Azad Engineering, a leading manufacturer of mission critical precision components, made a strong stock market debut on Thursday, listing at a huge premium of over 37% on both BSE and NSE.
The company’s initial public offering (IPO) last week was subscribed over 176 times by investors, indicating strong demand for the stock.
Azad Engineering IPO Listing Details:
- On BSE, the stock listed at ₹710 per share, a massive 37.5% premium to the issue price of ₹525 per share.
- On NSE, it debuted at ₹720 apiece, marking a premium of 37.14% over the issue price.
The stock witnessed some profit booking after a strong opening. It hit an intraday low of ₹701 on both BSE and NSE as investors rushed to book profits.
However, strong buying interest emerged at lower levels which pushed the stock higher again. It recovered to hit an intraday high of ₹727 on NSE and ₹727.50 on BSE.
At 12:30 pm, Azad Engineering was trading at ₹712 on BSE and ₹714 on NSE, with market capitalization crossing ₹2,100 crores.
Azad Engineering Background:
Incorporated in 2008, Azad Engineering is a leading manufacturer of mission critical and specialised precision components for the aerospace, defense, and space sectors.
The company has five manufacturing facilities in India and one in Germany. It serves customers across Europe, USA, Israel, and India.
Azad Engineering manufactures complex and high-precision components and assemblies using advanced machining processes. Over 80% of the company’s revenues come from exports.
Some of its key customers include GE Aviation, Pratt & Whitney, Collins Aerospace, Rolls Royce, Rafael, Elbit, DRDO, ISRO, BDL, HAL, Boeing, Airbus etc.
Azad Engineering IPO Details:
The initial public offer of Azad Engineering was open for subscription between December 13-15, 2022.
The IPO received a stellar response from investors and was subscribed 176.26 times overall. The portion set aside for qualified institutional buyers (QIBs) saw 203 times subscription, while non-institutional investors bid 184 times the allotted quota. Retail individual investors applied 17.5 times the shares on offer.
The company raised ₹400 crores through the IPO by issuing fresh shares. The net proceeds from the IPO will be utilised for debt repayment, funding working capital requirements, investment in subsidiaries, and general corporate purposes.
Azad Engineering Share Price Outlook:
Market analysts believe Azad Engineering shares have strong prospects given the niche and critical nature of the products manufactured by the company.
Prashant Tapse, Senior VP at Mehta Equities, advises allottees to hold the stock from a long-term perspective of 3-5 years.
He believes Azad Engineering would command a higher valuation multiple going ahead, given its niche product profile catering to critical aerospace and defense applications. The company also enjoys a superior margin profile with around 80% exports.
Arun Kejriwal, Founder at Kejriwal Research, advises short-term investors who applied for listing gains to book profits at current levels as they already got 40% returns.
However, long-term investors can continue holding the stock while maintaining a stop-loss below ₹701. The stock has potential for more upside once it breaches Thursday’s high of ₹727, he adds.
In summary, Azad Engineering has made a remarkable debut on Dalal Street, rewarding its IPO investors handsomely. While some profit booking can be expected at higher levels, the long-term growth prospects remain intact. Investors would watch how the company delivers on its future plans using the IPO proceeds.