Broker’s Call: Azad Engineering (Buy)

Why It Matters

The upgrade underscores Azad Engineering’s role as a key Indian supplier in expanding global aerospace and energy markets, offering investors exposure to high‑growth, export‑driven earnings.

Key Takeaways

• Order book ₹6,500 crore, 14.2× FY25 revenue
• Export exposure 85‑95% fuels global aerospace demand
• Target price raised to ₹1,900, 45× FY28E EPS
• Margin expansion driven by high‑precision turbine contracts
• Growth guidance capped at ~35% topline increase

Pulse Analysis

Azad Engineering’s latest earnings reveal a company transitioning from niche supplier to a strategic partner for global OEMs. By deepening relationships with top‑tier aerospace and turbine manufacturers, the firm has unlocked significant margin upside, reflected in its expanding operating leverage. The sizeable order backlog—valued at over ₹6.5 trillion—acts as a multi‑year runway, ensuring revenue visibility well beyond FY26 and positioning Azad to benefit from the anticipated peak utilisation phase around FY28.

Macro‑level trends further amplify Azad’s growth narrative. Worldwide aerospace and renewable‑energy capex are on an upward trajectory, driven by fleet renewals, greener propulsion technologies, and geopolitical shifts that favor diversified supply chains. India’s strengthening trade ties with the United States and the European Union, coupled with recent tariff reductions on critical raw materials, enhance the company’s cost efficiency and export competitiveness. The upcoming delivery of India’s first indigenous jet engine adds a unique optionality, potentially opening new domestic and international markets for the firm’s precision‑engineered components.

From an investment standpoint, Choice Institutional’s upgrade to Buy reflects confidence in Azad’s earnings trajectory and valuation discipline. The revised target multiple of 45× FY28E EPS translates to a ₹1,900 price target, a modest premium to current levels after the recent correction. While management’s conservative 35% topline growth guidance tempers near‑term expectations, the combination of a deep order book, export‑driven demand, and favorable industry tailwinds suggests a compelling upside for investors seeking exposure to India’s high‑tech manufacturing sector. Risks remain in execution timing and potential supply‑chain disruptions, but the firm’s disciplined scaling strategy appears well‑aligned with its long‑term earnings potential.

Broker’s call: Azad Engineering (Buy)

Choice Institutional · Updated · February 16, 2026 at 04:26 PM · Published on February 16, 2026

Target: ₹1,900

CMP: ₹1,648.20

Azad Engineering has delivered a strong operational quarter, marked by meaningful margin expansion and continued execution discipline. The company is steadily scaling up its global top‑tier OEM relationships, reinforcing its positioning in high‑precision aerospace and turbine supply chains. Visibility is exceptionally strong owing to a robust order book of about ₹6,500 crore (14.2× FY25 revenue). As programmes move from qualification in FY26 to anticipated peak utilisation by FY28, we expect volume‑led operating leverage to structurally lift earnings.

We believe that Azad Engineering stands to benefit from global aerospace and energy capex cycles in the next few years. Its 85–95 per cent export exposure positions it favourably amid deepening India‑US and India‑EU industrial cooperation. Additionally, easing of tariffs on critical raw materials should support cost‑efficiency. The upcoming delivery of India’s first indigenous jet engine platform provides optionality.

That said, the management continues to guide for a measured, about 35 per cent topline growth trajectory despite having a large backlog, indicating calibrated scaling up rather than aggressive ramp‑up. In view of moderated near‑term growth expectation, we trim our target multiple to 45× (earlier 50×). Following the recent correction, we upgrade the stock to Buy (from Add) with a TP of ₹1,900, valuing it at 45× FY28E EPS.