Ladies and gentlemen, good day and welcome to Azad Engineering Limited Q4 FY 2025 earnings conference call hosted by ICICI Securities. 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 listen only mode, and 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 touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Amit Dixit from ICICI Securities. Thank you, and over to you, Mr. Dixit.
Yeah. Good afternoon, everyone. On behalf of ICICI Securities, I welcome all the participants for today's call. At the outset, I would like to thank the management for giving us an opportunity to host the call. From the management today we have with us Mr. Rakesh Chopdar, Chairman and CEO, Mr. Vishnu Malpani, Whole-time Director, and Mr. Ronak Jajoo, Chief Financial Officer. It has been a glorious year for Azad where we have seen consistently robust performance through the quarters. We will have brief opening remarks from the management. Post we will open the floor for an interactive Q&A. Without much ado, I would hand over the call to Mr. Chopdar to take this forward. Over to you, sir.
Thank you so much. Good afternoon, everyone. Welcome, and thank you for joining us today for the Q4 and FY 2025 earnings call. Joining us on this call are Mr. Murali Krishna, our Managing Director, Mr. Vishnu Malpani, Whole-time Director, and Mr. Ronak Jajoo, CFO. We are also joined by our investor relationship partners from Strategic Growth Advisors. Our result and presentations have been uploaded to the stock exchanges and the company website. We hope you have had a chance to review them. On the Q4 performance highlights, we are pleased to report a strong close to the fiscal year. Standalone revenue for the quarter grew to INR 125 crore, representing a 34.2% increase year-on-year. EBITDA for the quarter stood at INR 45 crore, with margin improving from 38.8% to 36.5%, driven by operating leverage and enhanced product mix.
Net profit grew from INR 15 crore in Q4 FY 2024 to INR 26 crore in Q4 FY 2025, marking an impressive 74.4% growth. On the full year FY 2025 highlights, FY 2025 has been a defining year for us, one marked by momentum and meaningful progress across all fronts. Revenue from operations grew by 32.9% year-on-year to INR 453 crore, underscoring the strength of our core business and the growing global demand for our specialized capabilities. Our EBITDA margin expanded to 36.3%, and we delivered a PAT of INR 89 crore`, a significant milestone reflecting both scale and execution discipline. On the strategic wins and market position, this quarter we secured new orders from global OEMs such as GE Vernova, Mitsubishi, Baker Hughes, and Rolls-Royce Defence as well as Civil.
A clear endorsement of our engineering capabilities and reliability as a strategic supplier. These wins follow rigorous global evaluations and reflect Azad Engineering's growing prominence in the global supply chain. Beyond these marquee wins, we also added multiple new orders across the year, taking our current order book over INR 6,000 crore. On the capacity expansion and execution focus, we have taken bold steps to expand capacity and align with long-term demand. Our new facility in Hyderabad became operational in Q1 of FY 2026, marking a pivotal moment in our growth journey. These facilities are part of our mega factory vision with dedicated spaces for key clients. This approach enables deeper collaboration and greater agility in meeting demand. We are already seeing strong interest from global OEMs to secure multiyear capacity, reinforcing our belief in the direction we are headed.
On the outlook and growth ambitions, in previous years, our growth was constrained by capacity. With our new infrastructure which is coming online, we now see significant headroom to scale. We are confident in achieving approximately 30% plus revenue growth in FY 2026, supported by a robust order pipeline, operational readiness, and a sharp strategic focus. Looking ahead, our aspiration is anchored in innovation, reliability, and global partnerships. Our strategy is simple but focused: scale with precision, invest with intent, and grow with agility. Before I hand over the call to Mr. Murali Krishna Bhupatiraju, our Managing Director, let me take a moment to introduce him. Murali brings over 25 years of rich experience in operations management, corporate finance, and metal forming.
Previously, he held leadership roles at Bharat Forge America, Dyson Corporation America, Gerdau Macsteel America. He also holds advanced degree in industrial engineering from The Ohio State University and computer science from Georgia Tech. His passion and holistic approach, accompanied by strong leadership qualities, will drive our growth in the coming years. Over` to you, Murali. Thank you.
Thank you, Mr. Chopdar, for providing this opportunity. Azad Engineering has an impressive journey and has built strong credibility in the industry with its niche offering customized to clients' requirements. This has been a truly incredible growth story. To support this growth, we have strengthened our balance sheet with a QIP of INR 700 crore in February. I would like to thank all the investors for believing in our growth story and showing confidence in our business. In the last few months, we reached a major milestone with the inauguration of our first lean manufacturing facility dedicated to Mitsubishi Heavy Industries. Covering an area of 7,200 sq m, this facility marks a crucial milestone in our journey to increase production capacity tenfold. This achievement was made even more memorable as MHI honored us for our decade-long collaboration by awarding us their prestigious 2024 Partner of the Year.
This was followed by a second state-of-the-art plant for our dedicated customer, GE Vernova. Spanning 7,600 sq m , this advanced facility is designed to manufacture complex airfoils for GE's next-generation turbine engines. Our subsidiaries, Azad Prime and Azad VTC, have been a great addition to our capabilities in special processes. These capabilities help us reduce our dependence on our outside vendors and also save on the cost. We expect these subsidiaries to start contributing this financial year. As we enter the new growth phase, our focus is to build on the success and execute the long-term growth trajectory. We will continue to set new benchmarks and redefine what is possible. Now I hand over the call to Mr. Vishnu Malpani, our full-time director, to take this conversation further. Thank you.
Thank you, Mr. Murali Krishna. FY 2025 has been a defining year for us, a year where we didn't just grow in numbers, we grew in capability, direction, and ambition. We've made meaningful progress across all the five pillars of our growth strategy. Whether it's capacity, capability, capital, customers, or contracts, our progress has been well-rounded and has set the stage for the next chapter of Azad's journey. Let me begin with a quick look at on our Q4 numbers. Our energy and oil and gas segment remained dominant contributor, generating INR 97 crore or 77.7% of our Q4 revenue. The aerospace and defense segment scaled beautifully, contributed to about INR 25 crore or 19.8% of the quarter's revenue. Stepping back and reflecting on the full year, it was a year of broad-based growth.
Revenue grew significantly across verticals, supported by strong execution, customer relationships, and deeper engagement with all stakeholders. We expanded not just our production capacity, but also our engineering capability this year, which is evident from some of the prestigious awards that we've received from our customers in India and abroad. We strengthened our capital position with a QIP, and we continue to reinvest in our infrastructure, people, and innovation. One of the most strategic shifts that happened this year has been our diversification. While energy has provided scale and stability, aerospace and defense represents our next big leap. These sectors reward us with technical strength, reliability, and trust of our customers that play to our core strengths. To support this growth, we've invested in our most valuable asset, our people.
Over the past year, we've onboarded senior leaders across every major function, giving us the experience and leadership depth needed for the future. Today, we are fully staffed, structurally ready to take the opportunities that come ahead. Looking at FY 2026, we're entering the year with confidence and with momentum. We've built the base, the teams are in place, the capacity is live, and the opportunity is clear. We are excited about what lies ahead. With that now, I'd like to invite Mr. Ronak Jajoo, our Chief Financial Officer, to walk us through the financials. Thank you.
Thank you, Vishnu. I will first talk about the standalone financial highlights for Q4 FY 2025. Let me take you through the revenue. Revenue for Q4 FY 2025 is INR 124.5 crore. A significant increase of 34.2% compared to the last quarter of FY 2024, which reflects our strong business growth. EBITDA for the quarter was INR 45.4 crore with an EBITDA margin of 36.5%, which makes an impressive 44.9% growth over Q4 FY 2024. PAT for Q4 FY 2025 was INR 26 crore with PAT margin of 20.3%, representing a robust growth of 74.4% year-on-year basis. Let me now take you through the full year financials of FY 2025. Revenue from operations. The company recorded revenue of INR 452.9 crore in FY 2025, up from INR 340.7 crore in FY 2024. This represents a robust growth of 32.9%, driven by strong operational performance of the company.
On segmented by classification, in the aero and defense segment, our revenue has grown to INR 80.7 crore compared to INR 43.8 crore in FY 2024, highlighting a successful diversification story, which we have told you over the last two earning calls. Other income. In FY 2024, include one-time other income of INR 27.3 crore, and if you normalize that particular thing, this year our other income increased by INR 6.9 crore, which primarily is driven by interest on fixed deposit and foreign currency restatement as per Ind AS guidelines. Our EBITDA for FY 2025 was INR 161 crore with the EBITDA margin of 35.5%, the highest ever EBITDA margin which company has achieved in full financial year. This margin expansion was supported by improved employee cost efficiencies and operating leverage and business excellence switch.
Our profit stood at INR 88.5 crore in FY 2025 with a PAT margin of 19.5%, showing a strong growth of 51.5% compared to FY 2024. The operating cash flows of the company has turned positive this year with a INR 56 crore of operating cash flow positive, which reflect our healthy profitability and the cash flow management. Our debt position. Gross debt for FY 2025 was around INR 243 crore, which is approximately 1.5x of EBITDA, which are our long-term guidance. But if you take the net debt position, which is gross debt minus cash and bank balance, it is still negative INR 412 crore, and we have a strong liquidity in system of around INR 656 crore because of QIP raised in the last quarter.
This give us the confidence to get into a great quarter next year and the full financial year of FY 2026. The floor is open for question- and- answers.
Thank you.
Thank you. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on a 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. Also, a reminder to all the participants, please restrict yourself to two questions. The first question comes from the line of Kamlesh Bagmar with Lotus Asset Managers. Please go ahead.
Yeah. Thanks for the opportunity and congrats, Rakesh, for the excellent delivery and successful QIP. Sir, first question on the order books. What is the order books as on date or quarter end?
Yeah. Thank you, Kamlesh, for the question. Our order book currently stands at upwards of INR 6,000 crore.
Secondly, we have commissioned the capacity. Roughly around 95,000 sq m have been there. This phase two, when do we expect that particular commissioning?
For the first phase, Mr. Bagmar, we are building 95,000 sq m. As you would have heard in the call, we are doing one facility after another. We have inaugurated two lean factories for two of our customers, which have happened respectively in the last financial year. Now we are going to be getting them online. Those factories would start generating revenues while we start focusing on the rest of the factories which will come up during the course of the year and next. It will be a staggered approach, and slowly we will have all of these factories contributing to revenue one after the other. We are not waiting for the entire plant to be open. We are going after every factory one after the other and working on it. That is our strategy.
Lastly, do we have any clarity like how much CapEx will be there over next two to four years? This year we have planned roughly around INR 270 odd crore. Next year and next after that.
Yes, Mr. Bagmar, we did a QIP of INR 700 crore. The reason the QIP was done, to foster the growth of the company, right? This capital that we raised will be deployed towards building our infrastructure and also capacity and in a staggered way over the next few years. This is exactly what we planned to do.
Yes, thanks a lot.
You are welcome. Thank you.
Thank you. Next question comes from the line of Kinjal with Shah & Savla. Please go ahead.
This is Munish here. Thanks for taking my question. Congratulations on the great set of numbers, and we welcome Mr. Murali and also happy to note that we are increasing our bandwidth at all the levels. My first question is, sir, we have commissioned two dedicated facilities for Mitsubishi and GE Vernova. How is the ramping up happening there? When can we reach the optimum capacity there? At the optimum level, what can be the revenue generation from those two facilities? That is my first question.
Okay. Thank you so much for the question. I think this is also slightly related to the last question that I answered. We did inaugurate two facilities, two lean facilities for our customers. The way this will happen is, the facilities are now live. This is not a transition that will happen overnight. I think it will take us a few quarters and it will get better quarter on quarter. This year, FY 2026, we are obviously generating revenue out of the new facility. Any incremental net revenue comes out of over FY 2025 will come out of the new facilities. But you will see that progressive development happening quarter- on- quarter. I think towards the end of this year, we should be able to reach a full capacity in terms of those new facilities in terms of output.
What can be the revenue expected at the optimum level from both these facilities?
Yeah. The way to think about this would be the revenue guidance that we're looking at. If you looked at what Mr. [Inaudible] had said during his speech, he said that we are anticipating a revenue growth of upwards of 30% for this financial year. This growth that is coming up will be coming out of the newer factories.
Yeah. Great. How many further dedicated facilities do you think we'll be able to inaugurate in the current financial year? Are there any new customers or new products being developed and being targeted this year?
Yeah. Thank you for this question. I think there are a few factories that are lined up in pipeline. I mean, we wouldn't be able to disclose too much information about it. But yes, there are factories that will get the course of this year. Slowly, like we did for the current two factories, those also will come in line and start producing results. That is there and obviously if you've seen our customer roster, you would have known that our order book and our customers are backing us and trying and looking by signing long-term contracts with us. We are seeing great demand across each of our verticals and very confident of delivering on the execution timelines that we have. FY 2026 should be a year of stabilization for us and consolidation for the next year of growth.
Thank you.
Mr. Kinjal, please rejoin the queue for more questions. Next question comes from the line of Rajesh Vora with Jainm ay Venture. Please go ahead.
Good afternoon, gentlemen. Congrats on the good set of numbers. I wanted to understand your competition under your able leadership has done great on the energy side and now taking strong steps towards the aerospace and defense. With the contribution this year increasing quite significantly from around 13% to 18% of revenues. How are you seeing this number panning out over the next three to five years? How does that change the trajectory of margins for the company?
Yeah. Thank you for the question. I think we are very bullish on each of our verticals and each of those are growing at a certain rate. If you look at our business' trajectory for the last four years or five years, we have grown at a compounded growth rate of about 40%. Our EBITDA CAGR has been higher than 40%. Our PAT CAGR has been higher than 40%. The business is looking at continuing the growth momentum. When you look at our business' growth across verticals, you would see that some of our verticals are, for example, it is a testament to the fact that we kept talking about diversification, and this is the first year where one of our verticals, other than energy, has demonstrated reasonable numbers.
We closed aerospace with an INR 80 crore segmental revenue, up from about INR 43 crore last year, which demonstrates the fact that our qualifications have been completed. If you look at our other vertical, which is oil and gas, last year we delivered about INR 4.4 crore, and this year, FY 2025, we have been able to deliver about INR 13 crore. When you look at the growth of these verticals in the coming year, FY 2026, you will see that these verticals are ramping up very quickly because from the business perspective, we have focused on qualification, we have built capacity, and now we are ramping up. Each of these verticals will grow at a faster rate than the blended growth rate of the business. You will see that oil and gas will grow multi-fold because the base is smaller today.
Aerospace also will grow upwards of the blended growth rate that I talked about. This is how we are seeing the business evolve over time.
Okay. Any goalpost for HEB revenues as a percentage of revenue over the years?
Yes. Yes, I understand. Ideally we want the business to be fairly diversified. We anticipate in the next few years, the business would reach about 55%-60% energy and the balance, 35%-40% will be contributed by aerospace and defense and oil and gas. We anticipate does not mean that any vertical is growing. We have a lot of headroom even in energy, but we anticipate that the growth rates of the business will get us to a point where 55%-60% will be contributed by energy and the balance between the other two verticals in the next few years.
That's useful, Vishnu. My second question is on, given the massive opportunity for the company in each of the verticals, and given that we are taking significant leaps in capacity expansion with 15,000 sq m already booked out of 95,000 sq m. Earlier question you mentioned that it will be a sort of a staggered utilization and ramp-up. Is it fair to say that we will have the entire 95,000 sq m will be booked in the next year or so? How much time are we looking at?
The way I would like to answer this two ways, if you look at what we've delivered, we've delivered INR 453 odd crore of revenue last year. If you look at our order book, which I said was upwards of INR 6,000 crore, you know that the order book to sales ratio is extremely big.
Massive.
For us, we are looking at progressively adding manufacturing facilities with capacity, and this is a year of stabilization for us. We are trying to build an ecosystem where we are building newer plants, 10x higher capacity and all of that. We intend the business to grow at upwards of 30% while ensuring that each of these things are properly scaled up. You will see that 95,000 sq m will be completed over the next 12 to 18 months in terms of construction, and we'll slowly open it up for capacity. Then we will move into our phase two of expansion, which is the next leg for us. But right now our focus is to look at FY 2026, deliver on the commitments that we have for customers and to our shareholders. We are looking at that right now.
Great. Thank you, Vishnu, and wish you all the best at HEB and the team.
Thank you. Thank you so much for your question.
Thank you. Next question comes from the line of Kireet Atluri with Jetha Global. Please go ahead.
Yeah. Hello, sorry. Can you hear me?
Yeah. Hi, Kireet. Go ahead.
Yeah, sorry. It's Kireet here. Just two quick clarifying questions. What should we assume is the asset turnover on the incremental CapEx spend over the next two years, like directionally?
The incremental asset turnover for the next two years will be two, blended across verticals.
Two, right? So on any incremental CapEx spend, the asset turnover should end up being about two, I would think, correct?
Yeah, that's correct.
I guess, and maybe this speaks to the conservatism of the guidance. I guess if you consider that you are going to spend INR 150 crore, the minimum in CapEx, which I forget the exact number. You are actually only assuming 30% growth, which would equate to INR 120 crore of incremental revenue. If you simply keep extrapolating that, you are not getting anywhere close to two, you are close to one. There is a big discrepancy between what you are saying is your revenue growth guidance for the next couple of years and the asset turnover of two. How does one reconcile those two numbers?
Yeah. Thank you for the question. I think for us this year, we are not looking at getting our capacities line. We are looking at consolidation as a thing. The asset turn that you are saying, incremental asset turn of two will happen over time because now the deployment of capital is also towards infrastructure, towards capacity. By the time we are investing and returning, you will see that towards the end or quarterly progressively, you will be able to see the ramp-up moving from 1.0 to 2.0 of incremental asset turns. You will be able to see it will be demonstrated over our progress that you see for this business. Our strategic priority for this year is to get all our manufacturing facilities up, constructed, filled with capacity.
We do not have any challenge in terms of capacity for the years that we are looking forward because order book is already there. This is how we are looking at 30% because even on the base of INR 140 crore we are looking at growing this and any incremental revenue that you are seeing from INR 450 crore and upwards is going to come out of the new facility. There the investment is done. We are going through that cycle of stabilizing it, consolidating and then rapidly growing from there.
The QIP money will be deployed shortly. It is with us in the
Yeah.
Sir, your voice is breaking.
Mr. Atluri, your voice is breaking. Can you come a little closer to the phone?
Hello, can you hear me? Hello, can you hear me? Is that better? Hello?
Yes, please go ahead.
Okay. Yeah, sorry. Maybe I'll just squeeze in just last.
Yeah. I'm sorry. I'm unable to hear you. Okay. It's all right. We can move on.
Absolutely.
Sir, can you please repeat your question?
Yeah, the question was for the two facilities that have already ramped or are in the process of ramping, have we already sourced all the equipment that is needed for those facilities, or are they still in transit?
Yeah. The sourcing has been done. I think few of the machines have already arrived. Out of the two manufacturing plants, one of the manufacturing plants, about 70% of the machines have arrived and have started production already. But the balance machines are on the way. For the other plant, it's happening. So it will happen over the next one or two quarters for us to be able to ramp this up. Yeah. But the machines orders have been placed. So everything is pretty much done from our side. We are just waiting for it to be delivered to us and then we get them operational.
Mr. Atluri, are you done with the question?
Yes.
Mr. Atluri, thank you. Next question comes from the line of Amit Dixit with ICICI Securities. Please go ahead.
Good afternoon, and thanks for taking my questions. There are few questions from my side. The first one is on the advanced gas turbine engines that Azad Engineering are limited production partners with GTRE. So, as per my understanding, the first engine was to be delivered by the last quarter of FY 2026 or maybe first quarter of FY 2026. So I just wanted to understand where we are on this and what kind of market you see considering that the recent Indo-Pak conflict was basically drone-based, and these engines are supposed to go in drones and LRCM, which are the flavor of the town now. So just wanted to get a brief on where we are on this development and what kind of use case you see for these engines.
Okay. Thanks, Amit. First of all, on this engine, the jet engine. It is in production at the moment, and we are very close to. Very soon we are going to deliver the first two engines. Looking at the market, if you ask me, it's not really defined to us because this is utilized in multi-platforms. It's used in the UAVs, it is used in anti-ship missiles, and it has quite a few platforms where this engine will be used. This engine is a very strategic decision. This is just a key to the bigger door. It's a small key. If you see this capability development, we'll be the first one to manufacture this engine in India.
This is more for the country, so this is a need of our. Our focus is fully on to develop this engine and deliver to the government as soon as possible.
Okay, got it. The second one is on, there was an MOU that we executed in Saudi under the Make in Kingdom and used by the Kingdom kind of thing.
Yeah.
Just wanted to understand the progress on that.
Yeah.
Are there any milestones that we have crossed when we expect contracts to be signed, et cetera?
Amit, so the MOU was signed for sure, yes. We also have this intent to do it. We are having multiple discussions with the government of Saudi Arabia as well as our customers. We are making a proper strategy to set up a shop there. We are aware that it is not so easy to get into out of India setting up the shop. A lot of work is involved in this. That is ongoing at the moment. Maybe we can update you by next quarter, we can tell you what exactly the status would be. Still, the discussions are going on, and we are very active in that.
Great. If I can squeeze one more, then I will rejoin the queue. On working capital, it is pretty pleasant to see that in Aerospace & Defense, actually, the working capital days have come down. Inventory days have come down, particularly in a very steep manner, 246 to 155, if I compare FY 2024 versus FY 2025. Even the receivable days have come up. However, we see a little bit of increase in inventory days in Energy vertical. I just wanted to understand from FY 2026, is it the peak working capital days that we will see? What kind of sustainable working capital days can we assume for both the verticals?
Amit, in this there is a small catch in this. Look, there is one way we are looking to reduce all the working capital, as I mentioned in the last call as well, that most of the qualifications are now done and the inventory which is sitting is now getting off. Not long, in few quarters, you will see declining the number of days, and very soon you will witness that. On the other hand, now we are seeing these contracts which we are signing, where we need to really showcase the customers that we need to hold some kind of inventory for showing the raw material. Because these contracts are bound on the OTD work we do, the deliveries work we really. We have to demonstrate that, look, we are holding the raw material for you. There are two aspects going on.
One is the past, which we finished major of the qualifications, and now you will see next quarters a declining working capital cycle. It is not far away. A few quarters only you will start seeing the decline thing. The other part is on few of the contracts which requires mandatory that, we need to have some inventory for some sort of time where we have this regularize as if the contract is very new. So the cycle starts and even that also can be controlled very well.
The question was more on what we saw that aerospace and defense, where our focus is. Focus is a wrong word. Basically, we saw increase in revenue significantly from there. However, on inventory front we saw a decline. On receivables, we saw a decline. This is very pleasant to see. Just wanted to understand the genesis of that and you mentioned that this will continue. This decline is actually quite welcome. Just wanted to understand more that what lies ahead as we go for more qualifications, whether this number will increase and then decrease or we will see this remaining at this particular level, particularly for aerospace and defense.
Yeah. So, Amit, as a strategy, we sign something, say two years, three years back, and we have committed to the customers. You are very well aware on the raw material, which are having massive lead times, three months, six months, nine months, sometimes 12 months also for the deliveries. This is one time. One time we took these contracts, we got the orders, we bought the materials lying, and we finished the qualification. The entire cycle, it just looks like a contract to the qualification. If you actually see the cycle times of the entire journey right from receiving the contract till you finish the qualification, and till then you will not see any movement in the inventory change. You will only see inventory change as you start producing in the production orders. That has started.
Going forward, the best part is we have taken up the entire qualifications and we do not see any more contracts of this new kind of massive where we have to invest massively in the large inventory for finishing the qualification. That part is majority is over. We have not signed, we do not have anything which is sitting, which needs to be having a big inventory with us. That way, I think that is the reason I am telling in few coming quarters you will see the decline.
Great, sir. Thank you so much and all the best.
Thank you. Next question comes from the line of Sarang Joglekar with Vimana Capital. Please go ahead.
Yeah. Hi, can you hear me?
Yeah.
Yeah. On the order book, first of all, we wanted to understand the INR 6,000 crore order book, over how many years it will be executed?
Thank you for your question. Our order book is split over multiple years. There are three years, five years, six years contracts that we have.
Got it. On the product side, do you look at, in the future, developing more complex, more value-added products or there will be scaling of whatever you are producing right now?
Yeah, we are doing that. In fact, if you look at our orders that we have bagged in the last financial year, we have also looked at some very strategic orders where we are increasing our valuation. From our component manufacturing, we are moving into, say, end-to-end assembly of a complete gas turbine engine for Indian defense. Right? Mr. Chopdar talked about it briefly. We are increasing our capability by going up the value chain in terms of the manufacturing industry. From a component manufacturing, we today are building capability and skill set around end-to-end manufacturing as well. That is-
Got it.
That is happening across customers, yeah.
Got it. Yeah, that's it.
Thank you.
Thank you. Next question comes from the line of Aditya Bhatia with Investec. Please go ahead.
Hi, good afternoon, sir. My first question is on the revenue guidance that you have given. Last year also, you had started off with roughly 25%-30% growth and we ended up delivering almost like 35% growth. Do you think that you are being a bit conservative given that we are expanding our capacity quite sharply? Is it a case that this year, as you are calling it to be a year of consolidation, next year growth can be even significantly faster?
Hi, Aditya.
Hi, Vishnu.
Yeah, hi. This again, it is a mixed answer for whatever Vishnu, myself, and what we spoke. As we told you, these facilities which are coming up, they are massive, right? The equipment what we are buying, they are not really available off the shelf. We have to import a lot of machines. The questions which are coming is when the revenues will coming up, when the factories will come up, and what is the guidance we are looking at. FY 2026 is very crucial to us to set up these facilities, get the equipment. The equipment which has arrived, for example, for GE Vernova, this was not ordered today. This was ordered quite long back. That is the reason the machines comes in, installs, we commission them, we start doing the qualification again, and then we start using the bus.
There is a cycle which we have to follow. Correct? Whatever we have done before the QIP where we raised money and before these equipments were raised, it was ordered long back. Similarly, from now what we are planning to fill up these factories up, right? The equipments have been ordered. As this comes, we need to give some time for them to stabilize. FY 2026 is what we will look to stabilize first. Maybe in coming quarters we can let you know on this question how exactly we are going to give a guidance more. At the moment, we hold this because it's a term that conservative or aggressive, that's difficult to say at the moment.
We're just waiting for all these facilities to come up and make sure that first the commitments what have been given to the customers to show the facilities up, that's where our focus is at the moment. Anything you want to add, Vishnu?
Aditya, just adding to what Mr. Chopdar said, I think if you've seen how we've given quoted guidance and annual guidance in the past also, we have been very accurate about where we want to go, and in all cases, we've over-delivered on our guidance. This is our estimate of what we will be able to do by achieving various aspects of growth in the organization. It's about stabilization, ordering of machines, newer contracts, new team members, all of that. A 30% on a base like this is a pretty good number, to look forward to it, in my view.
Absolutely. My second question is on the working capital side, wherein you did speak about likelihood of working capital coming down. Anything more that you can share on that? What kind of trajectory should we look at? Maybe not from the perspective of this year, but over a slightly longer period of time also. Where is it that you would like the working capital to be settling?
I think, Aditya, this, Mr. Chopdar attempted to answer this in the previous one, but we still just to give you a broad contours of where we want to head to. We believe that we want to get to about, by the end of this financial year, we want to get to about 170 to 180 days of cash-to-cash conversion cycle. And if you remember why and how this working cycle is getting trimmed, you see our verticals scaling up revenues. Our aero business from INR 40 crore moved to INR 80 crore and will continue to grow. Oil and gas, which is currently about INR 13 crore, will significantly grow this year. So you would see all of this trimming towards the end of it progressively.
Yeah, overall, quarter on quarter, you might be able to see smaller changes, and then by the end of this year we should be at a range of 170, 180 days of cash-to-cash conversion cycle.
Perfect. That's clear to you. Thanks, Rakesh. Thanks, Vishnu.
You're welcome. Thanks, Aditya.
Thank you. Next question comes from the line of Vignesh Iyer with Sequent Investments. Please go ahead.
Hello, sir. Thank you for the opportunity. Just one question from my side. What I was observing over the last three quarters is there is some movement on part of the employee expenses moving on a higher side. I heard your comments where you said we are entirely staffed for the requirement, I mean, in relation to the new facilities that have opened up. Is it fair to say that these expenses already showcase the additional salaries that is required for the upcoming 7,200 and 7,400 sq m facility?
Vignesh, just to go back to what I meant when I was talking about it. Over the last one year, Azad has hired a lot of senior management resources across various business posts that we had. This was created for the future, right? Each of our business verticals today need business leaders that are focusing on how we're going to be ramping up in each of the verticals, whether it's energy and space and defense and oil and gas. Because the way we have to scale up from this point is very different from five years ago. That is why these senior management positions have been manned.
In terms of the manpower cost, yes, you can say to an extent we do have the people that we needed, but the ideal manpower cost for our business is significantly lower than where we anticipate it to be today. Today we are at about 20%-21% of manpower cost right now for the business. But we anticipate this cost to, over time, normalize to about 15%, 16%, 17%. But this will happen over the next few years.
Understandable. That leverage will play out even more because
Because as a high-growth company, this is the capital that needs to be deployed. We are not looking at it from a cost perspective. We think this is an investment for the future. Today, our order book to sales is about 10, 11x . For us to be able to cater that, we need Senior leaders focusing on each of the growth engines and scaling the business rapidly. That is our view on the business, and you will see employee cost tapering off over the next few years.
Perfect. Sorry if I had mentioned earlier, could you tell me what is our EBITDA margin guidance? Will it remain at the same level as FY 2025 going ahead?
Yeah. Our EBITDA guidance will be consistent. We will maintain the EBITDA guidance that we have done for the last financial year. Whatever we have delivered, we would want to continue at the same rate.
Perfect. Thank you. That is all from my side. All the best, sir.
Perfect. Thanks.
Thank you. Next question comes from the line of Jatin Jadhav with Sahasrar Capital. Please go ahead.
Hello. Am I audible, sir?
You are audible. Please go on.
My first question was regarding how many more dedicated facilities are we targeting to manufacture or cater to for our future clients or existing clients? My second question was regarding the gas turbine engine which we have made. What are the future prospects, or are we looking to deploy them in any near time soon in any products or what is the overall development over there?
Thank you for your question. I would start by answering the first one. Yes, we are looking at putting up more dedicated factories and I think we are working on it as well. Over the course of this financial year, you would be able to see some updates regarding that. It will be difficult to share some insights onto it now because we are bound by some confidentiality norms. But during the course of this year, you will see a couple of more manufacturing facilities going live for our customers. That is one. On the second front, which is gas turbine engine that we spoke about. Mr. Chopdar brought about the fact that this is our entry into something really big. For us to move from a component manufacturing into a complete engine manufacturing, this is a strategic path for us.
This is the first step towards a major development that is happening towards the defense ecosystem in India, and we are doing it for the first time. India is also making engines for the first time, and this is their first time. We are very confident of it. The developments internally, the results look promising, and we hope that this continues and this step that we are taking will lead us to bigger and more bigger engines in the future.
So just to follow up on the engine. So are we currently the design phase is complete? Are we testing it?
So our scope. So the design is with GTRE. We are looking at end-to-end manufacturing and supply of it. So the design is already achieved, and we are in the process of manufacturing.
Got it.
And then testing will be happening at DRDO once the manufacturing is completed at our end.
Correct. That's pretty much from my side. Thank you so much and all the best.
Thank you. You're welcome.
Thank you. Next question comes from the line of Vishal Dudhwala with Trinetra Asset Managers. Please go ahead.
Hello. Am I audible?
Vishal, please go on.
Sir, first of all, thank you for taking my question. Congratulations for a good set of numbers. As I hope my couple of questions already answered and I have left with one question, I will be using a little bit more EBITDA margin. Can you tell me your EBITDA margins have expanded to 36.3% FY 2025, and as we have known that is a mix evolved with more aerospace and defense work, which may be more engineering intensive. Do you foresee any risk to margins or could this lead to further operating leverage losses in the coming years?
Our margin guidance is consistent with what we have delivered in FY 2025, and we anticipate that we will grow the business at 30%, sustaining our EBITDA margins and PAT margins.
Okay. Thank you for that. Thank you so much.
You are welcome.
Thank you. Next question comes on line of Divya Agarwal with Ficom Family Office. Please go ahead.
Yes. Thanks for taking the question. So a few questions from my side. I actually wanted to know what was capacity realization for the old 27 sq m facility and the two new facilities that came up.
I am sorry. Can you please repeat your question slowly?
Yeah. I just wanted to know the capacity realization for the old facility that was around 20,000 sq m and the two new facilities that came up recently.
For the existing facility, we operate at an average of about 84%, 85%. The new facilities that are coming up online, we are in the process of getting all equipment, setting it up, et cetera. But our aim towards the end of this year should be we should be able to reach an optimum utilization of 70%+ by this year.
Okay. That was helpful. Got it. Regarding the two new facilities that you have set up, approximately how much was the CapEx that you have incurred for that?
For us, we would not want to share numbers at a unit level, but our investment in the business will be to the tune of INR 700 crore, which will happen over time. This will be invested in infrastructure and capacity building across all our dedicated units.
Sure. This would include that 95,000 as well as Sangareddy capacity, right?
Yes, that is correct. This includes the 95,000 sq m only.
Okay. Regarding, just a clarification on the Sangareddy facility. In the last PPT, the Q3 PPT, you had mentioned the capacity would be around 75,000, but in this current presentation it is around 67,000. Can you help me with that? What is the final number for that?
Yeah. Sorry, can you please repeat? Your voice is breaking. Can you please repeat once again?
Sure. I just wanted a clarification regarding the Sangareddy facility. In the last PPT of the Q3, the capacity that was mentioned was around 75,000 sq m. But in this current PPT, the capacity is mentioned as around 67,000. There is a deviation between the two numbers. Can you help me with that?
Yeah. The way to think about this is, we are constantly improving our capacity. If you look at a few years ago, we were talking about 20,000 sq m of manufacturing capacity available with us, and then roughly about 10x more coming up. The 10x more coming up was across two manufacturing plants. One was about 95,000 sq m and the other one was about 75,000 sq m. Currently, what we are developing is phase one of it, which is 95,000 sq m. All the investments that you are seeing are going in the 95,000 sq m, and this is coming up one by one. As soon as this entire 95,000 sq m, all the plants in it come and get completed, we will move on to the second phase, which is 75,000 sq m.
Okay, so it is 75,000, right?
Second one. Yeah. Second capacity is about 70 to 75,000 sq m. Yeah.
In the presentation, it is mentioned around 67,000. I got confused between that, but thanks for the clarification, sir.
Yeah.
Thank you.
Thank you. Ladies and gentlemen, due to time constraints, we have reached the end of question and answer session. I would now like to hand the conference over to Amit Dixit for closing comments.
Yeah. Hi. I would like to thank everyone for attending the call and the fruitful discussion that we had today. I would now like to hand over the call to Mr. Chopdar for any closing comments. Over to you, sir.
Thank you, Amit. Thank you, [Inaudible] . Thank you, everyone, for your time and patience for this call. I have nothing much to add, and I think we are good. Thanks a lot.
Thank you. On behalf of Azad Engineering Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.
Thank you.