₹6,000 Cr Orderbook: Defence stock with 30% revenue guidance for FY26 to add to your watchlist

Synopsis:
Azad Engineering Ltd. expects strong growth in FY26, supported by new capacities, a healthy order book, and planned expansion, reflecting confidence in its business momentum and profitability.

A manufacturer of aerospace components and turbines is in the spotlight today following the announcement of its revenue and capex guidance for FY26. The article below provides a detailed overview of the company’s future outlook.

With a market capitalization of Rs. 9,868.09 crore, the shares of Azad Engineering Ltd closed at Rs. 1,528 on Friday, down by 0.86 percent from its previous closing price of Rs. 1,541.30 per equity share.

What’s the News?

The company’s management remains optimistic, anticipating strong revenue growth aided by new capacity. A robust order book and planned capex provide long-term visibility, while consistent EBITDA margins demonstrate confidence in maintaining business momentum.

Revenue Guidance

Management maintained its FY26 revenue growth outlook at 25–30 percent and expects to outperform this target with the stabilization of new capacities.

Order Guidance

The company has an order book of approximately Rs. 6,000 crore, which is expected to be realized over the next 5-6 years, ensuring strong revenue visibility across segments. The order book includes ~Rs. 3,400 crore from Energy, ~Rs. 1,700 crore from Aerospace & Defense, and ~Rs. 850 crore from Oil & Gas. 

CAPEX Guidance

The company has already opened two dedicated lean factories in March and April 2025, and plans to expand to eight facilities, including a cutting-edge forging plant in Tuniki Bollaram, Hyderabad, over the next 12-18 months.

For FY26, it has guided for Rs. 450 crore in capex, with Rs. 250-300 crore allocated to capacity creation. With an asset turn of 1.8x, this investment is expected to generate ~Rs. 550 crore in additional revenue, bringing the total incremental potential to ~Rs. 1,000 crore. The projected depreciation for FY26 is Rs. 48 crore due to asset ramp-up.

EBITDA GUIDANCE

The company reported EBITDA of Rs. 48.5 crore for the quarter, up 46.8 percent year-on-year from Rs. 33 crore in Q1 FY25. It maintained its EBITDA margin guidance at 33–35 percent, depending on product and segment mix.

About the Company

Azad Engineering Ltd. is a highly specialized manufacturer of complex, mission- and life-critical components for industries that require high quality and regulatory compliance. With 15 years of operational experience, the company has established itself as a Tier 1 supplier, exporting to 12 countries and accounting for approximately 92 percent of total revenue in FY25. 

Azad has a large operational manufacturing area of approximately 20,000 square meters, with another 94,899 square meters under development. The company runs 45+ qualified manufacturing processes and employs approximately 1,700 qualified parts and components.

The company has strong, long-lasting relationships over 10 years with major clients like Honeywell International, Baker Hughes, Eaton Aerospace, Rolls Royce, Siemens Energy, MAN Energy Solutions, GE Vernova, and Mitsubishi Heavy Industries.

Financial Outlook

Azad Engineering Ltd reported Rs. 137.09 crore in revenue for the first quarter of FY26, an increase of 39.30 percent over the Rs. 98.41 crore for the same period in FY25. However, from Rs. 126.93 crore in Q4 FY25, revenue increased by 8 percent sequentially.

The consolidated net profit for the first quarter of FY26 was Rs. 29.43 crore, which was 18.62 percent higher than the Rs. 24.81 crore reported in the previous quarter and 71.90 percent higher year over year than the Rs. 17.12 crore in Q1 FY25.

At the moment, the company’s P/E stands at 98x higher than the industry average of 46.3x. The ROE and ROCE of 8.58 percent and 12.2 percent respectively, indicates the company’s financial performance. Its Debt to Equity ratio stands at 0.18.

Written by Akshay Sanghavi

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