Stellar Start: Azad Engineering lists at 37% premium at Rs 720 per share on the NSE

Azad Engineering Limited is a manufacturer of aerospace components and turbines, supplying its products to original equipment manufacturers in the aerospace, defence, energy, and oil and gas industries, debuted on the Indian stock market today.

Upon its debut on the BSE, the stock opened at Rs 710 per share, reflecting an impressive 35.5% premium compared to the final issue price of Rs 524 per share. Meanwhile, on the NSE, the stock debuted at Rs 720 per share, representing an impressive premium of around 37.40% over its final issue price. The current market capitalisation of the company stands at Rs 4,197 crore.

IPO Proceeds 

The company intends to use the net proceeds from the Fresh Issue for the following purposes: funding the company’s capital expenditure (Capex), repayment or prepayment in part or in full of certain borrowings availed by the company, and addressing general corporate purposes.

Company profile:

Azad Engineering Limited is a manufacturer of aerospace components and turbines, supplying its products to original equipment manufacturers (OEMs) in the aerospace, defence, energy, and oil and gas industries. The company was incorporated in 1983.

Azad Engineering’s products are highly engineered, complex, mission-critical, and vital. The company operates four manufacturing facilities in Hyderabad, Telangana, India. These facilities can produce high-precision forged and machined components and encompass a total production area of approximately 20,000 square meters. Moreover, the company is planning to establish two additional manufacturing units one at Tuniki Bollaram village in Siddipet district, Telangana, and another at Mangampet village in Sangareddy district, Telangana.

Subscription details: 

On December 22, 2023, the final day of the IPO window, the IPO witnessed an impressive response, especially compared to other recently-listed IPOs, with a subscription rate of 83.04 times. The public issue received remarkable interest, with the retail category being subscribed 24.51 times, the QIB category achieving a subscription rate of 179.64 times, and the NII category reaching a subscription rate of 90.24 times.

The company attracted Rs 220.80 crore from various anchor investors by allocating 42.13 lakh equity shares at Rs 524 per share. The complete lock-in period for these anchor investors ends on April 30, 2024.

The IPO price range was set between Rs 499 and Rs 524, with a face value of Rs 2 per share and a lot size of 28 shares. The total size of the company’s IPO was Rs 740 crore, and the final share issue price was fixed at Rs 524 each.

Financial Performance:

Conclusion:

The key dilemma for investors lies in whether to hold onto their shares. Those who applied for the IPO solely intending to capitalise on listing gains have already gained an impressive 37.40% return over its final issue price on the listing day itself. Investors who applied for the IPO purely for listing gains may consider closing their positions. Conversely, investors with a higher risk tolerance might opt to hold onto their shares for the medium to long term, as this strategy could potentially yield benefits over time.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.