management can capture and commercialise new opportunities more efficiently. Furthermore, increasing its footprint in defence and aerospace and O&G segments is likely to mitigate the product concentration risk to an extent, it said.
It also believes that Azad’s earnings are likely to see an extended period of meaningful growth led by tailwinds from the new contracts. Taking cognizance of the higher possibility of our estimates being achieved, it has raised the valuation multiple to 80x(earlier 70x).
Azad Engineering Debut on D-Street
Shares of Azad Engineering Ltd made a strong debut at Dalal Street as the manufacturer of aerospace components and turbines debuted at Rs 720, a premium of 37.40 per cent, at the National Stock Exchange (NSE), against the issue price of Rs 524 apiece. The scrip was listed at a premium of 35.50 per cent at Rs 710 on the BSE.
Sachin Tendulkar-backed Azad Engineering offered its shares in the fixed price band of Rs 499-524 apiece with a lot size of 28 equity shares between December 20 to December 22. The company raised a total of Rs 740 crore via IPO, including a fresh share sale of Rs 240 crore and an offer-for-sale (OFS) of up to 95,41,985 equity shares.
About Azad Engineering
Azad Engineering, which was incorporated in 1983, is a manufacturer of aerospace components and turbines. The company supplies its products to original equipment manufacturers (OEMs) in the aerospace, defense, energy, and oil and gas industries. Azad Engineering's products are highly engineered, complex, mission-critical and vital.
Legendary cricketer Sachin Ramesh Tendulkar invested about Rs 5 crore in the company in March 2023. He picked up 14,607 equity shares at a price of Rs 3,423 in the company, which were later turned in to 3,65,175 equity shares post stock split and bonus issue, as per the RHP of the company. The average price of Sachin's holding came out to Rs 136.92 apiece.
Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
ICICI Securities, in its recent report, has maintained its 'Buy' rating on Azad Engineering stock with a target price of Rs 1,600 per share(earlier Rs 1,400). It noted that Azad Engineering has received an order from Baker Hughes for the supply of high-complex and critical components.
The brokerage firm believes that this is significant as it enables Azad to diversify its sector mix; potentially could translate into adjacent revenue streams; and would likely keep earnings growth momentum. This is the second major order in the fourth quarter after Rolls-Royce for defence engines and signifies that the development efforts made over several years are now getting monetised.
ICICI Securities also mentioned that the management is making efforts to deepen engagement with existing customers by developing new components. Given the vast market potential and significant cost advantage compared to peers across various geographies, it believes that Azad is at a vantage point.
Additionally, the new 95,000m2 facility would ensure that management can capture and commercialise new opportunities more efficiently. Furthermore, increasing its footprint in defence and aerospace and O&G segments is likely to mitigate the product concentration risk to an extent, it said.
It also believes that Azad’s earnings are likely to see an extended period of meaningful growth led by tailwinds from the new contracts. Taking cognizance of the higher possibility of our estimates being achieved, it has raised the valuation multiple to 80x(earlier 70x).
Azad Engineering Debut on D-Street
Shares of Azad Engineering Ltd made a strong debut at Dalal Street as the manufacturer of aerospace components and turbines debuted at Rs 720, a premium of 37.40 per cent, at the National Stock Exchange (NSE), against the issue price of Rs 524 apiece. The scrip was listed at a premium of 35.50 per cent at Rs 710 on the BSE.
Sachin Tendulkar-backed Azad Engineering offered its shares in the fixed price band of Rs 499-524 apiece with a lot size of 28 equity shares between December 20 to December 22. The company raised a total of Rs 740 crore via IPO, including a fresh share sale of Rs 240 crore and an offer-for-sale (OFS) of up to 95,41,985 equity shares.
About Azad Engineering
Azad Engineering, which was incorporated in 1983, is a manufacturer of aerospace components and turbines. The company supplies its products to original equipment manufacturers (OEMs) in the aerospace, defense, energy, and oil and gas industries. Azad Engineering's products are highly engineered, complex, mission-critical and vital.
Legendary cricketer Sachin Ramesh Tendulkar invested about Rs 5 crore in the company in March 2023. He picked up 14,607 equity shares at a price of Rs 3,423 in the company, which were later turned in to 3,65,175 equity shares post stock split and bonus issue, as per the RHP of the company. The average price of Sachin's holding came out to Rs 136.92 apiece.
Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.