Detailed Narrative
Strong Q4 and Full-Year FY26 Financial Performance
Azad Engineering delivered robust financial results for Q4 FY26, with revenue growing 26.4% YoY to INR157 crores. EBITDA margin improved to 36.7% from 36.5% in Q4 FY25, and PAT margins expanded to 22.3% from 20.9%. For the full year FY26, revenue increased over 30% to INR590 crores, with a consolidated PAT of INR134 crores, marking a 54.4% YoY growth. The consistency in growth and profitability reflects strong execution across all business segments.
Capacity Expansion and Strategic Customer Integration
The company successfully inaugurated four dedicated lean manufacturing facilities for marquee global customers, with two commissioned in FY26 and one for Baker Hughes in April 2026. This infrastructure build-out is approximately 70-80% complete, with the remaining plants expected to be commissioned by the end of FY27. This expansion is crucial for converting qualifications into revenue and supporting the next phase of growth.
Significant Order Book and New Contract Wins
Azad Engineering maintains a strong order book of approximately INR6,500 crores as of FY26 end, representing 11-12x its FY26 revenue. This order book is expected to be consumed over the next 5-6 years. A key highlight was securing an 8-year single-source supplier contract with Mitsubishi Heavy Industries Japan for highly engineered hot section Nozzle Vanes segments, a testament to the company's technical and process capabilities.
Segmental Growth and Diversification
The Energy and Oil & Gas segment remained the largest contributor, accounting for 81.5% of FY26 revenue at INR481 crores, growing over 34% YoY. The Aerospace & Defence segment contributed INR101 crores, representing 17.2% of revenue with 25% YoY growth. The company is actively diversifying, with Oil & Gas expected to add material numbers in FY27 and potentially breach INR100 crores in the next couple of years, reducing reliance on any single segment.
Capital Allocation and Working Capital Management
In FY26, the company capitalized assets worth INR392 crores and recorded INR191 crores in CWIP and capital advance. Total gross borrowing stood at INR457 crores, with net debt at INR272 crores. The treasury balance is INR184 crores, including INR160 crores from QIP proceeds. Management is focused on normalizing the working capital cycle in FY27, aiming to reduce inventory days to closer to 200 in H1 and 160-170 in H2, which is currently elevated due to strategic buildup for ramp-up.
Outlook and Strategic Focus for FY27
Management projects a '25% plus' top-line growth for FY27 and on a multiyear basis, while maintaining EBITDA margins in the '33% to 35% plus' range. Key priorities for FY27 include ramping up the four newly capitalized plants, commissioning the remaining plants under construction, deepening customer relationships, and normalizing the working capital cycle. The company continues to invest in capabilities, capacity, people, and systems to sustain its growth trajectory.