Azad Engineering IPO fully subscribed, HNI portion booked over 6 times on Day 1

Azad Engineering is a manufacturer of aerospace components and turbines

Azad Engineering’s Rs 74o-crore initial public offering (IPO) was subscribed 3.3 times within hours of opening on December 20, with investors bidding for 3.3 crore shares against the issue size of 1 crore.

The retail portion was booked 3.9 times and high net-worth individuals picked 6.13 times their allotted quota of shares. Qualified institutional buyers have purchased a marginal 5 percent of the portion set aside for them.

The offer, which closes December 22, comprises fresh issues of shares worth Rs 240 crore and an offer for sale (OFS) of shares worth Rs 500 crore by stakeholders.

The price band for the issue has been fixed at Rs 499-524 a share, with a lot size of 28 equity shares and in multiples of 28 thereafter.

Of the fresh issue proceeds, the company will spend Rs 60.4 crore for buying plant and machinery and repaying debt of Rs 138.19 crore, the offer document said. The company’s borrowings stood at Rs 154.2 crore in the September quarter. The remaining funds will be used for general corporate purposes.

Azad Engineering’s net profit declined 71.2 percent from the previous year to Rs 8.5 crore in FY23. This decline was attributed to a weak operating margin and elevated finance costs.

Revenue from operations, however, grew 29.4 percent to Rs 251.7 crore. EBITDA was up 16 percent to Rs 72.3 crore but the margin dropped 330 basis points.

One basis point is one-hundredth of a percentage point.

Axis Capital Limited, ICICI Securities Limited, SBI Capital Markets Limited and Anand Rathi Securities Limited are the lead managers to the IPO, while Kfin Technologies Limited is the registrar.

Incorporated in 1983, Azad Engineering Limited is a manufacturer of aerospace components and turbines.

The company supplies its products to original equipment manufacturers in the aerospace, defence, energy, and oil and gas industries. The company has four manufacturing facilities in Hyderabad, Telangana.