Azad Engineering Limited

Azad Engineering reported a robust Q4 FY25 with standalone revenue growing 34.2% YoY to INR 125 crores. EBITDA for the quarter stood at INR 45 crores, with margin improving to 36.5% from 33.8%. Net profit surged 74.4% YoY to INR 26 crores. For the full year FY25, revenue from operations increased 32.9% YoY to INR 453 crores, and PAT reached INR 89 crores, marking a 51.5% growth compared to FY24. The company achieved its highest ever full-year EBITDA margin of 35.5%.

The company successfully diversified its revenue streams, with the Aerospace & Defense segment revenue increasing to INR 80.7 crores in FY25 from INR 43.8 crores in FY24. The Oil & Gas segment also saw growth, reaching INR 13 crores in FY25 from INR 4.4 crores last year. New orders were secured from global OEMs such as GE Vernova, Mitsubishi, Baker Hughes, and Rolls-Royce Defense, contributing to a current order book exceeding INR 6,000 crores, which is spread across 3, 5, and 6-year contracts.

Azad Engineering has taken bold steps to expand capacity, with a new lean manufacturing facility for Mitsubishi Heavy Industries and another for GE Vernova becoming operational in Q1 FY26. These facilities are part of a mega-factory vision, with dedicated spaces for key clients. The company is building 95,000 square meters in Phase 1 and plans for another 70,000-75,000 square meters in Phase 2. The aim is to reach an optimum utilization of 70-plus percent in the new facilities by the end of FY26.

A Qualified Institutional Placement (QIP) of INR 700 crores was completed in February, strengthening the company's balance sheet and providing a strong liquidity system of INR 656 crores. Gross debt for FY25 was around INR 243 crores, resulting in a net debt position of negative INR 412 crores (gross debt minus cash and bank balance). The net debt to EBITDA ratio is approximately 1.5x, which is within the company's long-term guidance, indicating a healthy financial position for future investments.

Management is actively working to optimize working capital, with inventory days reducing significantly from 246 in FY24 to 155 in FY25. The company aims to achieve a cash-to-cash conversion cycle of 170-180 days by the end of FY26. This improvement is expected to be driven by the scaling of revenues in newer verticals and better control over inventory for new contracts, ensuring efficient cash flow management.

Azad Engineering anticipates approximately 30%-plus revenue growth for FY26, supported by its robust order pipeline, operational readiness, and sharp strategic focus. EBITDA margins are expected to be maintained at FY25 levels (around 35.5%). The long-term strategy involves scaling with precision, investing with intent, and growing with agility, with a target revenue mix of 55-60% from energy and 35-40% from aerospace, defense, and oil & gas in the next few years.