Ladies and gentlemen, good day and welcome to Azad Engineering Limited Q4 FY 2026 earnings conference call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance in the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rakesh Chopdar, Chairman and CEO. Thank you, and over to you, Mr. Chopdar.
Thank you. Thank you very much. Good morning, everyone. Welcome, and thank you for joining us on the Q4 FY 2026 earnings call. I am joined today by Mr. Vishnu Malpani, our Whole-Time Director, Mr. Ronak Jajoo, our CFO, and SGA, our Investor Relations Advisors. The audited results and the investor presentation have been uploaded on the stock exchanges and to our company website, and I trust you have had a chance to look at them. At the start of FY 2026, we described it as a year of consolidation. A year in which we would embed newly commissioned capacity, convert the qualifications we have been earning over multiple years, and put in place the human capital and the systems that the next phase of growth demands. I am pleased to report that we have delivered on each of those commitments.
Before turning to the numbers, I want to spend a moment on what the growth you are seeing actually represents, because it is important to characterize this correctly. The nature of our business and our growth. Azad is a global supplier. We compete head-on with established suppliers from U.S., Europe, China, and Japan. On their own benchmarks for the same global OEM platforms. We have done so far for many years now, and our growth today is a cumulative payoff of that long, hard work, not a function of any short-term tailwind, geographic shift or single market opportunity. The products we manufacture, critical rotating components for gas, steam, and nuclear turbines, mission and life-critical aerospace and defense parts, complex precision assemblies for oil and gas are among the most demanding components made anywhere in the world.
This is inside engines that operate at extreme temperatures, extreme pressures, extreme tolerances. The cost of failure is measured in lives and in billions of dollars platforms. The reason these components are made by only a handful of companies globally is straightforward. The qualification cycle to even be allowed to manufacture them take years, sometimes a decade, of process validation, metallurgical proof, dimensional verification, first article inspections, and serial production audits. Once the supplier earns that qualification, the business is sticky, multi-year, and high value. The growth you are now seeing in our reported numbers is a conversion of qualifications we earned over the last several years against the backdrop of capacity we have deliberately built to be ready for the next conversion.
Talking on the capacity and customer milestones, as promised on our CapEx roadmap, we have successfully inaugurated four dedicated leading manufacturing facilities for our marquee global customers since listing. Two were commissioned during FY 2026, and the most recent one just last month. in April 2026, we inaugurated a dedicated facility for Baker Hughes, a milestone in a relationship that, like all our relationships, we earn through one of the most rigorous qualification pathways in the industry. A dedicated facility represents the deepest possible form of customer integration, and we now operate several such facilities for several global OEMs. Mitsubishi Heavy Industries, a defining proof point. We are also pleased to share another significant milestone.
Azad has been awarded a prestigious contract by Mitsubishi Heavy Industries, Japan, as a single-source supplier partner, and we have signed an eight-year long contract and purchase agreement for the supply of high-engineered hot section nozzle vane segments for the combustion of a gas turbine engine. Single source qualification for hot section components of a turbine nozzle vane for an OEM of MHI stature is the strongest possible endorsement of our technical and process capabilities. This product is not just being awarded, and it is awarded by many, many audits and many, many qualifications prior to even they think of awarding such product to any company. On the financial performance snapshot, Q4 FY 2026 was another strong quarter. Revenue stood at INR 157 crores, a year-on-year growth of 26.4%.
Reported EBITDA margin improved from 36.5% in Q4 FY 2025 to 36.7% in Q4 FY 2026. Driven by operational efficiency, scale benefits, and improving product mix, PAT margins expanded from 20.9% to 22.3% over the same period. For the full year FY 2026 revenue was INR 590 crores against INR 453 crores in FY 2025, a growth of approximately 30%+. Reported EBITDA margin stood at 36.9% for the year and the PAT margin at 22.4%. The consistency of growth across both revenue and profitability reflects strong execution across every business segment and an increasing contribution from advanced manufacturing programs. Building the organization for the next phase, this is very important. Equally important to the financial performance is the work we have done on building the organization itself.
This is the work that does not show up in a quarter sprint, but it is in the work that determines what the company looks like five years from now. Infrastructure build out. A meaningful portion of management bandwidth in FY 2026 went into building physical infrastructure, new facilities, specialized equipment, audits, validation cycles, qualification, delta qualification for programs. That infrastructure phase is now approximately 70%-80% complete. With the heaviest part of the build out behind us, the operating focus from here is conversion, throughput, and the operating leverage that comes from running a fuller, more integrated manufacturing system. More importantly, the organizational restructuring. We are deliberately restructuring the organization to match the scale we are growing into.
We are bringing in senior professionals from the industry, leaders with deep functional and sector experience, and selectively replacing certain functional roles internally, where the role has outgrown what its current incumbent was originally hired to do. This is a planned exercise executed with care, and it is essential. The Azad of future need a different organization architecture from Azad of today, and we are building for the company today. Systems and process. Equally, we are upgrading our systems, our planning, our ERP, shop floor execution platform, our quality management system, and our governance frameworks. Scaling a complex precision engineering business requires us to grow across every lever; people, process, plant, partners, and systems. Growing one without the other is how companies stumble at this stage of the journey. We are determined not to. Overall outlook. Looking ahead, the demand backdrop of the product we make remains strong.
Global OEMs across aerospace, defense, energy, and oil and gas are scaling their platforms. The supplier base capable of meeting the technical threshold we operate at remains small. We are confident in sustaining strong business momentum and in delivering on our previously communicated top-line growth of approximately 25%+ for the current year. In line with growth outlook, we will continue to invest in capabilities, in capacity, in people, in systems, and in deepening our customer partnership. The story of Azad has always been one of the patient technical qualification-led growth. We intend to continue writing this story the same way. With that, I now hand over the call to Vishnu Malpani, our Whole-Time Director. Thank you.
Thank you, Mr. Chopdar, and good morning to everyone on the call. The segment is about where Azad stands strategically, and let me take you closer to how FY 2026 was actually executed on the ground, ramp up of the new plants and how each segment performed, the operational discipline that turns an order book into revenue, and also what are our key focus areas for FY 2027. FY 2026 was a year of calibrated execution for Azad Engineering. By every internal measure, it was one of our most productive years. We delivered our highest-ever revenue, highest-ever EBITDA, and highest-ever PAT, and we did it while commissioning two plants in this financial year, qualifying parts, and adding people at record pace. With this, we now have four additional plants that we've built in the newer facility.
We've always called FY 2026 a year of calibrated ramp up and not a rushed one, and the difference is really important to understand. Calibrated means we lined up everything, right from plant commissioning to customer qualification timelines, lined up hiring with our training, and lined up raw material flow with our realities of working capital and WIP cycle. I'm sorry. Every quarter of FY 2026 was planned in detail, and we've been able to deliver close to our plans in every quarter. In terms of segmental performance, we've been broad-based by design. Our growth of FY 2026 was not dependent on any single customer or any geography or any single segment. We've had tremendous growth every segment.
Energy and oil and gas remained the largest contributor for the full year 2026 and continues to be one of the main engines of the business, contributing to roughly 81.5% for the full year in terms of our revenue, which is INR 481 crores year-on-year growing at at least 24%. In quarter four specifically, the segment generated INR 128 crores in revenue, again, contributing roughly about 81% of our quarterly revenues. The headline number hides the diversity inside. We have grown across multiple customers, sub-segments within each vertical. Coming to aerospace and defense, we have delivered another strong year and a milestone number of INR 100 crores that we were able to reach for the first time.
For the full year 2026, this segment contributed to INR 102 crores, about 17.2% of our FY 2026 revenue, with a year-on-year growth of roughly 25%. In quarter four alone, this segment contributed INR 28 crores.
On the aerospace side, our share of qualified component categories with our key customers have grown materially through the entire year. Talking about our order book, our order book is at approximately INR 6,500 crores, with INR 600 crores delivered in FY 2026 and still remains at that level, which is about 11x, 12 x our FY 2026 revenue. Given the forward visibility, which is very rare in the times today. The conversion in our order book is broadly driven by three things, and this is a question that we were asked the previous time, that the conversion of an order book into revenue is driven by the production schedule already agreed with each of our customers, our capacity availability and ramp up against that schedule, and the qualification status of each and every part that is a part of a contract that we are signing with our customers.
As we exit FY 2026, I am very happy to share that all of these three are aligned for the first time at this scale. Capacity is largely in place. Qualifications are advancing across sectors and customers. Customer schedules are firm and are in place, and that is why we remain confident in delivering 25% + top-line trajectory, not just for FY 2027 but on a multi-year basis. Our focus for FY 2027 sits on three to four priorities at large. First, ramping up our four new capitalized plants across GE, Siemens, Mitsubishi, and Baker Hughes that we inaugurated over the last few quarters to their committed throughput.
Second, commissioning the remaining plants that are still under construction or are in WIP stages by the balance of the year, FY 2027, with the same discipline that we followed through FY 2026. Third, deepening our existing customer relationships. Four, normalizing the working capital cycle over this period.
With that, I now hand over our call to our CFO, Mr. Ronak Jajoo. Thank you.
Thank you, Vishnu, and good morning, everyone. I will take you through the financials and operational highlights for the quarter and the full year of FY 2026. FY 2026 has been an important investment and transition year for the company. During the year, multiple OEM dedicated facility progressed simultaneously through commissioning, qualification, and stabilization stage. While the result in elevated upfront investment in plant and machinery, inventory, manpower readiness, and work in progress. It has laid a strong foundation for our next stage of sustainable growth. We now have fully prepared facility, a robust order book, and a strengthened organizational structure to support future scale. Let me take you through the numbers now. For FY 2026, the company reported revenue from operations is INR 590 crores on a standalone basis and INR 603 crores on a consolidated basis.
This reflects a healthy year-on-year growth of over 32%, despite several facilities being in ramp-up stage, qualification stage, and significant part of the year. The other income stood at INR 46 crores, largely comprising of foreign exchange gain and treasury income. This is expected to moderate going forward as QIP profits are deployed towards the growth CapEx. Our EBITDA margin are around 37.4%, reflecting a strong execution discipline, supply chain efficiencies, and margin benefit driven by backward integration, which reduced our outsourcing cost. Depreciation and finance cost increased due to front-ended CapEx undertaken during FY 2026.
During the year, we have capitalized assets worth INR 392 crores and record an increase CWIP and capital advance of INR 191 crores during the year. Profit after tax stood at INR 132 crores on a standalone basis and INR 134 crores on a consolidated basis, delivering a strong growth of 54.5% for the year.
The balance sheet side, we continue to invest ahead of the curve. During FY 2026, we have capitalized assets worth INR 392 crores, as I mentioned. The company utilized incremental term funding of INR 154 crores to support ongoing capacity expansion, and total borrowing stood at INR 457 crores on gross basis and INR 272 crores on net basis. Our treasury balance stood at INR 184 crores, including INR 160 crores from QIP proceeds. Receivables stood at INR 309 crores, broadly in line with historical levels Trade payables were INR 87 crores, translating to approximately 51 days of sales, which was in line with historical numbers. We have not fully utilized receivable bill discounting facilities this year, given the current cost dynamics and our adequate liquidity available in the system.
As I mentioned that we have a treasury of INR 184 crores. Additionally, we have GST credit of approximately INR 100 crores accumulated over the past two years.
This is on the back of capital expenditures, which we have done historically, which we expected to realize by H1 FY 2028, supporting future cash flow and increase the liquidity in the system. Let me take you through the inventory. Inventory during FY 2027 reflects a deliberated and strategic buildup to support the ramp-up of our newly commissioned OEM facility and ensure readiness of committed production schedules as mentioned by Vishnu Malpani and Rakesh Chopdar in their presentation. The buildup is aligned with capacity expansion, customer stocking requirements, and upcoming order execution. It's important to note nearly 96% of our inventory is less than one year old, indicating that it is primarily linked to recent investment, plant ramp-up, configuration requirements, and customer-driven stocking needs rather than the legacy inventory.
As utilization improves across the new facility, we expect the investment to translate into stronger revenue observation, improved asset turn, better return ratio, and strong operating cash flow in FY 2027 and beyond. In closing remark, FY 2026 was just not a year of growth, but year of purposeful investment to build capacity, enhance capabilities, and position the company for long-term expansion. With a strong order pipeline, operational readiness across dedicated OEM facilities, and disciplined financial management, we are confident of converting this investment phase into the earning growth and improved returns in coming years. Thank you. I would now like to open the floor for questions.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Amit Dixit with Goldman Sachs. Please go ahead.
Yeah. Hi. Good morning, everyone, and congratulations for a good set of numbers again. A few questions, if I may. The first one is essentially, if I look at the projections or the commentary of global OEMs, including GE, Mitsubishi, Siemens, that seems to be very bombastic. They are fully booked for next 10 years. In this scenario, how do you see the landscape changing for Azad? The growth that we have projected, 25% in revenue, appears to be actually a little bit on conservative side, given the overall macro tailwinds that we are seeing. We have got, of course, relationship with all the global OEMs. Just wanted your thoughts on that.
Yeah. Hi, Amit. Thanks for the question. Yes, you are right. There is massive pressure from our existing customers. What we say, 25% + is a growth number as during last call and this call, and a couple of calls, we have been mentioning that we are moving the new facility, and it is not a small facility, which is in the making. We could successfully come to a level of stabilization that is 70%, 80% done. But we cannot see that massive jump immediately, right? Because we need capacity, we need infra, we need these orders, qualifications, redo delta qualifications. These things will definitely eat up a lot of time, and this is bound to happen with any organization, right? You must be doing all the stringent processes these OEMs carry for the stringent products what we manufacture. You are right. Definitely, there will be a jump coming in.
Maybe in coming quarters, I would definitely elaborate on the numbers of the growth we are seeing. But as we get stabilized 100%, my take is I would only give a growth number. What we are saying is conservative, you are right. And this statement is going to change maybe just because in the coming quarter also, we see that the 70%-80% is what we see the stabilization part done. Now the spindles are running, the material has been churning out, but the effect will not come overnight, right? This takes at least this quarter will give you. You will definitely see some movement of the revenues going up, but it is always nice to give a guidance and maybe in the next coming quarter, I can change my statement and definitely we can see after the stabilization is done, definitely we see a massive growth.
No, great. Got it. The second one is essentially on AGTE engine. Just wanted to understand the roadmap of delivery, and if I am not mistaken, there are 18- 20 engines that you have to deliver in maybe one and half years. Just wanted to understand where we are on that development also.
Amit , I would just give you an idea. It was years. Years got to months. Now it has come to weeks, so we are not far away. We are super excited, especially me, myself, I am super excited to deliver this to the government. Most needed for the country at this hour, so it is not far away.
Okay. One data bookkeeping question, if I may. Is it possible to break receivable and inventory days into segments for this year?
Yes. As we gave a statement in last call also, 2026 was something, and we were consolidating a lot of things. Stabilization was most important. A lot of our bandwidth of the entire management went up in trying to make these facilities up and running. That is most important, priority one. Then coming to the level where we have already WIP, work in progress, to cut down the inventories, as I promised, in H1. In H1, you will see a drastic change coming to closer to 200 days. In H2, we cut down to 160, 170 days. That we have already planned, and it is in execution, and we will achieve it.
Okay, great. Thank you so much, and all the best.
Yeah.
Thank you. A reminder to all the participants, please restrict yourself to two questions. Next question comes from the line of Suraj Malu with Catamaran. Please go ahead.
Hello, sir. Thank you very much for this opportunity. Sir, I have two questions. One is, in Q1 FY 2026, you had mentioned a plan of creating total eight dedicated facilities over 12-1 8 months, of which four have been completed. Are we on track to set up four more new facilities over six months?
Yes. You are right. We are on track.
Okay. The second question is, as and when you win some long-term contracts, you mentioned some contracts are five years, some are six, some are four, right? So of the existing order backlog of around INR 6,000 crore, what will be the timeline over which you will need to deliver this?
These contracts have specific delivery schedules. Every contract has a schedule at a part number level agreed with the customer, and then the capacity that we are bringing online. Just coming to the same thing that we were talking about, Sir, in the last about 18 months, we have gotten about four plants up. Right now, on the basis and ramp-up plan and the customer delivery schedules, the capacity is coming online for these four plants. If you look at it, over five to six years, we should be able to, on an average, these contracts extend to over five to six years.
Got it. Yeah. One last.
Yeah. If you just look at the guidance that we are talking about, 25%+ on the number, you will realize that over the next five years, we should be able to more or less consume INR 6,500.
Right. Understood, sir. Is it possible to get a split of the INR 6,000 crore order backlog by segment?
Yeah. Sure. Let me tell you broadly between our customers, or let me tell you broadly between our segments. Customers will be difficult for us to communicate.
Right.
Today, we have over $400 million worth of orders towards energy, approximately $200 million+ for aerospace and defense, and about $100 million+ in oil and gas.
Got it, sir. This is very helpful. Thank you very much.
You are welcome.
All right. Thank you.
Thank you. Next question comes from the line of Gaurav with Avendus. Please go ahead.
Hi. Thanks for the opportunity. My first question is on this new contract that you have got from Mitsubishi for the nozzle vanes for the hot section. Just want to understand a couple of things. When you said it is a single-source order, does it mean that these were originally manufactured by Mitsubishi, which is now being outsourced to you, subjected to qualifications, or you have won it from some other vendor? Second, how big is this opportunity, especially on the hot section for the nozzle vanes? And third question is more on the aerospace, which is for the Pratt & Whitney and Rolls-Royce order. Where are we in the qualification cycle?
Yeah, Gaurav. Just remind me if I am right. The first question you asked is, was this parts manufactured by Mitsubishi or some other vendor? It was manufactured in-house. These parts are very critical in nature, right?
Yes.
This is the combustion area. A lot of controls and checks are required to produce this part. It is not just someone has an infra or some kind of equipment, these parts just go like that. It needs a lot of specialized infra and specialized talent to handle these kind of components. Either they keep it in-house or they give it to the most trusted partner. They cannot have multiple partners in this. It is decided. Mitsubishi says, "Hey, you have to focus completely on this. And we only dedicate this to you, and same thing we expect from you." This is the conversation because of the nature of the product. This is mandatory it happens that way. Once it is developed in there.
Second, if you are talking about market, it is a very lengthy explanation. What I can tell you is you can go to the competition. Now we are going to be head on, is you can study with how Metalspace or PCC. These are the companies who are the players who are in this segment. We have stepped ourselves in this door, right? That will give you more this thing and if you can have more details, because it is a very lengthy conversation.
Yeah.
We can come back, or you can contact us after the call or something. I can explain you more in detail.
All right. Okay. On the Pratt & Whitney and the Rolls-Royce.
Yes. In this four engine manufacturers on the airflow is what we started. The first one was Rolls-Royce. We have in H2, we are expecting to supply the first qualification batch. Once that is approved, I think we can see some momentum coming from Q4 of FY 2027 or early of FY 2028. That is where the supply starts.
All right.
Followed by, as you can see, it took two and a half years to-
Yeah.
Enough to the state, and this is normal. We could do it in two and a half years. It is also a great thing, it is not a small thing to do it in and a half years. Same cycle will be followed. The next is Pratt & Whitney, then comes Safran, and then it is followed by them.
All right. If you allow me just one question on the numbers bit, which is on the margin. What I understand is that you have just commissioned the four plants, they are underutilized, and yet we get to see your margins going up every quarter.
Yeah.
Is it the case that we can see more margin surprise from here on because you are yet to see any operating leverage benefits from the new plants?
We always say 33%-35%+ , and that plus can be anything.
Yeah.
Expecting some kind of, definitely a growth is always, because we just don't produce. We do a lot of improvements, continuous improvements on the floor. That's our team's culture. Definitely, I wish and hope that we deliver that plus every time.
All right. Thanks for the answers and all the best for future.
Yeah.
All right. Thanks, Gaurav.
Thank you. Next question comes from the line of Bhavika Singhvi with Niveshaay. Please go ahead.
First of all, many congratulations on the set of numbers. The first question I have is related to the utilization, as currently we have been maintaining quite good utilization. The upcoming facility, like the one we have already installed and the one will going to come in six months, do we expect the same utilization or it will differ, in terms of how much time we can expect it to come at the same level of 90%+ utilization?
Yeah, Bhavika. See, if any plant is inaugurated, that means building brand-new machines. We don't wait for the shop to complete 100%. When, like you talk about Baker Hughes, we were around 50%, 60% of the capacity machines were inside, and when we cut the ribbon, we started producing the parts the same day. But when you see in the numbers, it will take some time to flow the material to come to the dispatch area, right? That's what I was giving an answer to Amit also, that the Q1 of this, the current month, quarter, which is going on, this is the churn out month. The revenues will follow once the material gets started dispatching. Once it's inaugurated, definitely the spindles are running and the metal starts in the flow.
The second question I have on the segment side, as which is quite good on the energy and oil segment. I just want to understand what's driving the growth in the segment. Is the new addition of the customers or the new products we are adding in the portfolio? If you can give the clarity on that.
Yeah. In that case, I will tell you, these requirements were always there with us, right from day one when we started. We just did not have the capacity. As we are setting up the capacity, as we are inaugurating these plants, this is where we start taking orders. It is us who were not taking orders because we did not have capacity. Now we are increasing the capacity, and we are opening the door to take more orders. This is where the growth is coming in. This requirement was not today. It was there with us from day one.
Okay, am I understanding right that we are getting from the same products, we are not adding new products in this segment?
The right way to understand this is, see, I think it is not a straightforward approach, right? Any time our growth with a customer happens on multiple fronts, right? First is you have certain parts that have been qualified. We are ramping up our market share on those qualified parts over time, right? Let us say we were doing a certain kind of volume share with our customer on those parts. Now, because of our progressive deliveries, our volume share on those parts will continue to grow. Most of the growth that you see today is coming out of qualifications of parts that have been done and ramp up that is coming in. Second lever for our growth is that we are also adding adjacent categories or more part numbers to our overall capability.
When Mr. Chopdar was talking about how, or one of you all asked us a question about how we have signed a contract with Mitsubishi, that is an additional capability, higher entry barrier than the current product and diversified product portfolio, right? With a much higher asset turn, much higher market.
We are also adding those. The third level for our growth is that we are also adding other customers where we can deploy our capabilities that we have built horizontally. Any of these industries that we are a part of, by nature, have three or four major players dominating the entire industry, whether it is energy, whether it is aerospace and defense, and oil and gas. The capabilities that Azad is building across our customers are very selectively building it so that we can horizontally deploy it and grow the business in the years to come. When we are committing a 25%+ growth, that is not on the back of products that we are going to qualify. That is on the back of the wallet share that we are gaining on qualified products. I hope that answers your question.
This is also very important to understand by a time that whatever we say the growth numbers are on the qualified products, we never have taken in consideration what is going to come, what we have to qualify. Let it be the engine, let it be the hot gas components. Though the markets are big and all, we know that we have signed up, we are definitely going to qualify, definitely going to increase revenues. Our culture here is what is achieved, what is qualified, what is the growth numbers coming out from that. That is the reason we give a very decent number, and definitely we see an upside going forward. Definitely.
Okay, understood. Just last on the aerospace and defense side, currently it holds 17% of our total revenue. Do we see the same percentage going forward or we are expecting the aerospace division getting increased in terms of share of the revenue?
Sure. Let me take this up. I think we've tried to address this even in the past. Azad's been trying to build a well-diversified business across every sector, right? If you look at the history, you will be able to see the demonstration of how we are looking at diversifying. Back in 2020 or 2021, Azad was largely an energy business focusing on one product category, which was compressor airfoils. Over the last five years, you see Azad has diversified at multiple levels, whether it is segments, and then in the segments, product categories as well. Let's say we want to look at Azad five years from today.
You will see that Azad is a fairly diversified business, where energy will be contributing anywhere between 55%-60%, and the balance will be contributed by our other verticals, such as aerospace and defense, and even oil and gas, for that matter. We expect our verticals to continue to grow because we have a lot of headroom, and become balanced, diversified over the next four, five years.
Out of 80% of current energy and oil and gas, how much is the oil and gas segment?
Ma'am, oil and gas, we are still under qualification. Baker Hughes is one of our only customers in this segment, and we are in the process of building capabilities right now. If you look at any revenue contribution for the current year, it was not material. It was under about INR 10 crores, because we are largely doing qualification. FY 2027 will be the first year where you will see a ramp-up in this. Because we've just started. In fact, the last notification that we gave in April 2026, was inauguration of the facility. This is one month old. But you will be able to see how we quickly ramp up in this industry or in this sector in the current financial year. We expect to add material numbers by our oil and gas segment this year. It will follow the same trajectory.
See, it is important to understand that it took us from 2008- 2020 to get to INR 120 crores. We have grown 5x in the last about five, six years. Aerospace was started in 2018, 2019, and in five, seven years, we have been able to deliver INR 100 crores of top line in that vertical. Oil and gas will not even take five, six years. Oil and gas should be able to breach that number over the next couple years. So this is how the ramp-up works, and this is the nature of this industry.
That is it. Thank you so much.
Thank you. Next question comes from the line of Pratik Dharmshi with Union Mutual Fund. Please go ahead.
Yeah, many congratulations for a fantastic set of numbers, Rakesh and the team. Just one question from the risk side. Any risk are you currently observing from this Middle East geopolitical tension on supply chain, or it is business as usual for us? How are we seeing things?
Yeah. See, if you take away the macro risks that are there in every business that is existing today, from our business perspective, I think we have de-risked ourselves from majority issues that can be faced in our business. Our business can get impacted if we do not have demand. We have purchase orders and visibility over the next five, seven years. The other thing that we can have a risk on is capacity creation, which we've been able to do to a large extent. The third one was manpower, which we are today doing. It's about our ability to be able to do all of this together. That execution risk remains, and we today are focusing on normalizing our working capital cycle along with it as well.
We don't see from a risk perspective, I think we've been able to manage that because our customer relationships are structured around qualifications which have taken several years to do and are based on multi-year contracts. We don't see risk from that perspective.
Got it. Just a follow-up. In terms of the new theme which is emerging on energy side, which is nuclear, do we have any scope or any opportunity which we can anticipate or play in the nuclear opportunity?
We are already a player that is working in the nuclear space. In fact, our energy segment, when we talk about it, we cater to gas turbines, nuclear turbines, and thermal turbines as well. We make critical rotating components for even nuclear turbines, and we make it for the world's largest customer, which is based out of France. It is a government-owned entity called EDF, Areva, and a fully owned subsidiary of EDF, which is Areva Solutions. They audited Azad for a few years. We cleared all our qualifications, we cleared all our entry barriers, and we've been supplying nuclear for the last couple of years. Today, in fact, we are one of the only qualified partners in the country to be producing nuclear turbine airfoils. We are ready and geared up for the opportunity that we are seeing, whether in India or globally.
Great. Many congratulations once again. Thank you.
Thank you.
Thank you. Next question comes from the line of Sahil Karia with White Pine Investment Management. Please go ahead.
Yeah, thank you for the opportunity. Just wanted to ask how many AGTE engines we have the order for, and what are the delivery timelines?
So, it will be difficult to share that information as it is a part of a coveted national defense program, and like our chairman addressed this before, I think it is a matter of we are in the process of delivering it, and soon we will be able to share more updates on it officially. But we may not be able to discuss specific numbers about it. We can tell you that, yes, there have been great advancements internally. We are very confident moving forward on this space. But sharing specific numbers around this will be difficult. Thank you.
Okay. The next question was, what was the CapEx number for FY 2026 and planned CapEx for FY 2027?
For FY 2026, I have already covered in my presentation. We have done the CapEx of around INR 392 crore capitalizations during the year. And for FY 2027, we are on the trajectory to ramp up the upcoming plans.
So what would be the number, if you could quantify it?
Sorry?
What would be the number for FY 2027? If you could quantify the number for FY 2027.
Most of the CapEx deployment is linked to the raise that we've done for QIP. We raised INR 700 crores in QIP and our CFO covered that the balance deployment of about INR180 crores.
INR 180 crores- INR 190 crores is coming there, which will happen towards that.
Okay. And sir, do we have any plans in entering the heat treatment plants or the surface treatment plants? Like I said-
Sorry, can you repeat that? Your voice is a little muffled. Can you please repeat your question?
Do we have any plans of introducing heat treatment plants or surface treatment plants?
We already have a state-of-the-art heat treatment facility, both we have vacuum heat treatment as well. We are Nadcap-approved, by the way. We just got Nadcap approved for our treatment. Also on the special processes, yes, that's the plan because there are some dependencies on our supply chain. What we are doing is we are ultimately going to have every special process in Azad. However, the critical special processes are already in-house, like shot peening and coatings. All these are already in-house, but few more left that is also going to be in-house.
Okay, thank you. Just an add-on on the CapEx. We had announced our CapEx in Saudi Arabia with Baker Hughes. Are we on track with the plans or is there some delay due to the war?
Sorry, your voice is not very clear.
Mr. Karia? Yes, your voice is breaking. Can you just come in the range and talk?
Am I audible now?
Yes, please go ahead.
We had announced our CapEx in Saudi Arabia with Baker Hughes. Are we on track with the plans or is there some delay there due to the war?
That is still on. From an opportunity perspective, I think we are still going ahead with that. But the timelines have been shifted. We are still in discussions with our customer on how do we best take this forward given the current situation and priorities. While you see we had signed an MoU, we inaugurated a Baker Hughes plant for us in our dedicated facility. Our growth plans with our customer remain, and that is an opportunity that is there. But our current management bandwidth is today focused on what is there in the current plant, and we want to get that capacity up and running. That opportunity which exists in the Kingdom of Saudi Arabia is available for us and will continue. But I think we want to take it up not as the most important priority today.
We want to get our current plans up and do that, and then that can happen alongside. But that opportunity still lies.
Thank you so much, sir.
You are welcome.
Thank you. Next question comes from the line of Rishika with Goldman Sachs. Please go ahead.
Good morning, everyone. Thank you for the opportunity. Sir, two questions from my end. When are you guys planning to start civil work for the third plant? Secondly, if you could share your views on potential benefits from upcoming engine ecosystem in the country.
I am sorry, can you repeat your second question again?
Just your views on potential benefits from the upcoming engine ecosystem in the country.
Okay. The first one, Rishika, I think we're building our. We've already completed four plants, four lean facilities in the CapEx that we were deploying towards creating additional capacity, and the balance four plants will be completed in this financial year. Every plant has a schedule that we are following on in terms of commissioning, when are we looking at ramping it up, and obviously, as explained by our Chairman and CFO, it takes specific time before we are able to get a plant to a reasonable amount of utilization. That is a natural course. That is coming up. In terms of the engine ecosystem, I think, I would make it broad-based even further, saying that the opportunity that Azad today is sitting on.
Azad has positioned itself always as a manufacturer of highly engineered critical components across these three segments, which are mission and life-critical. With the demand for these engines going up over time, with backlogs of our customers increasing, Azad is obviously looking at a much larger opportunity in this domain. Which also means that the ecosystem in India should be thriving, and with indigenization plans of the government, with indigenization plans of how we are stacking up, we are moving from building capability for one engine, and we will only scale it up. From the engine that we are building, we will move from the current 3.7 kilonewton- 4 kilonewton engine to a higher capacity going forward, and eventually contribute to much larger programs.
The entire engine ecosystem, we are seeing this demand grow and capacity is being added for a lot of capacity is being added in the country. We won't be able to talk too much about the engine program, but yeah, we see that India is going through that phase where we will now start contributing meaningfully to our GDP from a precision manufacturing industry perspective.
That's helpful. Thank you. Just one more question. What about the third expansion plan of 85,000 sq m plant that you are planning? When will that-
Yes.
Civil work start?
So, ma'am, as pointed out, this year our focus is very clear. We want to get the current facility and the balance plants committed, and our next priority would be to ramp these up slowly. Once this is done, we will take on the next facility. Because today, we are creating capacity based on the schedules that we have with our customers on order book. So once this is completed, our next focus will be building the second plant up over time.
Understood. That's helpful. Thank you so much.
You're welcome.
Thank you. Next question comes from the line of Manish Ostwal with Nirmal Bang Securities Private Limited. Please go ahead.
Yes, sir. I joined the call a bit late because I was in the impression of [Non-English content], so my question might be repetitive. I just wanted to understand your thought process around the working capital management and the cash flow generation of the company. We have invested a lot of money in the capacity building, but how we are managing working capital and what sustainable cash flow we can think of in our business. Thank you.
Yeah. If you see, we have upfront invested into the inventory, and all the plants are at different level of capacity ramp up, as Mr. Chopdar and Vishnu explained. So these plants are at different level of maturity, but your investment has to be upfront. That is the reason this year the inventory is slightly looking elevated. Looking forward from FY 2027 and onward, we see that this inventory will be converted into the revenues and that will ease out the cash flow from that particular perspective.
All right, sir. I go through the entire transcript after the call. Thank you.
Thank you.
Mr. Chauhan, please go ahead with the question.
Hello. Good morning, and thank you for the opportunity. I am audible?
Yes, you are. Please go ahead.
Yeah. So sir, congratulations on the new contract wins and the order section was in order. I just wanted, I guess you gave a breakup on order book. I would just reiterate the number. It will be around INR 8,500 around, right? INR 8,500 crores. Is my understanding correct?
No. We are talking about our rolling order book, right? So that is about INR 6,500 net of what we have delivered this year.
My question was basically on the renewals and amendments on the long-term contract that we had and also the new orders that we had after the Q3 that you indicated order book was around INR 6,500 crores.
We have added contracts and some of these contracts we cannot disclose the order value, and that is why whatever can be publicly disclosed is about INR 6,500 crores. But it is INR 6,500 crores+ . That is the order book that we are getting from a long-term perspective.
Okay, got it. And sir, also on the hot section modeling segment, like without getting into obviously the customer confidential details, I just wanted to understand the manufacturing processes. Is it broadly similar to existing airfoil work where you receive an engineer shape, forecast input and you perform on high precision machining finishing? Or does this require something materially different?
No. I think, see, the process of manufacturing hot section components cannot be discussed on the call. If you are very keen, we would invite you to our company and please visit us. We will be able to explain the manufacturing process. But I can only give you one statement, that there are only three players around the world of precision manufacturing that have been able to crack this materially. So the complexity of manufacturing these components is very, very high.
No, makes sense.
The majority of those three players, so the process is different than the existing manufacturing process.
Got it.
We can discuss the more operational details if you are keen. If you plan to visit, we will request our SGA team to sort of arrange a plant visit, and this can be addressed at the plants.
Sure, sir. This question was basically around, given the higher complexity and single source position, this definitely will be margin accretive, right? How will it be during ramp-up and mature volumes? This is obviously above company's vendor EBITDA margin band, right?
Sir, we will not be able to share. See, this is a single contract, and you are asking specific information on the contract. It will be difficult to share, but once you understand the process of manufacturing, most of these questions that you are asking will be addressed. So I would request you to please come down and spend some time with us. We will be able to explain. You can also look at, to draw parallels, please look at the top two or three players that are making these kind of components and what is the kind of profitability and bottom line that they do on these segments. This is publicly available information. You can look it up and you will get a sense of it as well.
True, sir. Also, one accounting clarification. In the FY 2025 annual report, you mentioned there is capitalization on new product development program. Can you clarify what exact costs are capitalized and which balance sheet line this is in the FY 2026 quantum? If these costs were fully expensed, what would the EBITDA five-year margin look like?
We generally don't capitalize any development cost in our balance sheet, and we expense out as a part of our accounting policy. There can be some tools specifically designed for the customer which are capitalized to that extent, but the general development cost or the general expenses are expensed out in the P&L.
Got it, sir. That's it from my side. Thank you.
You're welcome.
Thank you. Ladies and gentlemen, that was the last question for today. We have reached the end of question and answer session. I now hand the conference over to the management for closing comments.
So thank you. With this, I think, I'd like to take this opportunity on behalf of Azad Engineering, our chairman, our board of directors, and all of us, thank you so much for giving us this opportunity to talk about our business, present our thesis and share how we will be executing FY 2027 and beyond. Thank you so much. We are very excited about the current phase that Azad Engineering is in, our sectors are, and how our capacity is coming up online. So we are only looking at upward journey onwards from this point. Thank you so much.
Thank you. On behalf of Azad Engineering Limited, let's conclude this conference. Thank you for joining us. You may now disconnect your lines.