The Azad Engineering IPO has commenced, with the public issue earmarking up to 50% of shares for qualified institutional buyers (QIB), a minimum of 15% for non-institutional investors (NII), and at least 35% for retail investors. Additionally, equity shares totaling up to ₹4 crores have been reserved for employees.
Azad Engineering IPO Overview:
The IPO consists of a fresh issue of shares amounting to ₹240 crore and an offer for sale (OFS) of up to ₹500 crore by promoters and other selling shareholders. The total issue size is ₹740 crore. Azad Engineering Limited specializes in producing turbines and parts for aircraft, serving original equipment manufacturers (OEMs) in sectors such as oil and gas, aerospace, defense, and energy.
As per the red herring prospectus (RHP), Azad Engineering’s listed industry peers include MTAR Technologies Limited, Paras Defence and Space Technologies Limited, Dynamatic Technologies Limited, and Triveni Turbine Limited, each with their respective price-to-earnings ratios (P/E).
Important IPO Dates:
The basis of allotment of shares is tentatively set to be finalized on Tuesday, December 26, with refunds commencing on Wednesday, December 27. Share credits to the demat accounts of allottees are also expected on the same day, and Azad Engineering shares are projected to be listed on BSE and NSE on Thursday, December 28, adhering to the T+3 listing norm effective December 1, 2023.
Grey Market Premium (GMP):
The Grey Market Premium for Azad Engineering IPO today stands at +440, indicating a premium of ₹440 in the grey market. Based on the upper end of the IPO price band and the current grey market premium, the estimated listing price of Azad Engineering shares is ₹964 apiece, reflecting an 83.97% increase over the IPO price of ₹524.
Analyst Recommendations:
According to the brokerage report, Azad Engineering faces high entry barriers due to demanding qualification procedures from OEMs. The company boasts a solid track record, a robust business plan, and experienced management that has yielded positive results. Despite a high valuation of 292.7x P/E compared to peers, the brokerage recommends subscribing to the IPO for potential listing gains.
Nirmal Bang, in its analysis, emphasizes Azad’s significant efforts over the past 15 years in developing and registering 1400 components, positioning it for revenue growth. The company’s superior growth, return ratios, and positive outlook lead the brokerage to recommend subscribing to the IPO.
As the IPO opens for subscription, market participants are closely watching the developments, considering Azad Engineering’s potential in a niche market with promising growth prospects.
