Azad Engineering sees Rs 1,300 crore FY28 revenue run rate

Azad Engineering Limited expects its six commissioned customer-dedicated facilities to support an annual revenue run rate of more than Rs 1,300 crore by FY28-end, after revenue begins ramping from Q4 FY27. Management said the 44,800-square-metre facility network is production-ready but must complete customer qualification before output can be billed fully.

What capacity has Azad Engineering commissioned for the FY28 ramp?

Azad Engineering has commissioned six customer-dedicated manufacturing facilities covering 44,800 square metres for Mitsubishi Heavy Industries, GE Vernova, Siemens Energy and Baker Hughes. The final two dedicated lean manufacturing facilities for GE Vernova were inaugurated in September 2026, completing the company’s physical build-out during H1 FY27.

The facilities were built against customer volume commitments and contracts rather than as speculative expansion, according to management. GE Vernova now has three dedicated facilities with Azad Engineering, while each line was built to a customer’s specification and is being qualified for that customer’s supply chain.

Azad Engineering said it has deployed capital, hired and trained personnel, and stocked raw materials, tooling and consumables for the installed capacity. These inputs mean the six facilities are production-ready, although the company said customer acceptance remains necessary before the plants reach their intended billing rate.

When will Azad Engineering's new plants add revenue?

Azad Engineering expects throughput from the new capacity to begin in Q3 FY27 and revenue to ramp from Q4 FY27 as parts clear customer acceptance. Management expects all plants to be fully ramped by Q2 FY28, although a separate operating update described the full ramp-up timing as H1 FY28.

The gap between commissioning and revenue reflects delta qualification, which is required when an already qualified part moves to a new facility or machine. Management said the process includes inspection, process validation and customer audit; qualification for an entirely new part can take 30 to 48 months.

Azad Engineering is running several delta qualifications simultaneously across customer lines. Its dedicated oil and gas facility is linked to the customer’s delivery plan and is expected by management to provide an additional growth lever from Q4 FY27.

What revenue base is Azad Engineering building from?

Azad Engineering reported standalone revenue from operations of Rs 187.8 crore in Q2 FY27, its highest quarterly figure, up 31.6% from Rs 142.7 crore in Q2 FY26 and 10.1% from Rs 170.5 crore in Q1 FY27. The proposed FY28-end run rate of more than Rs 1,300 crore would therefore require a material increase from the pre-ramp quarterly revenue level.

For H1 FY27, standalone revenue grew 29.3% year on year to Rs 358.3 crore, above management’s stated annual growth guidance of more than 25%. Energy and oil and gas revenue rose 28.5% to Rs 290 crore and made up 81% of revenue, while aerospace and defence grew 28.3% to Rs 60.4 crore, or 17%.

Exports accounted for 88% of Q2 FY27 revenue, and management expects exports to remain about 85% of sales. Domestic revenue rose more than two-and-a-half times to Rs 43 crore in H1 FY27, reaching 12% of revenue from 6% a year earlier, helped by indigenisation work with Bharat Heavy Electricals Limited.

Azad Engineering also said Bharat Heavy Electricals Limited approved it as a long-term source under a two-year rate contract worth about Rs 52.68 crore for gas-turbine airfoils. Management said it is discussing a dedicated-facility model with aerospace customers similar to the one used for energy customers.

How has the build-out affected Azad Engineering's earnings and cash flow?

Azad Engineering’s Q2 FY27 operating performance improved while costs below earnings before interest, tax, depreciation and amortisation, or EBITDA, reflected the investment phase. EBITDA increased 37.1% year on year to Rs 70.4 crore, and the EBITDA margin rose to 37.5% from 36.0% in Q2 FY26.

Profit after tax was Rs 30.8 crore in Q2 FY27, a margin of 16.4%, after treasury income fell to Rs 4.7 crore from Rs 12.7 crore a year earlier. Depreciation doubled to Rs 21.8 crore from Rs 10.9 crore as new facilities were capitalised, while finance costs rose to Rs 12.2 crore from Rs 6.4 crore on term and working-capital loans.

Inventory increased by Rs 98 crore in H1 FY27 to Rs 425 crore, including Rs 72 crore of work in progress on new lines in qualification or ramp-up. Operating cash flow after tax was an outflow of Rs 45.8 crore, compared with an outflow of Rs 76.5 crore in H1 FY26, and management expects the working-capital cycle to stabilise as qualified inventory converts into sales and receivables.

One original equipment manufacturer, or OEM, agreed to provide a 50% advance against each purchase order, from which Azad Engineering expects US$4.5 million. Management said it is seeking similar arrangements with other OEMs to help manage working-capital requirements during the ramp.

What supports Azad Engineering's FY28 run-rate expectation?

Azad Engineering bases its more than Rs 1,300 crore FY28-end annual revenue run-rate expectation on the installed asset base, customer-dedicated facilities and contracted customer programmes. Fixed assets, including capital work in progress, stood at Rs 1,169 crore at September 30, 2026, which management identified as the asset base supporting the planned run rate.

Of the Rs 700 crore raised through the qualified institutional placement, or QIP, Azad Engineering had used Rs 621.8 crore by the end of September 2026 and held Rs 78.2 crore in fixed deposits for remaining capital expenditure. H1 FY27 capital expenditure was Rs 139.3 crore, funded by Rs 80.8 crore of QIP proceeds, Rs 28.6 crore of term loans and internal funds.

The company also cited customer arrangements as support for capacity visibility. Baker Hughes’ supply agreement with Nuovo Pignone has been extended to 2030, while management said each dedicated facility is linked to customer delivery guidance and long-term contracts.

Conclusion

Azad Engineering has completed commissioning of six facilities and is now moving through the qualification stage that converts installed capacity into billable production. The company’s Q2 FY27 revenue of Rs 187.8 crore and EBITDA margin of 37.5% show growth before the planned larger contribution from the new plants, while depreciation, finance costs and inventory reflect the preceding investment phase.

The next disclosed milestones are throughput beginning in Q3 FY27, revenue ramping from Q4 FY27 and full facility ramp-up by Q2 FY28, according to management. The key execution points are the timing of delta qualifications, output from the dedicated oil and gas facility and whether further OEM purchase-order advances reduce working-capital needs.