Azad Engineering Soars: Record Q2 & H1 FY26 Performance Driven by Strategic Expansion and Robust Order Book

Azad Engineering Limited, a key player in the high-precision manufacturing sector, has delivered an exceptional financial performance for the second quarter and first half of fiscal year 2026. The company reported its highest-ever half-yearly and quarterly results, underscoring robust market demand and successful execution of its growth roadmap. For Q2 FY26, standalone revenues surged by 28.1% year-on-year to INR 142.67 crore, while half-yearly revenues for H1 FY26 climbed 32.1% to INR 277.18 crore. This strong top-line growth was complemented by significant improvements in profitability, with Q2 FY26 PAT margin reaching 23.1% and H1 FY26 PAT margin at 22.7%.

The company's performance was primarily driven by its core segments: Energy & Oil & Gas, and Aerospace & Defence. The Energy and Oil & Gas segment continued to be the largest contributor, accounting for approximately 81.6% of H1 FY26 revenues, totaling INR 226.09 crore. This segment's growth was largely attributed to additional capacity and strong demand from global OEMs. The Aerospace & Defence segment also demonstrated healthy growth, contributing 17.0% of H1 FY26 revenues, amounting to INR 47.06 crore, on the back of new product commercialization and strategic partnerships.

Strategic Milestones and Capacity Expansion

Azad Engineering achieved several important milestones during the quarter, reinforcing its position as a critical supplier to highly regulated industries. The company recently inaugurated one of its new lean manufacturing facilities for Siemens at its Hyderabad plant. This state-of-the-art facility is designed to support the supply of highly engineered complex rotating and stationary airfoils for advanced gas, industrial, and thermal float turbine engines, catering to Siemens Energy's global demand. This brings the total number of dedicated lean factories inaugurated at the new site to three.

Further strengthening its order book, Azad Engineering signed Phase 2 of a Long-Term Contract & Price Agreement (LTCPA) with Mitsubishi Heavy Industries. This contract, valued at USD 73 million, is for the supply of highly engineered airfoils, bringing the combined contract value with MHI to USD 156 million. This expansion highlights the deep trust customers place in Azad's technical excellence and growing strategic relationships.

In a significant move for the Aerospace & Defence sector, Azad Engineering entered into a Memorandum of Understanding (MoU) with Safran Aircraft Engines. This MoU establishes a framework for their first long-term collaboration, focusing on the development of critical aircraft rotating engine components for strategic defence platforms. This partnership is expected to strengthen indigenous manufacturing capabilities and reinforce Azad's role as a trusted partner in global supply chains.

Financial Discipline and Future Outlook

From a financial perspective, the company demonstrated effective cost control, leading to improved margins. Raw material consumption as a percentage of revenue decreased due to better price negotiation and the successful onboarding of domestic suppliers, enhancing supply chain excellence. Employee costs saw a slight increase, driven by ongoing expansion efforts and the strengthening of the management team. Other income also contributed positively to the bottom line, mainly due to interest income from fixed deposits.

Management remains confident in achieving its projected 25% to 30% topline growth for FY26, anticipating even stronger performance in the second half. The focus for FY26 is on stabilization of the newly inaugurated facilities, optimizing manpower, and streamlining processes to ensure sustained growth. The company is also pursuing strategic inorganic acquisitions to complement and enhance capabilities, aiming to achieve full-stack production and reduce external dependencies. Geographical expansion, particularly into Saudi Arabia, is also on the cards, ensuring co-location with key global OEMs.

Azad Engineering's Q2 and H1 FY26 results reflect a period of strategic clarity and disciplined execution. With a robust order book, expanding manufacturing footprint, and a focus on operational excellence, the company is well-positioned to capitalize on emerging opportunities in the high-growth Energy, Aerospace, and Oil & Gas sectors, fostering continued investor trust and long-term value creation.