In the buzzing world of the stock market, the recent IPO of Azad Engineering Limited has become the talk of the town, primarily due to its remarkable grey market premium. As of now, the grey market premium for Azad Engineering Limited stands at a staggering 440 rupees. To put it into perspective, this represents an impressive 84% premium. Now, let’s break down what this means in simpler terms.
Suppose you decide to invest in one lot of this IPO. Based on the current grey market premium, you stand to gain an 84% listing boost. In practical terms, your initial investment of 14,670 rupees could potentially yield a profit of around 12,300 rupees. This enticing prospect is enough to grab the attention of retail investors, eager to capitalize on this golden opportunity.
Before delving into the chances of getting an allotment, let’s take a closer look at Azad Engineering Limited. Headquartered in Hyderabad, Telangana, the company operates from four manufacturing facilities. What sets them apart? Azad Engineering specializes in crafting the essential components for power generation—turbine blades. As an Original Equipment Manufacturer, they supply a range of equipment to the energy sector, contributing significantly to the global gas turbine market.
Established in 1983, the company has achieved a remarkable feat by covering 70% of the global gas turbine market with their supplied equipment. This impressive market presence is a testament to their prowess in the energy sector. Now, let’s shift our focus to the financials to gain a deeper understanding of the company’s health and performance.
Reviewing the financials for 2021, 2022, and 2023 reveals a positive growth trajectory. The revenue climbed from 123 crores in 2021 to 252 crores in 2023. Asset-wise, the numbers surged from 256 crores to 589 crores over the same period, reflecting a robust upward trend. However, a closer look at profits raises a few eyebrows. The company witnessed profits of 12 crores in 2021, a substantial jump to 29 crores in 2022, only to dip to 8 crores in 2023.
The profit inconsistency may leave potential investors questioning the valuation. Calculating the Price-to-Earnings (P-E) ratio based on the last year’s profit reveals a seemingly high figure of 292.74. The apparent discrepancy prompts skepticism, as investors ponder whether such a valuation is justified. To unravel this mystery, it’s crucial to understand the accounting changes implemented by the company.
The dip in profits in 2023 can be attributed to shifts in accounting policies rather than a fundamental decline in the company’s performance. The revenue stream remains robust, and assets continue to grow. It’s a case of accounting practices influencing the bottom line rather than operational setbacks. Notably, the company reported a profit of 26-27 crores in September, signaling a positive trend in 2024.
Now, circling back to the grey market premium and potential listing gains, investors might question the validity of such gains with a seemingly high P-E ratio. It’s imperative to recognize that the market sentiment, especially in the grey market, often hinges on short-term factors, and the P-E ratio may not capture the complete financial picture.
As retail investors contemplate whether to dive into the Azad Engineering Limited IPO, the allure of an 84% listing gain cannot be ignored. The chance to turn a 14,670 rupees investment into a potential profit of 12,300 rupees is undoubtedly enticing. However, the final piece of the puzzle revolves around the allotment process.
Enhancing the chances of getting an allotment requires careful consideration of various factors. As the IPO landscape evolves, staying informed about subscription numbers, market dynamics, and the company’s overall outlook becomes paramount. Investors navigating these waters must strike a balance between the allure of short-term gains and a thorough understanding of the company’s long-term potential.
Navigating the world of IPOs can be a rollercoaster ride, especially when the talk of the town is Azad Engineering Limited and its enticing grey market premium. As of the moment, the grey market is buzzing with a premium of 440 rupees, translating to an impressive 84% premium. To break it down further, if you decide to invest in one lot of this IPO, the potential listing gain stands at 84%, converting your 14,670 rupees investment into a tempting profit of around 12,300 rupees.
Before delving into the intricacies of this IPO, let’s understand what Azad Engineering Limited brings to the table. Headquartered in Hyderabad, Telangana, the company operates four manufacturing facilities, specializing in crafting turbine blades for power generation. As an Original Equipment Manufacturer, they play a pivotal role in the energy sector, covering 70% of the global gas turbine market with their supplied equipment.
Moving on to the financials, the revenue trajectory paints a positive picture, soaring from 123 crores in 2021 to 252 crores in 2023. Assets witnessed substantial growth, climbing from 256 crores to 589 crores during the same period. However, the profitability story raises questions, with profits fluctuating from 12 crores in 2021 to 29 crores in 2022, only to dip to 8 crores in 2023. The Price-to-Earnings (P-E) ratio based on last year’s profit stands at 292.74, causing some skepticism.
Digging deeper into the financial landscape, it’s crucial to note that the P-E ratio, when considering data until September, stands at a more reasonable 57.58. It’s essential to look beyond the seemingly high P-E ratio circulating on the internet and conduct a thorough analysis before making any decisions. The debt-to-equity ratio, at 1.47, sits at a moderate level, neither too high nor too low.
Now, let’s shift our focus to the important dates associated with the Azad Engineering Limited IPO. The IPO is open for subscription from the 20th to the 22nd, with a price band ranging from 499 to 524 rupees. The lot size is 28, translating to an investment of 14,672 rupees in the retail category. Retail investors can apply for a maximum of 13 lots, with a cap on the investment at 2 lakhs. For those interested in the High Net Worth Individual (HNI) category, applying for more than 2 lakhs is an option.
The issue size of 740 crores is split between a fresh issue of 240 crores, benefiting the company, and an Offer for Sale (OFS) of 500 crores for existing investors. The allotment date is set for the 26th, with shares hitting your Demat account on the 27th. In case of non-allotment, the refund will be processed on the same day. The much-anticipated listing is scheduled for the 28th of December, post-Christmas celebrations.
As investors contemplate whether to dive into this IPO, it’s crucial to exercise patience. Applying on the last day, after gauging the subscription status, can potentially enhance your chances of securing a good listing gain. The grey market premium is a positive indicator, but a thorough analysis and strategic approach are essential.
For those looking to increase allotment chances, the strategy of using multiple Demat accounts can be beneficial, especially if the subscription is high. Opening a Demat account, which can be done for free, offers an additional avenue for potential earnings through referral programs. Many companies are currently offering referral incentives, allowing you to earn up to Rs. 700 per referral.
Finally, the Azad Engineering Limited IPO presents a tantalizing opportunity, given its grey market premium and potential listing gains. However, investors must approach it with a discerning eye, considering the P-E ratio, debt-to-equity ratio, and overall financial health. The IPO landscape is brimming with options, and a comprehensive analysis is crucial before deciding to apply.