Azad Engineering IPO: Price Band Set, Aims to Raise Rs 740 Crore

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Hyderabad-based Azad Engineering, a 15-year-old company, announced the price band for its initial public offering (IPO) on Friday, December 15. The price band has been set at Rs 499-524, aiming to raise Rs 740 crore from the market. At the upper end of the price band, the company will be valued at close to Rs 3,000 crore.

Offer Details

The IPO comprises Rs 500 crore of Offer For Sale (OFS) component by promoters and external investors, who will completely exit the company. The remaining Rs 240 crore will be raised through a fresh issue of shares. Chairman and Managing Director Rakesh Chopdar shared the details of the OFS component, highlighting that external investors like Piramal Structured Credit Opportunities Fund and DMI Finance will be selling their shares.

Utilization of Proceeds

The company plans to utilize the proceeds from the IPO for various purposes. A significant portion will be allocated to capital expenditure for its Rs 280 crore expansion, which includes setting up two new units by the end of the next fiscal year. Additionally, the company aims to repay or pre-pay debt of around Rs 90 crore.

Investor Base

Even after the IPO, Azad Engineering will continue to have external investors in the form of High Networth Individuals (HNIs), including renowned sports stars such as Sachin Tendulkar, P V Sindhu, and Saina Nehwal. Together, these HNIs and the company's employees will own approximately 12% of the firm.

Financial Performance

Azad Engineering primarily generates revenue from exports to 15 global markets, contributing over 80% of its total revenue. In the financial year 2021 (FY21), the company reported a topline of Rs 122.7 crore with a net income of Rs 37 crore. The revenue grew to Rs 194 crore and net income to Rs 42 crore in FY22. In the last fiscal year, the company's revenue further increased to Rs 251 crore, while net income reached Rs 79 crore. For the first six months of the current fiscal year, the top line stood at Rs 158 crore and the bottom line at Rs 29 crore.

Global Clientele

In the energy sector, Azad Engineering boasts an impressive clientele of international companies, including Siemens, GE, Honeywell, Mitsubishi, Eaton, and Mann.

Azad Engineering's IPO is set to open on December 20, offering investors an opportunity to participate in the growth of a well-established company with a strong presence in the global energy market. The company's focus on expansion and debt reduction, coupled with its diverse investor base and experienced management team, positions it for continued success in the future.