Mumbai, August 30, 2025 — Azad Engineering Ltd., a precision components specialist active in the aerospace, defence, energy, and oil & gas sectors, has emerged as one of the most compelling stock picks in the defence manufacturing space. Riding strong momentum, the company reported record-breaking Q1 FY26 numbers and reaffirmed its bold FY26 outlook.
Quick Snapshot
| Metric | Q1 FY26 Result | YoY / QoQ Change |
|---|---|---|
| Revenue | ₹135 crore | +36.7% YoY, +8% QoQ |
| EBITDA Margin | 36.1% | Up from 33.6% YoY |
| PAT Margin | 22.3% | Up from 17.4% YoY |
| Order Book | ₹6,000+ crore | Diverse, high visibility |
| Revenue Growth Guidance | 25–30% for FY26 | Management reaffirmed |
Growth Drivers & Strategic Wins
- Robust Order Pipeline: With a ₹6,000 crore-plus order book, diversified across energy (₹3,400 cr), aerospace & defence (₹1,700 cr), and oil & gas (₹850 cr), Azad has strong revenue visibility stretching multiple years ahead.
- Capacity Expansion: The company is investing ₹450 crore in FY26 CapEx to set up eight state-of-the-art lean manufacturing units, including a forging plant in Hyderabad, to meet rising demand.
- Margins Up, Costs Stable: Q1 delivered sharp margin improvements — EBITDA rose ~47% alongside a bolstered PAT, all while maintaining stable operating efficiency despite scale-up pressures.
- Defense Segment Traction: Aerospace and defence revenues grew 26.3% YoY, now constituting over 17% of total revenue — a high-margin business likely under renewed domestic impetus.
- Valuation & Ratings: CARE Ratings upgraded Azad’s credit rating to ‘A,’ reinforcing confidence in its financial health and future prospects.
Market Context & Analyst Picks
- Sector Buzz: ICICI Securities expects private defence firms like Azad to outpace the overall industry growth, targeting 25–30% expansion versus a 15–18% range for public-sector counterparts.
- Peers & Multiples: Azad trades at a premium (70–77x forward earnings) given its high growth, pricing it among top-rated defence entities alongside Solar Industries and Paras Defence.
- Stock Reaction: Even before Q1 results, Azad shares rallied on a ₹450 crore contract with GE Vernova for airfoils — signaling strong investor appetite.
Investment Outlook
Why Azad Is a Watchlist Stock:
- High Growth: A validated growth trajectory and reiterated revenue guidance — 25–30% growth plus expanding margins.
- Order Stability: Strong visibility with a large and diversified order pipeline.
- CapEx Catalysts: Fresh capacity expansion to support next-gen earnings leverage.
- Sector Tailwinds: Rising defence manufacturing demand and modernization push align well with Azad’s niche.
- Positive Sentiment: Upgraded credit ratings and successful contract wins boost investor confidence.