Azad Engineering IPO


Azad Engineering IPO

10 things to know before subscribing to 740 crores issue

Azad Engineering IPO – Rs.740 crore issue is a combination of fresh shares and OFS.

Azad Engineering Ltd’s IPO will open for subscription on December 20.

In the 740 crore issue, the company raised Rs. 240 crore fresh shares and through existing shareholders Rs. 500 crore worth of shares are offered for sale.

Here are the 10 most important things to know before subscribing to an offer:

1. Company profile

Azad Engineering Limited is established in 1983 it’s a manufacturer of aerospace components and turbines.

The company supplies their products to original equipment manufacturers (OEMs) in the aerospace, defence, energy, oil and gas industries.

In the company there are four manufacturing facilities in Hyderabad, India.

2. Lead Managers

SBI Capital Markets Ltd, Axis Capital Ltd, ICICI Securities Ltd and Anand Rathi Securities Ltd are the book – running lead managers of the Azad Engineering IPO, while Kfin Technologies Ltd is the registrars of the issue.

3. Risks

i. The Company is dependent on third party suppliers for raw materials, plant, machinery and components. Such suppliers cannot fulfil the obligations immediately.

Any such delay could adversely affect the business, results of operations, financial condition, cash flows and prospects.

ii. Some of its manufacturing facilities, including registered and corporate offices, and offices are located on land parcels that Azad does not own and operate on a lease basis.

The Company’s inability to renew such lease rights may affect its operations, financial condition and cash flows.

iii. The company has operated manufacturing facilities in the past without obtaining necessary government approvals.

These manufacturing facilities are subject to risks of not obtaining required regulatory approvals in a timely manner or at all and Azad may face regulatory actions in the future.

4. IPO Dates

The IPO will be open for subscription on December 20, 2023 and closes on December 22, 2023.

5. Offer Details

The company plans to raise Rs 740 crore through the IPO. Promoter Rakesh Chopdar Rs. 204.97 crore worth of shares will be off loaded and investor Piramal Structured Credit Opportunities Fund will invest Rs. 260.85 crore shares will be sold.

Another selling shareholder is DMI Finance in OFS for Rs. 34.18 crore shares will be sold.

The public offer includes reservation of shares worth Rs 4 crore to the employees of the company.

An offer excluding the employee’s reservation portion is a net offer.

6. Lot Size

Investors can bid for a minimum of 28 equity shares and 18 multiples thereafter.

Hence the minimum investment for retail investors is Rs. 13,972 (28 (Lot Size) x 499 (Lower Price Band)).

At the upper end, the bidding amount rises to Rs.14,672.

7. Price band

The issue of the price band has been fixed at Rs.499-524 per share.

8. Objectives of the issue

In the latest issue proceeds, the company will spend Rs. 60.4 crores and Rs. 138.19 crores will repay the loans.

By September 2023, its borrowings will be Rs. 154.2 crores and the rest is used for general corporate purposes.

9. Financials

Azad Engineering faced financial volatility with a 71.2 per cent decline in net profit for the quarter ended March FY23 to Rs. 8.5 crores.

Weak operating margin and elevated finance costs contributed to this decline.

However, income from operations grew by 29.4 percent to Rs 251.7 crore during the same period.

EBITDA increased by 16 percent to Rs. 72.3 crore, but the margin declined by 330 basis points to settle at 28.7 percent compared to last fiscal.

10. Listing Date

Azad Engineering’s IPO tentative listing date on BSE and NSE is set for Thursday, December 28, 2023.

Azad Engineering IPO

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