On the opening day of bidding for Sachin Tendulkar-backed Azad Engineering’s IPO on December 20, the offering witnessed full subscription, drawing robust responses from both retail and high net worth individuals (HNI). Brokerages have lauded the IPO, recommending subscription for long-term and listing gains.
Azad Engineering, backed by prominent sports figures like PV Sindhu, Saina Nehwal, and VVS Laxman, has garnered significant interest among investors. Notably, these personalities are not divesting their shares in the IPO. As per records until March 2023, Tendulkar held 4.38 lakh shares, acquired at an average price of Rs 114.10, while Laxman, Nehwal, and Sindhu each owned 43,800 shares obtained at an average price of Rs 228.17.
At the upper price band, their initial investments are projected to multiply manifold. Nehwal, Sindhu, and Laxman’s Rs 1 crore investments are expected to burgeon to Rs 2.3 crore each, whereas Tendulkar’s Rs 5 crore investment might soar to Rs 22.96 crore.
The IPO, consisting of a fresh issue of shares worth Rs 240 crore and an offer-for-sale of shares worth Rs 500 crore by existing shareholders, attracted strong attention from investors. Azad Engineering intends to utilize the proceeds for acquiring plant machinery, debt repayment, and general corporate purposes.
Financially, Azad Engineering witnessed a decline in net profit by 71.2% in FY23 due to finance costs, yet reported a 29.4% growth in revenue from operations. However, in H1FY24, the company recorded a PAT of Rs 28.8 crore, with net debt escalating from Rs 70.5 crore in FY21 to Rs 290 crore in H1FY24.
Despite concerns over client dependence and financial volatility, brokerages have shared divergent views. Canara Bank Securities recommends subscribing for listing gains, acknowledging the company’s growth trajectory, while Reliance Securities advocates subscription for the long term, praising Azad Engineering’s strong financial performance and business model.
This IPO marks a pivotal moment for Azad Engineering, receiving significant investor interest and endorsements from brokerages, setting the stage for potential growth in India’s manufacturing sector.
