Azad Engineering (AZAD) Q1 24/25 earnings summary

Executive summary

• Achieved record quarterly revenue of Rs. 984.1 Mn in Q1FY25, up 29.6% year-over-year, with PAT more than doubling to Rs. 171.3 Mn, driven by reduced finance costs post-IPO and robust order book supported by major multi-year contracts with Siemens Energy, GTRE-DRDO, Rolls-Royce, Baker Hughes, and GE Vernova.

• Aerospace & Defence segment revenue more than tripled year-over-year, driven by new domestic orders and commercial production in Oil & Gas.

• Strategic acquisitions and vertical integration, including Leo Primecomp and Azad VTC, expand manufacturing capabilities and reduce reliance on external special process vendors.

• Transitioning from component manufacturing to full engine assembly, marking a significant move into propulsion systems for defense applications.

• Unaudited standalone and consolidated financial results for the quarter ended June 30, 2024, were approved and reviewed without qualification by auditors.

Financial highlights

• Q1FY25 revenue rose 29.6% to Rs. 984.1 Mn; adjusted EBITDA increased 28.8% to Rs. 339.2 Mn; PAT surged 131.5% to Rs. 171.3 Mn year-over-year.

• Adjusted EBITDA margin remained strong at 34.5%; PAT margin improved to 17.4% from 9.7% in Q1FY24.

• Gross margin achieved 70% in Q1 FY25.

• Exports accounted for 90.5% of Q1FY25 revenue.

• Historical CAGR (FY21-24) for revenue at 40.6%, adjusted EBITDA at 46.8%, and PAT at 72.1%.

Outlook and guidance

• Revenue growth guidance reaffirmed at 25%-30% for FY25, with expectations to sustain this rate long-term.

• EBITDA margin guidance maintained at 33%-36%, depending on product and sector mix.

• Upcoming capacity expansion to meet growing demand in energy, aerospace, and oil & gas sectors, with incremental revenue contribution expected from FY26.