- Azad Engineering’s Q3 FY26 EBITDA surged 45% YoY to INR 622 mn, an all‑time high.
- Revenue jumped 32% YoY, backed by a fresh INR 65 bn order book and capacity expansions.
- Management projects 32% revenue CAGR and 42% PAT CAGR through FY28, with margins edging toward 37%.
- Valuation rests on a 50× FY28 EPS multiple, implying a target price of INR 1,900.
- Sector tailwinds in energy and aerospace could extend the revenue runway for a decade.
You missed the fine print on Azad’s latest earnings – and that could cost you.
Why Azad Engineering’s 45% EBITDA Surge Is a Game‑Changer for Indian Manufacturing
Azad Engineering reported an EBITDA of INR 622 million for Q3 FY26, a 45% year‑over‑year jump and an 18% improvement over the prior quarter. The surge stems from a 32% revenue increase, driven by new fabrication facilities and a swelling order pipeline. In plain terms, EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) reflects the core operating profitability before financing and non‑cash expenses. A near‑50% lift in this metric signals that Azad’s operational engine is not only humming but accelerating.
How Azad’s Order Book and Capacity Expansion Set Up a 3‑Year Revenue Triple Play
The company now commands an order book exceeding INR 65 billion, a level that underpins a projected tripling of revenue over the next three to four years. Capacity additions are focused on high‑margin segments—especially aerospace and defence (A&D)—where order values are larger and the repeat‑business probability is higher. Historically, firms that lock in multi‑year contracts before scaling capacity enjoy a smoother ramp‑up, as they can amortise fixed costs over larger volumes. If Azad can execute its expansion on schedule, the 32% revenue CAGR quoted by analysts becomes realistic.
Sector Pulse: Energy & Aerospace Demand Driving Azad’s Growth Engine
Azad’s client base is heavily weighted toward energy infrastructure firms, many of which are also reporting record order books. The Indian power sector is in the midst of a Rs 10‑trillion capex wave, with renewable integration and grid modernisation demanding specialised engineering services. Simultaneously, the Indian aerospace segment is benefitting from the “Make in India” push, which includes domestic aircraft production and MRO (maintenance, repair, overhaul) contracts. This dual‑sector tailwind creates a virtuous cycle: stronger energy orders fund higher‑value aerospace work, and vice‑versa, widening Azad’s revenue runway for the next decade.
Competitive Landscape: Azad vs Tata & Adani in the Capital‑Intensive Services Space
While Azad focuses on niche engineering solutions, conglomerates like Tata Power and Adani Energy are expanding into similar service territories through acquisitions and joint ventures. Tata’s recent acquisition of a hydro‑equipment maker adds to its order book, but integration risk remains high. Adani’s aggressive capex in renewable projects offers volume but lower margins compared with Azad’s high‑tech A&D contracts. Azad’s advantage lies in its specialised skill set and a leaner balance sheet, allowing it to command premium pricing on complex projects. Should the larger players stumble on integration, Azad could capture spill‑over orders, amplifying its growth trajectory.
Technical Deep Dive: Decoding EBITDA Margins and the 50× FY28 EPS Valuation
Azad’s FY26E EBITDA margin is projected at roughly 36%, edging to 37% by FY28E. An EBITDA margin of this magnitude is uncommon in heavy‑industry firms, where typical margins linger around 20‑25%. The uplift reflects a higher proportion of A&D orders, which are less price‑sensitive and carry better cost structures. The analyst’s price target of INR 1,900 is based on a 50× FY28 earnings‑per‑share (EPS) multiple—a valuation technique often applied to high‑growth, high‑margin companies. For perspective, a 50× multiple translates to a 2% earnings yield, which is aggressive but not unheard of for firms with 40%+ PAT (profit after tax) CAGR expectations. Investors must weigh the upside of such a multiple against execution risk in capacity expansion and talent acquisition.
Investor Playbook: Bull vs Bear Cases for Azad Engineering
Bull Case: The order book continues to expand beyond INR 70 bn, capacity ramps up on schedule, and the energy‑aerospace tailwinds persist. EBITDA margins breach 38% by FY28, and the 50× EPS multiple becomes justified, pushing the share price well above INR 2,100.
Bear Case: Delays in facility construction or a shortage of skilled engineers throttle revenue growth. A slowdown in energy capex or a policy shift in aerospace procurement reduces new orders, compressing margins to the mid‑30s. In such a scenario, the valuation multiple would need to contract, dragging the price toward INR 1,300.
Bottom line: Azad Engineering sits at a strategic inflection point where robust order flow, sector tailwinds, and disciplined execution could deliver outsized returns. Investors comfortable with a medium‑term growth story should consider a position now, while keeping a close eye on capacity‑ramp metrics and order‑book quality.