Defence stock to buy now for an upside of more than 40%; Do you own it?

A leading precision engineering firm stands poised for significant growth, backed by a major securities firm’s optimistic outlook. With a substantial upside potential and strategic positioning to capitalise on government defence orders worth Rs 21,100 crore, alongside opportunities in indigenous manufacturing, the company’s future appears promising for investors seeking exposure to India’s defence sector.

Share Price Movement 

The share price of Azad Engineering Limited went up by 1.25 percent to Rs. 1,679.9 per share on Monday, an increase from its previous close of Rs. 1,659.1 per share. The market capitalisation now stands at approximately Rs. 9,894.04 crore as of December 23, 2024.

What Happened 

ICICI Securities maintains a ‘Buy’ rating on Azad Engineering with a target price of Rs 2,450 and an upside of 43%, representing a significant upside from Friday’s market price of Rs 1,704.55. The brokerage’s bullish stance is underpinned by Azad’s potential to benefit from recent defence sector developments, particularly the Cabinet Committee of Security’s approval of orders worth Rs 21,100 crore.

The company’s strong positioning in engineering components and its capacity to participate in the growing indigenisation of defence platforms, including the Su-30MKI and K-9 Vajra programs, support this optimistic outlook.

Q2 Financial Highlights

According to its recent filing, in the quarter ending September 2024, Azad Engineering’s consolidated revenue from operations has increased by 35 percent YOY from Rs. 83 crore in Q2 FY24 to Rs. 112 crore in Q2 FY25 and increased by 14.3 percent QoQ from Rs. 98 crore in Q4 FY24. 

The company’s consolidated net profit has increased by 10.5 percent, from Rs. 19 crore in Q2 FY24 to Rs. 21 crore in Q2 FY25. As compared to the last quarter of 2025, the company’s net profit has increased by 23.5 percent QoQ from Rs. 17 crore.

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Market Outlook 

The global aerospace and defence (A&D) industry is evolving rapidly in 2024, with robust growth in both commercial and defence segments. Civil aviation is recovering post-pandemic, surpassing pre-pandemic levels, while defence budgets rise due to geopolitical tensions.

Innovations in advanced materials, automation, and digital technologies are driving efficiency and sustainability. Despite growth, the industry faces challenges, including cybersecurity risks and supply chain disruptions. Companies are enhancing resilience, adopting AI and digital twins, and prioritising sustainability to seize emerging opportunities.

Shareholding Pattern

As of the September 2024 shareholding pattern, Azad Engineering Limited is primarily held by the promoters at 65.9 percent, foreign institutional investors hold 9.74 percent, and the public with 18.61 percent.

About Company 

Azad Engineering Limited, based in Hyderabad, Telangana, has established itself as a leading manufacturer of high-precision components since its inception in 1983. With a workforce of over 1,200 skilled professionals, the company caters to critical sectors like aerospace, defence, energy, and oil and gas. Its unwavering commitment to quality and innovation has earned it a trusted reputation among global original equipment manufacturers (OEMs).  

The company specialises in crafting mission-critical components for commercial and military aircraft, defence systems, and energy applications. Products include airfoils, engine components, missile parts, and equipment for nuclear and thermal power plants. Leveraging advanced techniques like CNC precision machining, forging, and rigorous testing, Azad ensures top-notch quality and reliability. Clients rely on its adherence to international standards and robust engineering capabilities.  

Azad Engineering’s strong focus on innovation and global standards cements its position in competitive industries. The company’s dedication to excellence continues to propel its growth and influence worldwide.

Written By Fazal Ul Vahab C H

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