Stock to buy: Multibagger Azad Engineering shares jump 8% after Investec initiates coverage with ’buy’, sees 23% upside

Global brokerage firm Investec has initiated coverage on the stock with a ‘buy’ rating and set a target price of 1,850, indicating a potential upside of 23 percent from Tuesday's closing price. Earlier, domestic brokerage ICICI Securities also raised its target price to 2,450 per share.

A Ksheerasagar
Published4 Sep 2024, 03:40 PM IST
Trade Now
Multibagger Azad Engineering stock jumps 8% after Investec initiates coverage with 'buy', sees 23% upside
Multibagger Azad Engineering stock jumps 8% after Investec initiates coverage with ’buy’, sees 23% upside (Pixabay)

Shares of Azad Engineering, a leading manufacturer of aerospace components and turbines, surged 8 percent in today's session, reaching 1,624 per share. The rally followed global brokerage firm Investec's initiation of coverage on the stock with a ‘buy’ rating and a target price of 1,850, indicating a potential upside of 23 percent from Tuesday's closing price.

Investec highlighted that Azad Engineering is the only Indian company providing 3D airfoils to global OEMs, emphasising the high entry barriers within the industry. The brokerage projects Azad's profit after tax (PAT) to grow at a 40 percent CAGR over FY 2024-2027, driven by recent order wins, diversification, and reduced finance costs.

Also Read | HAL, Mazagon, Cochin Shipyard, BDL: Defence PSU share prices surge. Here’s Why

Earlier, domestic brokerage ICICI Securities also raised its target price for Azad Engineering to 2,450 per share, maintaining a 'buy' rating—marking a record target for the stock. It said the company's enhanced cost efficiencies and product quality have led to a larger share of wallets from clients.

“In our view, Azad is on a long runway of significant earnings growth, with significant TAM still available,” said the brokerage.

Steady order wins

Azad Engineering has secured multiple orders in recent months, positioning itself strongly in the market. The company signed a five-year agreement with Siemens Energy Global GmbH & Co to manufacture and supply critical rotating components for advanced gas and thermal turbine engines, meeting their global demand.

Additionally, Azad secured a prestigious national pride contract from the Gas Turbine Research Establishment (GTRE), a leading R&D organisation under DRDO and the Ministry of Defence, Government of India, for the end-to-end manufacturing, assembly, and integration of a complete Advanced Turbo Gas Generator Engine.

Further strengthening its portfolio, the company entered a seven-year contract with Rolls Royce to produce and supply critical engine parts for their defence and military aircraft engines.

Also Read | HPL Electric & Power shares surge 19% to fresh record high on ₹2,100 cr order

Azad also signed a five-year agreement with a subsidiary of Baker Hughes to supply highly complex and critical components for the oil and gas sector, along with another five-year supply agreement to provide medium-to-high-complexity precision machined components for oil field services. The contract is extendable by an additional three-year and one-year term.

In a transformative collaboration, the company also established a contract with GE Vernova's Steam Power business to supply high-complexity rotating airfoils for the nuclear, industrial, and thermal power industries. This phase one agreement is valued at approximately USD 35 million over seven years. These contracts underline Azad's strong market position and growth potential in the industry, as per the company's recent exchange filing. 

Also Read | Stocks to Buy: Multibagger Solar Ind, Azad Eng, Astra- 3 ICICI Sec Defence picks

Robust performance in the June quarter, driven by Aerospace and Defence segment

For the quarter ending in June, the company reported a 29.6 percent year-on-year increase in consolidated revenue from operations, reaching 984.1 million. The Energy and Oil & Gas segment grew by 13.4 percent in Q1 FY25, driven mainly by additional capacity. The company began executing oil and gas orders in FY24 and is expected to see rapid growth in this segment during FY25.

Also Read | Azad Engineering IPO gives 170% return to allottees in 2-month of share listing

The Aerospace & Defence segment experienced significant growth, recording a 231.7 percent year-on-year increase in Q1 FY25, reaching 182.1 million, primarily due to the execution of domestic orders. The company's recent order wins, including those from Rolls Royce and GTRE, are expected to further boost growth in this segment.

Additionally, profit after tax surged by 131.5% year-on-year to 171.3 million, up from 74.0 million in the same period last year.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.

Catch all the Business News , Market News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.

MoreLess
First Published:4 Sep 2024, 03:40 PM IST
Business NewsMarketsStock MarketsStock to buy: Multibagger Azad Engineering shares jump 8% after Investec initiates coverage with ’buy’, sees 23% upside

Most Active Stocks

Bandhan Bank share price

203.10
11:41 AM | 14 OCT 2024
-7.9 (-3.74%)

Tata Steel share price

159.65
11:41 AM | 14 OCT 2024
-1.05 (-0.65%)

Indian Oil Corporation share price

164.00
11:41 AM | 14 OCT 2024
0.8 (0.49%)

Wipro share price

539.80
11:41 AM | 14 OCT 2024
10.85 (2.05%)
More Active Stocks

Market Snapshot

  • Top Gainers
  • Top Losers
  • 52 Week High

Tech Mahindra share price

1,681.75
11:33 AM | 14 OCT 2024
36 (2.19%)

National Aluminium Company share price

226.50
11:33 AM | 14 OCT 2024
3.8 (1.71%)

Divis Laboratories share price

6,152.90
11:32 AM | 14 OCT 2024
11.75 (0.19%)

HCL Technologies share price

1,840.55
11:32 AM | 14 OCT 2024
1 (0.05%)
More from 52 Week High

Avenue Supermarts share price

4,187.00
11:33 AM | 14 OCT 2024
-385.35 (-8.43%)

Bandhan Bank share price

201.65
11:33 AM | 14 OCT 2024
-9.35 (-4.43%)

Sapphire Foods India share price

354.80
11:28 AM | 14 OCT 2024
-16.3 (-4.39%)

Alembic Pharmaceuticals share price

1,125.55
11:32 AM | 14 OCT 2024
-46.6 (-3.98%)
More from Top Losers

Aptus Value Housing Finance India share price

396.05
11:33 AM | 14 OCT 2024
35.05 (9.71%)

Finolex Industries share price

317.95
11:33 AM | 14 OCT 2024
18.8 (6.28%)

Raymond share price

1,687.00
11:33 AM | 14 OCT 2024
84.1 (5.25%)

Poly Medicure share price

2,460.55
11:32 AM | 14 OCT 2024
116.15 (4.95%)
More from Top Gainers

Recommended For You

    More Recommendations

    Gold Prices

    • 24K
    • 22K
    Bangalore
    77,675.00-10.00
    Chennai
    77,681.00-10.00
    Delhi
    77,833.00-10.00
    Kolkata
    77,685.00-10.00

    Fuel Price

    • Petrol
    • Diesel
    Bangalore
    102.86/L0.00
    Chennai
    100.75/L0.00
    Kolkata
    104.95/L0.00
    New Delhi
    94.72/L0.00

    Popular in Markets

      HomeMarketsPremiumInstant LoanMint Shorts