Azad Engineering Q2 FY27 Revenue Rises 31.6% to ₹187.8 Crore

Azad Engineering Limited reported its highest-ever quarterly revenue of ₹187.8 crore in Q2 FY27, up 31.6% year-on-year, supported by export growth and a planned capacity ramp-up. EBITDA rose 37.1% to ₹70.4 crore, while profit after tax increased 6.6% to ₹30.8 crore as depreciation and finance costs increased.

What did Azad Engineering report in Q2 FY27?

Azad Engineering reported standalone revenue of ₹187.8 crore for the September quarter of FY27, compared with year-on-year growth of 31.6%. Revenue was also about 10% higher than in the preceding quarter, according to management's earnings-call presentation. The company said the result exceeded its stated 25% growth guidance.

EBITDA increased 37.1% year-on-year to ₹70.4 crore. The EBITDA margin expanded by 150 basis points to 37.5%, indicating that operating profitability grew faster than revenue during the quarter. Profit after tax stood at ₹30.8 crore, with a net profit margin of 16.4%, and was up 6.6% year-on-year.

Management attributed the revenue performance to export-led demand and the gradual addition of production capacity. Azad Engineering manufactures precision-engineered components for sectors including aerospace, defence, energy and oil and gas, where production growth is linked to customer approvals, qualified parts and delivery schedules.

Which financial metrics changed during the quarter?

Azad Engineering's operating performance improved in Q2 FY27, but higher depreciation and finance costs moderated profit growth relative to EBITDA growth. The company capitalised ₹251 crore of capital expenditure, resulting in increased depreciation and interest-related costs as newly installed capacity moved into operations.

The company said EBITDA covered finance cost 5.8 times during the quarter. This indicates that operating earnings remained materially higher than finance expenses, although capitalisation of new facilities raised the cost base. Other income was also lower at ₹4.7 crore, according to the earnings-call summary.

Azad Engineering also reported negative operating cash flow of ₹45.8 crore in the call summary. Management indicated that cash inflows were expected to begin from Q4 FY27, though it did not provide a firm cash-flow number or a detailed quarterly projection.

When will Azad Engineering's new capacity contribute to revenue?

Azad Engineering said its buildings, machines and manpower are in place, with production throughput beginning in Q3 FY27 and revenue ramp-up expected from Q4 FY27. Chairman and Chief Executive Officer Rakesh Chopdar said the company's spindles were running and that the newly commissioned capacity was entering the operating phase.

Management expects the full capacity ramp-up to be achieved by Q2 FY28. This timeline is important because the company has incurred manpower, depreciation and financing expenses ahead of the expected revenue contribution from the additional manufacturing infrastructure.

The company said manpower costs were front-loaded to support the capacity addition. It plans to use automation and lean-manufacturing measures as output rises. The call did not provide a quantified estimate of expected savings from these initiatives.

New manufacturing capacity typically requires qualification and production approval from customers before volumes can rise. Azad Engineering described demand visibility as linked to qualified parts and rolling contracts, rather than presenting its stated ₹6,500 crore rolling order book as a conventional fixed backlog.

What is Azad Engineering's FY28 revenue target?

Azad Engineering has targeted an annual revenue run rate above ₹1,300 crore by FY28 and has retained long-term revenue growth guidance of more than 25% per year. The target depends on the commissioning-to-revenue transition at its facilities and the completion of customer qualification processes for additional production.

The Q2 result provides evidence of current growth in revenue and operating profit, but the FY28 run-rate objective remains a management target rather than a reported financial outcome. Investors will need to track quarterly revenue conversion, operating cash flow, depreciation, finance costs and the pace of capacity utilisation.

For the broader engineering manufacturing sector, the update highlights the financial effect of capacity-led expansion. Revenue can increase as new facilities start production, while depreciation, employee expenses and borrowing costs may appear earlier in the profit and loss account. This can create a gap between EBITDA growth and net-profit growth during an expansion period.

Conclusion

Azad Engineering delivered record Q2 FY27 revenue of ₹187.8 crore and improved its EBITDA margin to 37.5%, reflecting export growth and operating leverage. However, profit after tax grew at a slower rate than EBITDA because the company absorbed higher depreciation and finance costs associated with its ₹251 crore capitalised expenditure.

The next key development is the revenue contribution from newly commissioned capacity, which management expects to begin ramping from Q4 FY27 and reach full ramp-up by Q2 FY28. Progress toward the stated annual revenue run rate of more than ₹1,300 crore by FY28, along with operating cash-flow improvement, will be central to assessing execution.