Azad Engineering’s new GE facilities strengthen execution capacity and long-term order visibility
Azad Engineering Ltd.
BUY
₹2,723
₹2,964.8
₹3,200
17.52%
Investment View and Capacity Expansion
ICICI Securities upgraded Azad Engineering to BUY from ADD in its September 29, 2026 company update, following the inauguration of two dedicated manufacturing facilities for GE Vernova’s gas power business at Azad’s Hyderabad Centre of Excellence and Innovation Centre.
The two facilities represent Azad’s largest single-tranche capacity addition, covering 15,200 sq. mt. Six of the seven planned dedicated manufacturing facilities, along with a forging unit, are now commissioned. ICICI Securities believes the additional execution capacity addresses the principal constraint on growth, while Azad’s order book of more than Rs 65 billion has not been a constraint.
GE Vernova Relationship and Order Visibility
GE Vernova now represents Azad Engineering’s largest single-customer footprint. This includes a steam-power-services facility inaugurated in April 2025 and two gas-power facilities inaugurated in September 2026.
The new capacity is being built against GE Vernova’s existing contract book, including a USD 112 million, six-year aerofoil agreement signed in January 2025 and a USD 53.5 million GE Steam Power contract signed in May 2025. ICICI Securities expects follow-up large orders from GE, which could provide five to six years of visibility for the new units.
As a majority of the order book is denominated in US dollars, the broker expects Azad to exceed its guidance with support from rupee depreciation.
Execution Outlook and Technology Development
The final dedicated facility is expected to be commissioned by the end of FY27. ICICI Securities views this as the beginning of an execution phase that can drive earnings over the next two to three years. The broker expects Azad to announce its next growth-capex programme to retain visibility beyond FY30.
Azad delivered India’s first indigenous turbojet engine to GTRE and DRDO in July 2026. Weapon-integration testing and certification are expected to be prerequisites for serial production. According to ICICI Securities, the investment case now rests on throughput conversion and working-capital normalisation.
Management has retained guidance for revenue CAGR above 25 per cent and margins of 32 to 35 per cent. ICICI Securities considers this guidance conservative amid geopolitical conditions and forecasts a 33 per cent revenue CAGR over FY26 to FY29E, with EBITDA margins of 37 to 38 per cent, partly supported by rupee depreciation.
The broker expects further qualification across four global aero-engine makers and expansion into propulsion-system and hot-section segments.
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Financial Forecasts
| Financial year | Revenue (Rs million) | EBITDA (Rs million) | EBITDA margin | Net profit (Rs million) | EPS (Rs) |
|---|---|---|---|---|---|
| FY26 | 6,030 | 2,253 | 37.4% | 1,336 | — |
| FY27E | 8,011 | — | — | — | — |
| FY28E | 10,780 | — | — | — | — |
| FY29E | 14,117 | 5,429 | — | 3,765 | 58.3 |
Valuation
ICICI Securities’ target price is Rs 3,200, based on 55 times FY29E EPS. The broker introduced FY29 estimates and rolled the valuation multiple forward.
Key Risks
- Delays in OEM approvals.
- Further tariff escalation on India.
- A slowdown in the energy or aerospace sectors that reduces revenue growth.
Disclaimer: This is a summary of a research report published by the broker/research house identified above. The views, recommendations, target prices and estimates are those of the respective broker and do not represent DSIJ investment advice. The summary may be AI-assisted, hence please refer to the original report for complete details, disclosures and risks.
