Azad Engineering share price rallies 5% after company raises ₹700 crore via QIP; Do you own?

Azad Engineering share price rallied over 4.79 per cent on Tuesday's trading session after the company raised ₹700 crore via a qualified institutional placement by issuing 54.68 lakh shares at ₹1,280 each, reflecting a 1.77 per cent discount to the floor price of ₹1,303.08.

At 10:00 am, the Azad Engineering stock reached an intraday high to ₹1,278.35 apiece, despite market crash. However, the shares have fallen over 5 per cent in last five trading sessions amid market reeling.

Azad Engineering QIP details

The company's board, during its meeting on January 3, approved a proposal to raise funds by issuing equity shares for a total amount of up to ₹1,000 crore, with or without a greenshoe option.

The company announced that it may, at its discretion, provide a discount of up to 5% on the floor price for the QIP issue. It has proposed raising funds to fully or partially finance its capital expenditure needs.

According to the exchange filing, the QIP opened for bidding on February 25.

The placement document has been adopted, and the board has approved and finalized the allocation confirmation note for eligible qualified institutional buyers. The company will notify stock exchanges regarding the list of investors. Additionally, Azad Engineering is among the first 100 stocks included in the T+0 settlement cycle introduced by the National Stock Exchange.

The Hyderabad-based company revealed earlier this month that it had entered into a long-term agreement with Rolls-Royce to provide essential components for civil aircraft engines.

For the December quarter of FY25, the company recorded operating revenue of ₹120.48 crore, compared to ₹89.22 crore in the same period last year. Net profit for the quarter stood at ₹23.72 crore, up from ₹16.80 crore in Q3FY24.

Should you buy or sell?

Brokerage firm Choice Broking has maintained its ‘buy’ rating on Azad Engineering stock and has revised the target price to ₹2,150, sees 46 per cent upside.

"We expect Azad Engineering to register a healthy revenue/EBIDTA/PAT growth of 43/47/58% CAGR over FY24-27E. We are maintaining our recommendation to "BUY" and revising our target price to INR 2,150, which implies a valuation of 55x FY27E EPS," the brokerage firm said in a note.