Azad Engineering gains after foreign brokerage predicts 23% upside

The brokerage firm has launched coverage on Azad Engineering, an aerospace components manufacturer, with a positive outlook, assigning a 'buy' rating and setting a target price of Rs 1,850 per share. This target represents a potential increased of 22.75% from the stock's previous closing price of Rs 1,507.15 on 3 September 2024.

The brokerage firm highlighted Azad Engineering's robust foundation for sustained multi-year growth. Since its IPO in December 2023, the company's stock price has surged over 100%, reinforcing Investec's confidence in its future performance.

Investec anticipates that Azad Engineering will achieve a 40% compound annual growth rate (CAGR) in profit after tax (PAT) from FY24 to FY27. The firm's working capital is expected to stabilize, and its return on invested capital (RoIC) is projected to improve.

Azad Engineering is a key manufacturer of qualified product lines supplying to global original equipment manufacturers (OEMs) in the energy, aerospace and defence, and oil and gas industries. The products the company manufactures are highly engineered, complex, mission and life critical high precision forged and machined components.

The company's consolidated net profit soared 131.4% to Rs 17.12 crore on 98.41% jump in sales to Rs 98.41 crore in Q1 FY25 over Q1 FY24.