Azad Engineering Limited — Q1 FY26 earnings call

So if you talk about the Azad's competition, it's in China, Europe, Japan, America and Korea, right? These are our competitions. Now if the business has come, so I can give you an idea from China, we are 20%, 25% competitive. From Europe, and Japan, we are around -- Europe, we are around 30%, 35%. Japan, we are 40%, 45% and similar to the global levels where we compete them. So today, if we talk about the closest competition, that's China, okay? Now we are 25% already very we are competing them. And China has a 30% tariff. India has a 25% tariff. So the situation doesn't change for Azad. It remains the same for the customer. So still, we are the only option, again, no matter if another tariff goes up by 10%, 15%, it will not matter us, right?

Management clarified that tariffs (e.g., 25% in India) do not impact their competitiveness or margins due to their already significant cost advantage over global competitors, including China.

Asked by Karan

So if you look at the overall deployment, we should be deploying anywhere between INR250 crores to INR300 crores towards creating capacity. Now when you look at a INR300 crore investment, I would suggest that with an asset turn of roughly about 1.8, we should be able to generate INR550 crores of incremental revenue, right? Now we had already delivered INR450 crores. So this should be good to go to take us to about INR1,000 crores.

Management provided a clear projection of incremental revenue (INR550 crores) from the capex, indicating strong future growth potential and asset utilization.

Asked by Aditya Bhartia

So just for information, the contracts which are signed have already covered these both aspects, right? Here, we are saying 25%, 30% growth, consistent growth with high margins, right? So these are already captured, covered, signed off. So that's a good news for everyone, right?

Management confirmed that their current contracts are structured to deliver both high growth (25-30%) and consistent high margins, addressing concerns about a potential trade-off.

Asked by Jayesh Shah

So I'd just like to slightly correct you. So we're not just an aerospace company, we are an energy, aerospace, defense, oil and gas. So we focus on each of these sectors equally. So that one, and we are adding a lot of products. So if you look at the way we are diversifying our business in product, 4 years ago, 90% of our product was airfoils in energy. So today, that business is about 75%. 25% in energy, we have diversified. Aerospace and defense, we are adding a lot of new products. Components, like we said in our previous call, we are also working on nation-pride contracts where we are looking at manufacturing and engine end-to-end.

Management clarified their broad sector focus and significant product diversification efforts, moving from a heavy reliance on energy airfoils to a more balanced portfolio including defense and engine end-to-end manufacturing.

Asked by Rakesh Roy

No, I think that's a wrong statement because if we were not taking orders, we wouldn't our order book to sales wouldn't be 8 to 9x what it is today, right? So we've always been pro at taking orders. But at the same time, this is an industry where our commitment is valued. So we do not go ahead and do it if we see challenges in terms of delivery. So we've always been supportive of taking newer orders, growing in newer segments with our customers.

Management refuted the idea of capacity constraints hindering order intake, emphasizing their proactive approach to securing orders while ensuring delivery commitments, evidenced by their high order book-to-sales ratio.

Asked by Manish Ostwal

So we are looking at developing this entire plant, and all the investments that we would do this year and the next couple of years. We anticipate all of this to get realized over the next 5 to 6 years.

Management provided a clear long-term timeline for the execution of the substantial order book and associated investments, giving investors visibility into future revenue streams.

Asked by Maitri Shah

Good question. But again, what we have been telling is we operate in niche. So that's exactly when we say it's niche, everything is mission backed, right? And when we say we are the only one company for major of the components manufacturing in the country, that means there is nothing called what every -- it's not a normal business. They are 3D components, 3-dimensional components, right? So it's not easy to manufacture them. And it's more of a process engineering what we do on the floor, and this is where we generate the margins from.

Management explained that their high margins stem from their focus on niche, mission-critical, complex 3D components that require specialized process engineering, differentiating them from typical build-to-print companies.

Asked by Nitiksha