Azad Engineering Ltd. announced on Sunday that it has entered into a long-term contract and price agreement (LTCPA) with Mitsubishi Heavy Industries Ltd., based in Japan. As a result, the stock jumped by as much as 13% during Monday’s trading session.
This order involves supplying highly engineered and complex rotating and stationary airfoils for advanced gas and thermal power turbine engines, addressing Mitsubishi’s needs in the global power generation sector.
The initial phase of this contract is valued at $82.89 million, or nearly ₹700 crore, and will be carried out over a five-year period.
Earlier in October, Azad Engineering secured an order worth ₹134 crore from Honeywell Aerospace Ltd. for the manufacture and supply of complex components to meet the global aviation industry’s demands.
In a conversation with CNBC-TV18 on Monday, Azad Engineering’s management stated that the company’s current order book exceeds ₹4,000 crore.
The management also noted that Azad Engineering’s current share of the wallet with Mitsubishi stands at 1%, which the company aims to grow to between 2% and 5% over time. Revenues from this order are expected to start appearing in the next three to four quarters.
As of the end of the June quarter, 78.4% of Azad Engineering’s revenue was generated from the Energy & Oil and Gas sector, while 18.5% came from Aerospace & Defence.
The majority of Azad Engineering’s business is derived from exports, with nearly 91% of its sales coming from international markets as of the June quarter.
The company operates four manufacturing facilities in Hyderabad, covering a total area of 20,000 square meters.
In a note published in July, brokerage firm ICICI Securities indicated that even with a projected growth rate of 25% to 30% for Azad Engineering until the financial year 2035, the company would only capture a 7% market share in the mature energy sector, less than 2% in the Aerospace & Defence sector, and just under 4% in the Oil & Gas sector.
Azad Engineering was one of the last companies to list in 2023, debuting on the stock market at an IPO price of ₹524. As of Friday’s close, the stock has nearly tripled, finishing the Mahurat Trading session at ₹1,463.65.
First Published: Nov 4, 2024, 7:44 AM IST
