Azad Engineering Limited — Q3 FY26 earnings call

Call held 14 Feb 2026

Management summary

Azad Engineering delivered a strong Q3 FY26, with revenue growing over 31% YoY to INR155.8 crores and PAT increasing over 40% to INR34 crores. The company's 9-month profitability has already surpassed FY25 levels, driven by disciplined execution and stable margins. While FY26 is a stabilization year for new capacities, the order book remains robust at over INR6,500 crores, and management is confident in achieving 25%+ revenue growth with 33-35% EBITDA margins from FY27 onwards.

Highlights

  • Q3 FY26 Revenue of INR155.8 crores, registering growth of over 31% year-on-year.

  • Q3 FY26 EBITDA stood at INR60.1 crores, registering growth of over 40.7% year-on-year, with EBITDA margin at 38%.

  • Q3 FY26 PAT was INR34 crores, registering growth of over 40.1% year-on-year.

  • 9M FY26 PAT grew by 55% year-on-year, significantly outpaced revenue growth and already exceeded the full year of FY25 level.

  • Order book remains strong at over INR6,500 crores plus, providing multiyear revenue visibility.

Concerns

  • FY26 is a transition year focused on stabilization, with full operating leverage benefits and maximum capacity utilization not expected until FY27 and FY28 respectively.

  • The process of building massive, world-class facilities and managing simultaneous operations, commissioning, and training is complex and requires time.

  • Growth guidance is conservatively set at 25%+ for coming years, despite historical 30%+ growth, due to the complexities of capacity ramp-up and validation.

Key financials

2 periods

Headline

  • Revenue
    ₹155.8 Cr
    YoY +31%
  • EBITDA
    ₹60.1 Cr
    YoY +40.7% QoQ +16.9%
  • PAT
    ₹34 Cr
    YoY +40.1%
  • EBITDA Margin
    38%

9M

  • Revenue Growth
    —
    YoY +32%
  • EBITDA Growth
    —
    YoY +38.4%
  • PAT Growth
    —
    YoY +55%

What they filed

Q1 FY27: revenue up 26.7%, net profit up 20.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue111 119 125 135 143 +29%156 +31%157 +26%171 +27%
EBITDA40 43 45 49 51 +28%60 +40%58 +29%64 +31%
Net profit21 24 26 30 33 +57%34 +42%35 +35%36 +20%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

high confidence

Total value

₹6,500 Cr

as of 2025-12-31 quantified

Execution

multiyear revenue visibility

Order book remains strong, consistently growing, and provides multiyear revenue visibility, reflecting increasing trust from global OEMs.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex Capex disclosed largely through QIP proceeds
    • Infrastructure development ₹200 Cr
    • Plant and machinery deployment ₹450 Cr
    • Ancillary deployment and installation costs (part of general corporate expenses) ₹100 Cr
    Our guidance to the market has always been that we are investing roughly about INR200 odd crores in infrastructure, INR200 crores to INR250 crores in infrastructure and the balance INR450 odd crores to INR500 crores will be deployed towards actual plant and machinery. Right? Which will be leading towards an output. ... capitalized plant and the machinery as we have mentioned that we have capitalized MHI, GE and Siemens plant during the last nine month which amount to around INR250 crores on the plant and machineries side. ... that required around 15% 10% to 15% has to be deployed toward the ancillary which required your installation cost and all those things which amount to around INR100 crores, INR150 crores.
  • Debt Debt disclosed
    • Repayment Debt reduction from IPO proceeds ₹180 Cr
    see we raised INR240 crores in IPO but out of that INR180 crores were towards debt reduction. ... balance has gone toward the long-term working capital and few of the machines which are not part of the QIP we have funded debt.

Guidance & targets

Revenue

  • Revenue Growth Revenue · over the coming years (from FY27 onwards) · High confidence 25%+ revenue growth
    On the growth outlook, based on plant readiness, secured order book and customer demand visibility, we remain confident of achieving 25% plus revenue growth over the coming years.

    — Rakesh Chopdar

Profitability

  • EBITDA Margin Profitability · over the coming years (from FY27 onwards) · High confidence 33% to 35%
    As utilization level improve from FY '27 onwards, we remain confident our long-term EBITDA margin profile is in the range of 33% to 35% is sustainable over a longest period of time.

    — Ronak Jajoo

Capacity

  • Operating Levels Capacity · by FY '27 · High confidence stable operating levels
    We expect stable operating levels by FY '27 and maximum utilization starts by FY '28.

    — Rakesh Chopdar

  • Maximum Utilization Capacity · by FY '28 · High confidence maximum utilization

    — Rakesh Chopdar

Product Development

  • Small Engine Delivery Product Development · in a couple of months · Medium confidence positioned to deliver the engine
    We are planning very soon. I mean, a couple of months, I think we should be able to be positioned to deliver the engine.

    — Rakesh Chopdar

What to watch in Q4 FY26

Small Engine Delivery Status

Q1 FY27
Current 70-75% complete, planning to deliver in a couple of months
Target Successful delivery and further news in Q1

Why it matters

Successful delivery of the indigenous jet engine could unlock substantial new business as an import substitute.

We are planning very soon. I mean, a couple of months, I think we should be able to be positioned to deliver the engine. ... Maybe in Q1, we can give you more good news on the engines...

Risks & concerns

  • Capacity stabilization and ramp-up delays

    medium

    FY26 is a transition year for new capacities, with stable operating levels by FY27 and maximum utilization by FY28, implying a slower realization of operating leverage.

    Management acknowledged

  • Complexity of building world-class manufacturing facilities

    medium

    Building massive, world-class factories with stringent validation, certification, and customer audits is complex and time-consuming, requiring disciplined execution.

    Management acknowledged

  • Non-linear growth in the industry

    low

    The industry does not experience linear growth; it requires significant time for infrastructure stabilization and qualifications before full execution of contracts.

    Management acknowledged

Q&A highlights

7 direct
Timeline for new capacity stabilization and utilization Direct
So that's what we mentioned like it will be done by FY '26 stabilization. And FY '27, we can see that we can we can stabilize the operations and maximum utilization will start by FY '28. So it's a process. It's a process that we all have to follow.

Clarifies the phased ramp-up of new facilities and when full benefits are expected, impacting near-term operating leverage.

Asked by Vikash Singh

Impact of US-India trade deal and Safran engagement on business Direct
So in that angle, there's no effect before, there is no effect after. However, the customers at ease, they are more happy that, "Okay, we don't have to pay the tariff and we are back on track with Azad." So that is where the best part what having is happy environment.

Addresses concerns about tariffs and confirms that while the trade deal improves customer sentiment, it doesn't fundamentally alter Azad's business due to the essential nature of its products.

Asked by Amit Dixit

Explanation of INR156 crores in general corporate expenses Direct
So where as Vishnu mentioned that we are deploying around INR450 crores, INR500 crores in plant and machinery, that required around 15% 10% to 15% has to be deployed toward the ancillary which required your installation cost and all those things which amount to around INR100 crores, INR150 crores. Out of INR250 crores, INR100 crores, INR150 crores has gone toward the debt to stabilization debt and balance has gone toward the long-term working capital and few of the machines which are not part of the QIP we have funded debt.

Provides a detailed breakdown of a significant expense item, clarifying its allocation towards expansion-related costs, debt stabilization, and working capital.

Asked by Manish Ostwal

Conservative 25%+ revenue growth guidance vs. historical 30%+ Direct
As I mentioned, that stable -- the stabilization is very important, right? So FY '26, I want to stabilize. We want to stabilize Azad. FY '27 is where we start the operating levels... And when it comes to maximum utilization for FY '28, I'll change my statement of the growth.

Reiterates management's cautious approach to growth guidance, emphasizing the current focus on stabilizing new capacities before accelerating growth targets.

Asked by Mulesh Savla

Business potential of the indigenous small jet engine Partial
See, right now, we are not looking at business. Right now, we are looking at to get this engine successful. That's my main focus now. I'm not concerned, because this is the need of the country and we all should be proud of it.

Management defers specific business projections for the indigenous engine, prioritizing its successful development as a strategic national project.

Asked by Mulesh Savla

Aerofoils opportunity, demand, and qualification cycle Direct
The second is, we are aggressively progressing on our aerofoil qualification on the aerospace side as well. In fact, if you see, these developments that are happening with our customers on this side is a testament to the fact that there is progress that's happening and customers are recognizing it.

Confirms aggressive progress in a key growth area (aerofoils) and highlights strong demand from OEMs, indicating future revenue potential from the aerospace segment.

Asked by Gaurav

Working capital days and their improvement timeline Direct
On the working capital side, H1 as I mentioned that we are targeting around 190 to 200 days. ... But right now, it's still on the sustainable basis what we have seen in the historical periods. ... you will see the first milestone being hit and then it will start reflecting in H2 for the second milestone, and we should be able to do this in our H1 commentary for next year.

Provides insight into working capital management targets and the expected timeline for improvements to become visible in financial reporting.

Asked by Gaurav

Manpower hiring strategy for scaling infrastructure Direct
we've built an execution engine today where we are able to source about 150 to 200 people per month. We have created a training center internally and a program where we are able to in about 50 days, we're able to put a person on the training program and deploy them on the shop floor.

Details the company's proactive approach to addressing manpower needs for rapid capacity expansion, mitigating a potential bottleneck for growth.

Asked by Vinayak Kariwal

3 min read 7 chapters

Detailed narrative

Robust Q3 and 9M FY26 Financial Performance

Azad Engineering delivered strong financial results for Q3 FY26, with revenue growing over 31% YoY to INR155.8 crores and EBITDA increasing over 40.7% to INR60.1 crores, maintaining a healthy 38% margin. Profit after tax also saw significant growth of over 40.1% to INR34 crores. For the 9-month period, revenue grew nearly 32% YoY, and PAT surged by 55% YoY, significantly outpacing revenue growth and exceeding the full year FY25 profitability, underscoring the structural strength of the business model.

Strong Order Book and Strategic OEM Engagements

The company's order book remains robust at over INR6,500 crores, providing multiyear revenue visibility and reflecting consistent growth since listing. A key highlight was the progression of contracts with Safran and Pratt & Whitney for critical aerospace components, built on extensive validation. Management emphasized Azad's role as a global supplier, benefiting from increasing trust from global OEMs and expanding wallet share, with energy and oil & gas contributing the majority of revenues while aerospace and defence steadily increase their share.

Capacity Expansion and Stabilization Phase

FY26 is a crucial year for stabilization, with new plants dedicated to GE, Mitsubishi, and Siemens programs now capitalized and undergoing validation. While full capacity utilization is expected by FY28, stable operating levels are anticipated by FY27. The company is strategically building capacity against firm contracts and long-cycle programs, avoiding speculative expansion, and managing the complex process of construction, equipment commissioning, and workforce training with discipline.

Long-term Growth and Profitability Outlook

Azad Engineering is confident in achieving 25%+ revenue growth over the coming years, supported by plant readiness and secured order book. This growth is expected to be accompanied by a sustainable EBITDA margin in the range of 33-35% from FY27 onwards, as operating leverage benefits become more visible with improved capacity utilization. The company's focus remains on profitable growth, ensuring every growth initiative aligns with long-term sustainability and value creation.

Capital Allocation and Funding Strategy

From IPO proceeds, INR180 crores out of INR240 crores were allocated to debt reduction. QIP proceeds of approximately INR700 crores are being deployed for capex, with INR200-250 crores for infrastructure and INR450-500 crores for plant & machinery. Approximately INR250 crores has been capitalized on plant and machinery in the first nine months, with the balance QIP funds to be deployed over the next 1-2 years. The company expects an asset turn of 1.7 to 2 on new machinery, supporting a revenue roadmap towards INR1,500-1,600 crores and beyond.

Manpower Development and Operational Excellence

To support its scaling infrastructure, Azad Engineering is actively building capability by hiring 150-200 skilled personnel per month, including engineers, machinists, and quality professionals. The company has established an internal training center, enabling deployment of trained personnel to the shop floor within 50 days. Operational efforts are focused on strengthening execution, embedding lean principles, improving domestic sourcing for agility, and managing working capital effectively, while maintaining stringent OEM qualification standards.

Indigenous Jet Engine Development and Market Potential

The company is in the final stages of developing India's first 100% indigenous jet engine, currently 70-75% complete, with delivery expected in a couple of months. Management views this project as a matter of national pride and a strategic initiative, with substantial volume potential as an import substitute. While current focus is on successful development, the market for strategic defense drones, UAVs, and anti-ship missiles, where this engine will be used, is considered huge.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Capital Goods earnings calls