Ladies and gentlemen, good day and welcome to Azad Engineering Q1 FY 2025 conference call hosted by ICICI Securities. As a reminder, all participant lines will be in the listen- only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during 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, sir.
Thanks, Amit. Good afternoon, everyone. On behalf of ICICI Securities, I welcome all the participants for Azad Engineering Q1 FY 2025 conference call. At the outset, I would like to thank the management for giving us an opportunity to host this 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. We will have brief opening remarks from the management, post which we will open the floor for an interactive Q&A session. Without much ado, I would hand over the call to Mr. Chopdar to take this forward. Over to you, sir.
Thanks, Amit. Thank you very much. Good afternoon, everybody. Welcome and thanks for joining today on our quarter one earning call. On this call, I have our Whole-Time Director, Mr. Vishnu Malpani, our CFO, Mr. Ronak Jajoo, and team Strategic Growth Advisors, and our investor relationship advisor. The results and presentations are uploaded on the stock exchange and the company website. I hope everybody has had a chance to look at it. I am pleased to share that Azad demonstrated its best ever quarter in terms of revenues and profitability. During the quarter, our top line increased by 30% on a year-on-year basis to INR 98 crores. We witnessed a similar growth trend in the operating profits as well. The PAT has more than doubled on a year-on-year basis to INR 17 crores. As indicated previously, this is largely due to the reduction in finance costs post-IPO.
We expect to maintain this growth trajectory throughout the year. The road ahead is very promising as we continue to have a robust order book of more than INR 3,300+ crores distributed among the business verticals. We are continuously working on qualifications and approval to further strengthen our order book. Some of our major order wins which are part of our order book includes, the recent one is a prominent contract from Siemens Energy Global GmbH & Co. KG, Germany for a tenure of five years to manufacture and supply critical rotating components for the global requirement in demand of spare advanced gas and turbine engines. An order from GTRE, DRDO for manufacturing and assembly of a turbojet engine. Now, this is very exciting opportunity and this is going to take Azad into a very different league.
This is a landmark contract for us, for India, as this marks our entry from component manufacturer to an integrated assembly, complete assembly, and the best part is we move to the propulsion system. We have expanded our manufacturing capabilities by vertically integrating to offer end-to-end manufacturing of the complete assembled gas advanced turbo engine. As we play an important role in this mission as a single source industry partner to GTRE, DRDO. This is a very critical component and a nation pride component, and this will be utilized in the various different defense applications. A lot of programs where defense applications are being utilized. A seven-year contract with Rolls-Royce for the defense and military aircraft engines, two major contracts from Baker Hughes, a contract from GE Vernova for supply of high complex rotating airfoils for the nuclear, industrial and thermal power industries.
All these above referenced have very good progress which has secured Azad's growth for the coming years. These contracts reflects Azad's win in terms of new customers, segments and geographies, and we expect them to generate significant business value over the next coming years. Further, we have orders from our existing customers for existing products as well as the new products which we are adding progressively. As a company, we are focused on consistently expanding our capabilities in terms of processes. Towards this, we have recently acquired the assets of Leo Primecomp Private Limited through our subsidiary, Azad Prime Private Limited. Azad Engineering holds a 51% stake in this company and the rest well owner shall hold the remaining stake. It is notable that this company has the capability to manufacture and supply large size critical advanced technology parts.
In addition to our existing portfolio of small to medium size mission critical life-critical components. This acquisition in fact will expand our product portfolio in the nuclear, gas, thermal and oil and gas sectors and enable us to service our existing customers as well as the new ones. We believe this will also help us improve our overall asset turnover. Likewise, we have added a subsidiary, Azad VTC, for special processes and coatings, which will help us reduce job work charge as well as the dependency, as these special processes and coatings, only few companies in India have the qualification, else we are depending on the other special processes house worldwide. So this is a very good advantage for Azad now. Now let me take a moment to update on the expansion front.
As stated previously, we are coming up with a new facility that is 10X the existing facility in a phased manner. We are on track to complete the expansion phase and will be ready by end from FY 2026. With orders in hand and pipeline of validations, we have high visibility on the utilization of the first phase. We are strategically positioned with a well-diversified portfolio that spans across high-growth sectors, driven by strategic partnerships, industry qualifications, and long-term contracts. These diverse engagements solidify Azad's standing as a very key player in the energy, nuclear, aerospace, defense, and oil and gas. Energy, we hold a very long-term contract with all major industry players across various product segments, reinforcing our significant presence in this sector. Like the nuclear.
With our recent approval from EDF, we are exceptionally well-positioned and are ready to capitalize the upcoming boom and the growth opportunities within the nuclear industry. Aerospace and defense, we are just transitioning from manufacturing rotating engine components to comprehensive engine manufacturing and assembly, showcasing our expanded capabilities in this field of both defense and civil aircraft engines. Oil and gas, our two major contracts with Baker Hughes are enhancing our capabilities and setting the stage for further scaling in the sector of all the Class A components. Finally, we are pleased to reaffirm our guidance of 25%-30% revenue growth for FY 2025, alongside an anticipated improvement in our margin profile. That is all I had to say for this, and now I hand over to Mr. Vishnu Malpani, our Whole-Time Director, to take this conversation further.
Thank you, Mr. Chopdar, for your strategic insights. Good afternoon, everyone. I am thrilled to join you today to discuss the remarkable progress we have made in this quarter and our ambitious outlook for the future. As Mr. Chopdar mentioned, we are in a period of unprecedented growth and transformation, driven by a relentless focus on scaling our capabilities and expanding our market presence. Today, I will take you through the numbers that underscore our performance and strategic decisions that are fueling our momentum. From the substantial increase in our order book to key customer acquisitions and sectoral gains, we are operating from a position of strength. More importantly, I will highlight why we believe this is just the beginning of a sustained period of high growth for Azad. Let us dive into the details quickly. We are dominating the market by unleashing unprecedented growth. Azad is not just another precision manufacturing player.
We are redefining the market. As we have emphasized earlier, our competition is not local. Our competition is not in India. We are operating at a global scale, competing, matching, and exceeding the standards of companies based in the U.S., Europe, China, Japan, and other leading geographies. Our growth strategy is laser-focused on five critical pillars. We call it five C internally, and these five Cs are customers, contracts, capability, capacity, and consistency. Today, I am proud to announce that we have exceeded expectations across all of these areas. Our order book has skyrocketed from INR 2,000 crores a few quarters earlier to over INR 3,300 crores today, driven by strategic contracts and key customer acquisitions, including industry giants such as Rolls-Royce for their defense platforms and another key aero-engine OEM, which for confidentiality reasons I will not be able to name.
We have onboarded them for their commercial platform for manufacturing life-critical rotating parts. With our current wallet share of less than 1% in a TAM of $28 billion, we are only beginning to scratch the surface of our potential. Now let me talk about some strategic acquisitions and diversification that we have done. Diversification is not just a strategy for Azad. It is our pathway to dominance. By strategically shifting our business mix across verticals, we are not only reinforcing our existing verticals, but also seizing new opportunities. Recent opportunity that Mr. Chopdar talked about with GTRE, DRDO, under Ministry of Defence for supplying of a complete jet engine is a massive opportunity for us, for India. This will not just improve our target addressable market further because now from component manufacturing, we are moving into the propulsion industry as well.
Please note that this is just the first step and there is tremendous potential to be unlocked. Our recent acquisitions have strengthened our portfolio and extended our global reach. This isn't just growth, it's calculated expansion that cements our industry leadership. Taking this further, let's dive into our explosive performance and strong forward momentum. Reflecting on our performance, the numbers speak volumes. Compared to the same quarter last year, we've achieved approximately 30% growth in our top line and a 30% increase in our EBITDA, with PAT surging by 2.3 times. Just four years ago, we were delivering INR 100 crore- INR 120 crore annually. Now we are closing in on INR 100 crore revenue in just one quarter. This is nearly 4x growth over four years, and this is a powerful testament to our strategic execution capabilities, relentless drive, and rest assured, we are just getting started.
Azad is poised for sustained high growth. Looking ahead, we are more confident than ever in our ability to sustain aggressive growth. Our guidance of 25%-30% annual growth isn't just ambitious, it's achievable, backed by our track record of execution excellence and the strength of our current order book. This momentum is also only the beginning. Now let me talk about consistency, which is the foundation of our success. Finally, the bedrock of a strategy is consistency. It's not just enough to achieve growth. We are committed to sustaining and building on that growth year- after- year. Consistency for us means that every contract that we sign, every customer relationship that we build, and every capability that we develop is underpinned by a razor-sharp focus on quality and execution. It is this unwavering consistency that fuels our confidence in Azad's future.
With sectoral tailwinds and an expanding global market across sectors, power, nuclear, aerospace and defense, and oil and gas, Azad is positioned not just to grow, but to dominate in the years ahead. With this, I would like to conclude and thank all of you who have joined us and for your continued trust in Azad as we embark on this exciting journey of transformative growth. I would now like to move this on to our CFO, Mr. Ronak Jajoo, for his insights on the financials.
Thank you, Vishnu. Firstly, we'll talk about our standalone financials highlight for quarter one, FY 2025. Let's start with revenue. Revenue from operations grew by 30% to INR 98 crore in quarter one, FY 2025 on year-on-year basis, which essentially means ARR of INR 400 crore per annum on annualized basis. As explained by Vishnu, during the quarter, aerospace and defense contributed around 19% of our total revenue, which is in line with our long-term diversification plan. Our long-term guidance to the market for sales growth will be in the range of 25%-30% on year-on-year basis for a longer period of time. The EBITDA and adjusted EBITDA margin for the last three quarters and FY 2024 remain very stable across the period at a range of 34%. Our long-term guidance to the market for EBITDA margins will be in the range of 33%-36%, depending upon product and sector mix.
Let's talk about our key major operating cost checks over the past three quarters. Quarter one, FY 2025, quarter four, FY 2024, quarter one, FY 2024. Employee expenses as a percentage of sales were between 20.5%-21.2%, which are quite consistent. The raw material and other expenses put together have been in a range of 45.1%-45.7%, which is again through a mark of consistency in our performance. The adjusted EBITDA grew by 29% to INR 34 crores compared to INR 26 crores in quarter one, FY 2024, with sustainable margins of 35%. EBITDA was adjusted for one-time expenses of Forex restatement and provision for credit impairment of trade receivable as per the Ind AS guidelines. Let's talk about depreciation. Depreciation has increased on account of capacity added during quarter four, FY 2024 and quarter one, FY 2025, which help us to achieve our growth margins.
The finance cost mainly represents interest toward working capital, term loan, and there are no one time impact in this particular quarter, which was there in previous two quarters. Which come to the PAT. PAT is to that INR 17 crores with 17% margin compared to INR 7 crores in quarter one, FY 2024 with a margin of 10% at that moment of time. As a summary, I'd like to reaffirm few of the points. We, as a company, has achieved a sales growth of 40% between FY 2021-FY 2024. For FY 2025, our MD, Mr. Chopdar and Vishnu Malpani, who is our director, has already given a guidance of 25%-30%. And over the long term, we are going to sustain this particular growth. The business is diversifying both on product and sector mix, and same is reflected in quarter one FY 2025's numbers.
The adjusted margins are quite consistent over a period of time, and we are doing this at a healthy growth of 35%. The gross margin grew over a period, and in quarter one FY 2025, we have achieved a 70% gross margin. And going forward, we will sustain these margin on a long-term basis. The adjusted ROC of the business is over 20% plus over the period, and the same will be sustained in a long-term basis. With this, I conclude the presentation from Azad side, and I open the doors for question and answers.
Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question, you may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants please mute your handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Deepak Saha from DRChoksey Finserv Private Limited. Please go ahead.
Hi. Good afternoon. Am I audible?
Yes. If you can be a little more louder, please.
Yeah, sure. First of all, congratulations on good set of number. Just one question I have. The recent deal that you have signed with GTRE, you can share some of the criticality and complexities on this particular deal given your entry into the propulsion system? Are you all players in terms of the incumbent players, in India especially, to take some good certain details or you already were making this kind of components involving propulsion system, particularly, for this kind of product? That's the only question that I have. Thank you.
Okay. On this GTRE DRDO, this is a complete engine. Just as a layman to make you understand what this engine looks like. You have seen Tejas aircraft or any of the military aircraft, it has an engine, right? And that engine is classified with its thrust. What size of thrust it is. This is a complete engine which will fly a missile, it can fly a UAV, or it can fly a drone, it can fly many things. This is something that I can't speak much about it at this call, but to just give you an idea, this is a complete engine. So making components, integrating, assembly, and give ready to fit. That's the scope of this work.
Just to add to Mr. Chopdar's point. One important thing to note is that while we received this order, we were chosen amongst the top defense companies in India. We competed against them, today we have been chosen as the single source industry partner for development cum production.
Perfect. Just quick one follow-up on that. Do you have your current capabilities that you have are well equipped for executing this kind of project on the propulsion system side?
Yeah. If you look at our product portfolio, you will see that we have been making all of these critical components for various customers internally. That is why for us, getting this entire engine manufacturing was easier because Azad is obviously manufacturing most of these critical components for other players.
When the technical assessment happened by DRDO and GTRE and they could see all these parts and capabilities already existing in Azad, that's where we could compete everyone in the line, and we could win this because the capability is all set. It's not something new we have to learn in this, it's just assembly and all. We have to take guidance from GTRE DRDO. Rest component manufacturing, we are very well-versed with it. So we are very confident on making this a success. We wish and hope that 2026 we see this engine fly.
Okay, perfect. Thank you and all the best.
Welcome.
Thank you. The next question is from the line of Bala Muralikrishna from Omen Investment Advisors. Please go ahead. Hello, please go ahead. Thank you. As the line of Bala Muralikrishna is not audible, we will move to the next question. The next question is from the line of Pranav Shrimral from PINC Wealth Advisory. Please go ahead.
Yeah. Hello. Hope I'm audible.
Yes.
Yeah.
Yeah. I had just a couple of questions. One, so we have seen a significant increase in our revenue from aerospace and defense. Could you just give some background as to which sector are you seeing the growth in? Is it the defense sector? Is it the aerospace sector?
For us, we are doing both in terms of commercial as well as defense.
Okay.
You are seeing growth in the aerospace sector because like we have emphasized on our previous calls that we are in the process of qualifications. We anticipate that once the qualifications are completed, aerospace will continue to grow at a much, much faster rate than the other verticals. This is a reason because of that, and we are focusing on both. This is a mix of both defense and commercial.
Okay. Is there a way we could use even the breakup from aerospace and defense, or is that not possible?
Today we look at business broadly in three sectoral forms: energy, aerospace and defense, and oil and gas. We intend to separate this into separate verticals only after we cross a threshold of about INR 75 crores to about INR 80 crores in every sector. Until then, we look at it at a blended level because it does not make sense to look at a vertical at a lower number and then call it a separate vertical. As of now, we look at it blended only.
Blended only. Okay. And just one last question.
Yeah.
Do we have any plans to open up subsidiaries in Europe or a manufacturing hub in Europe? Or would that be feasible in long term for us, considering it will be longer transportation times, better cost?
Yeah. We get a lot of opportunities that come to us. As of now, all our manufacturing units are based out of India and Hyderabad, and two recent acquisitions have happened in Vizag and Chennai. As of now, we do not have an active plan. We are not, but we are hopefully, any assets that come and that are interesting, we are open to-
Yeah. What I can add to Vishnu is, as our customer base is spread across the global areas. What happens sometimes, as you know that we are into critical components, right? The entry barriers are very, very high. It takes a lot of time to qualify, both from our side as well as the customer side. What happens is, if one qualification is done with one supplier, it's not easy to switch to someone else. They won't continue that long. However, there are some opportunities which keep on coming to us from our customers. Like, one of the OEM will tell us, "Hey, are you interested to buy this company? He's our qualified supplier in Europe," or maybe South Africa or maybe America.
They keep telling us, "Can you take over this company so that we don't have to redo the qualification?" So these opportunities keep on coming to us. This comes from our customers.
But it's not feasible at the moment, or is it just not-
No, we keep on exploring.
You are open to it.
Yeah, we are open to it, and we are keen to explore that. That way, yeah.
It's an ongoing thing. We evaluate it like we evaluate any other opportunity that comes to us, like the ones that we did in India. We are in the process of evaluating assets that come to us, and then whenever we strike a right opportunity, I think location shouldn't be a barrier for us.
Yeah, that doesn't matter.
Got it. Okay. Thank you so much, and that's all.
Thank you.
Thank you. The next question is from the line of Kamlesh Jain from Lotus Asset Management. Please go ahead.
Yeah. Thanks for the opportunity, sir. And congrats on very strong set of numbers. Just one question on the part of your comments which were made in the presentation, where you highlighted that our other expenses have increased primarily because of the higher freight rates because of the Red Sea disruption. I believe our material is majorly sold on the basis of ex-plant. Does really the freight part come into play? Because our business model is primarily on the ex-plant basis.
Yeah. This is on account of we have a job work which are a special process for which we have to send our part, and in aero, there are a lot of processes for which we have to send for the coating and all those things. Therefore, the logistic cost has increased. On account of that, we have acquired a company, VTC, where we started the qualifying for those particular process, and going forward, we see that this cost will normalize again.
Okay. Secondly, on our new facility, what particular construction rate we have reached at that particular location. What is the schedule for commissioning of that particular facility?
We are on track. Mr. Chopdar also mentioned it during his minutes, that we are on track there, and you will see that the revenue in FY 2026 will also be contributed through the new facility. We are on target and at least we will be ahead by a couple of months in terms of what our target date was. We are at point there and FY 2026, you will see incremental revenue of that financial year coming out of the new facility.
Okay. For FY 2025, we continue to maintain that we will grow at 25%.
Absolutely. Yeah. We are maintaining our guidance, and we are very confident about the 25%-30% range.
Okay. And lastly, it is more of a bookkeeping. On the margin side, since our listing, the margins have came up from a level of 30-odd % to 33.5%. Where do you see our margins going forward?
So far, our range of capital margins have been always consistent in the range of 33%-35%. Right. Now, because of the product mix that changes sometimes at a quarterly level based on customer priorities, you would see that it moves up by 100- 150 basis points. That is why we talked about a range. This is sustainable because for us, this is a part of a long-term contract, and the prices and everything has been secured and agreed. So EBITDA margins for us will be sustained at this level for a longer period of time.
Yeah. Just to add to this particular point, in this quarter, we have a Forex loss of INR 50 less because we have 80% export sales and we have to de-check our receivables and our liability. That is on top of that.
Mm-hmm. Great.
Great. Thanks a lot.
Thank you.
Thank you. The next question is on the line of Jatin from Sahasrar Capital. Please go ahead.
Am I audible?
Yes.
Hi. My first question is on the lines, a large OEM delayed the delivery of their engines to one of the system integrators in India. Will this affect us in any way?
Sorry, you are not very audible. Can you speak again, please?
Hi. Is this better now?
Yes.
Yeah. Am so sorry. One of the large OEMs delayed the delivery of their engines to the system integrators in India for jet fighters. Will this affect us in any way?
No, no. Is this question related to the order what we have got from GTRE or DRDO?
Not exactly, sir, but I wanted to under-
No.
Not pertaining to that.
No, nothing to do with this.
Okay. Second question was on the lines of capabilities. The engine we are supposed to make with DRDO, are they in line or at comparable or the ones which will be used in, let's say, Tejas or AMCA or FGFA in the future?
No. They all are different segments. Every engine has a thrust, and the thrust design of these engines are based on what the application is. It could be confidential for both GTRE, DRDO, and us to name the programs, because we do not want to name the programs, neither they can have the programs, right? But what we know is this will be used in various platforms.
Oh, okay. I guess the platforms also will not be named.
No.
All right. No problem. That is pretty much it. Thank you so much, and all the best.
Thank you.
Thank you. Ladies and gentlemen, just a reminder, anyone who wishes to ask a question may press star and one on your touch-tone telephone now. The next question is from the line of Aman Soni from Invest Analytics Advisory LLP. Please go ahead.
Hello.
Hi.
Am I audible?
Yeah.
Congrats for the good set of numbers. My question, is there any update or delivery timeline for the first batch of fully integrated ATGG engines, which was initially scheduled to commence in early calendar year 2026? And what is the size of the opportunity in this?
So, in terms of the timeline, we are looking at FY 2026 for delivering the first set of engines. That is correct. We cannot share when exactly we will be doing it. But yes, it is towards the first half of FY 2026 is what we are looking at. Beyond that, we will not be able to share a lot of information. The other thing to look at it is you should think of it as an opportunity for us to move into a complete end-to-end engine manufacturing from, say, component manufacturing. You should be able to assess the opportunity size when it comes to propulsion industry, et cetera. This is our first step and we are obviously very excited about it. The opportunity is massive. I will not be able to comment on the size of the same contract for confidentiality purposes.
Logically, you would understand that this is a large, massive opportunity for us.
Okay, sir. My second question is, given that the company previously imported 50%-55% of its raw materials and has aimed to reduce this to 40% in FY 2024, could you provide an update on the current status of the company import content?
Sorry, can you repeat that question again, please?
The company previously imported 50%-55% of its raw materials. What is the current status of the raw material imported?
Okay. So, you are asking about the import of raw materials?
Yes, sir.
Yeah. So import of raw materials, this was as a part of our efforts towards optimizing our working capital numbers. We wanted to work on a cash-to-cash conversion cycle and to improve our set of operations. We were looking at indigenizing some of the raw material grades to India. We have been able to successfully indigenize two or three raw material grades with two companies. One of them is Sunflag and the other one is Star Wire. You will see that gradually our import percentage of raw materials will come down. This will not just have-
impacts on this, but we will have better control over our supply chain. We will be able to optimize our working capital cycle also because the sailing time, the payment terms, et cetera, also become much more in control with us than they are today.
Okay. Thank you.
Thank you. The next question is from the line of Bala Muralikrishna from Omen Investment Advisors. Please go ahead.
Hi. Good afternoon. I hope I am audible, sir.
Yes. Good afternoon to you as well.
Regarding the recent order wins from Rolls-Royce to Siemens Energy and GTRE. I think GTRE, you told about the supply timeline, but what about the remaining orders when already we started supplying the components to the customer or when we can expect the supply of the components to customers? Any timeline on these orders?
Yes. These are all rolling orders. When we sign a contract that is effective from the day we sign. If parts which we have already qualified, there are two ways of signing a contract. Either you get qualified and sign a contract, or you take a contract and then qualify the parts. Few in the aviation and defense contract being Rolls-Royce, being very prestigious. And the components are very critical. So those qualifications will be done by calendar year 2025, and the review you will see from FY 2026 for these contracts. On the energy part, these are 50%-60% already qualified. And new families keep on getting added as we increase the capacity. So it's a mix. It's always a mix of qualified and non-qualified parts and things. So it is the day you sign contract, it is effective from the same date.
I need to define a long list of items if I want to answer all your question in detail. It's a very long answer for this.
Sure, sir. Regarding that component manufacturing to the entire jet engine assembly, could you please elaborate a little bit on this? Earlier, what is the bill of material of the jet engine, and what could be the bill of material from our side now for that complete jet engine assembly?
We will be the first Indian company to do this. I do not think so, as far as my knowledge is there. I am not confirming what I am saying at the moment. Is what I feel is that we will be the first in the country to do a complete assembly of this jet engine. I do not think any private players have done it before. I am not sure on what I am saying just now, but this is what I feel. This is very exciting, as I mentioned in my call, in my statement. This is very exciting for us. We are very super excited to make this engine.
Good. One more thing regarding this commercial aircraft in your opening remarks, you said something that we are also initiating some Indian assembly for that commercial aircraft also.
No.
Sorry.
We are not making engines except for DRDO or GTRE. We are not making any complete engine. We are making a lot of rotating components. If you see an engine, what you feel is rotating components is you can see with your eyes when you enter the aircraft, what rotates. These components are very critical. We make a lot of components for the civil aircraft engines and the defense military aircraft engines.
Okay. That's all. Thank you.
Thank you.
Thank you. The next question is from the line of Kamlesh Jain from Lotus Asset Management . Please go ahead.
Yeah. Sir, Rakesh ji, just one particular thing. Like over the years, we have grown at a massive pace. But if we just want to compare with, say, one of the best players which is Howmet. So how identical we are in terms of business models with Howmet, how differently things we are doing as compared to this particular field? So just want to understand business model, because in case of Howmet, so they are, like, say, across the value chain, right from the forging part and in terms of contextualizing the design in the OEM as well. So how are we placed in terms of the value chain as compared to the Howmet?
Kamlesh ji, Howmet's revenue, you are aware Howmet's revenue they do, and Howmet is one company working similar to Azad. I think that is one company. But one day, Howmet was also in the same position where Azad is today, I am sure.
Yeah.
The vision, what we have, and as Vishnu mentioned, we compete the world, not India. We compete China, we compete Europe, Korea, America. We have started the journey, and you can imagine Howmet also was one day where Azad is today, and definitely there is a huge massive scope for Azad to reach that height.
But what capabilities we are building in? Like say what investments or what efforts are we putting in right from the forging or shop floor people and all this designing part. So if you can throw some light on that.
Every aspect has to grow. When you see, Kamlesh ji, Howmet's revenues, it is all in billions, I think so, right?
It's billions.
Right. So definitely there is massive capacity to be in the billion scale, let it be forging, let it be manpower, let it be machines, let it be flooring. This is all been accounted and that's the reason we are first moving to 10x size. We have this in mind how massive growth we are sitting on the path. The best part is we are in the same league. We are too small before our competitors who are ages, decades-old companies, and everyone passed through where Azad Engineering is today. So the massive scope is there, and that's why the confidence what we are taking and moving at, is this is all of what we are talking now.
We are also resourcing the business similarly. While we are optically able to only see increase in capacity, you will see that we are also building organizational functions, hiring across the organization at key levels to sort of manage or address the growth that we are seeing in the coming years. So we are very well-positioned. We are looking at it from all aspects. We gave a glimpse of it in our speeches as well.
Lastly, how much CapEx we are looking over next three to five years in total?
I will take you back to our discussion of last quarter, where we had charted out a plan for FY 2027, and for FY 2027 we had raised a primary of INR 240 crores, and this was to be deployed towards infrastructure and capacity. Now we are planning how do we go beyond FY 2027 and, given the increase in contracts, given in the customer wins, given in our capability expansion, we are now doing the math of how do you go from FY 2027 and beyond, and what is the necessary CapEx that is required.
I think, Kamlesh Jain, as you are mentioning, our math. They are in billions and we are in millions. Definitely there is a story from million to billion.
If you can pinpoint that CapEx, that would be very helpful, so that would be visible in your CapEx as well. That was the whole purpose behind that.
If you have any more specific questions, you can always write to us via ICICI Securities, and we will be more than happy to sort of address that question in case you want more information on it.
Great. Thanks.
Thank you.
Thank you. The next question is from the line of Amit Dixit from ICICI Securities. Please go ahead.
Yeah, hi. Thanks for taking my question. Just a couple of them. One is related to us foraying into now complete engine. In India, as we are all aware, the engine ecosystem particularly is developing pretty fast. Particularly in defense space, there are various tie-ups on the anvil. They include some of the OEMs with which we already have contracts to, we are already supplying to them. If you could just highlight some of the opportunities that we see in Indian defense space in particular, that would be very helpful.
Yes. Good question, Amit ji. Actually, if you notice these engines now, it is under in development stage within India, right? India is still using these engines. That means India is importing these engines as finished and setting up using it in various platforms. Now, once these engines gets proven, first thing is import gets stopped, right? This becomes an import substitute that these engines will no more be imported, and it will be made in India and used in India. However, for Azad, that's one plus point. If you notice, Azad is a global player. Azad plays in a global platform. This engine requirement capability is one spelt. I'm definitely sure with our existing customers, like all these giants, all these OEMs, Azad is already a prominent player in this field.
We just go and need to one day, we just need to inform them, "Hey guys, we already have this engine capability also being added to the portfolio for that." That opens a different ball game, right? It is not just for India. Definitely this capability is going to serve for the global market. Maybe where India is importing at the moment from that OEM, we may go and supply back to those OEMs. That really makes a very different story, right? Just like if you can see the nuclear boom which is going to come, we are the only company EDF-approved. EDF is a French environment organization which controls the major nuclear plants. All this big boom is coming up in nuclear. So we are in good position in almost all these niche areas.
I would say, Amit ji, I think it is important to look at Azad as not a player that is only focusing on the defense field. We are an organization that is very well-positioned across all sectors, whether you look at power, nuclear, aerospace, defense, oil, and gas. Today, we have opportunities in every sector and particularly each of these sectors, we are looking at massive opportunities. You look at how our order book has been increasing quarter- on- quarter. This is based on the opportunities that we are looking at. We are also currently working on some nation pride contracts, which we will not be able to share a lot of information on. I would say it is exciting to be at this point for Azad.
Moreover, I would like to add one more thing, Amit ji, is Azad plays not only just in defense, not only just in aviation, not only just in energy, not only just in oil and gas. We are there everywhere, wherever there is niche. In all these four sectors, in the niche areas, Azad is dominant and building capabilities to just increase the order share now. So it is a beautiful story from all the core segments. I hope we answered your question.
No, great to hear that. One more question that I have, and that is on essentially oil and gas. Now, while energy, as we understand it, power sector and aerospace have been discussed, debated quite a bit, your recent wins, if I look at it, they have been on oil and gas. At least the recent five, six orders. So just if you could give a little bit of more color on this, that where do we see this particular segment evolving? Because it has just started for us, and given the TAM, it can have significant opportunities. So just if you could highlight where we are focused here, which area we are looking at.
Yeah.
Because that can be a very interesting opportunity.
Definitely. I think as Vishnu mentioned, just adding a CNC machine, we call it as a precision manufacturing. That is fine. Precision is there everywhere. But when you look at the parts, it is like how beautifully you utilize the technology available and produce the part consistently at a cost, maintaining your margins, maintaining your deliveries with the investment what we do. It is very important to make a match and mix of these kind of things. Sustaining is a big question everybody asks us. Is it sustainable? This is where Azad specializes in sustaining things. Now, if you look at the oil and gas sector, there are many areas in oil and gas sector. But where Azad plays is also very important in Class A. When I say Class A, these parts go and operate 32,000 feet below the ground. Right.
We can imagine these parts being so critically drilling, going deep in the well, and something goes wrong on those parts. So a lot of engineering and processes are required to make these parts right every time consistently. Similarly, talk about 32,000 feet above the ground on the aviation, 32,000 feet below the ground in oil and gas, and of course, in nuclear. So we can just see that where Azad is a key player, is not only component supplier, Azad is a solution provider.
Amit ji, just to add to what Mr. Chopdar said, these parts are extremely niche parts. The contract that we signed on, our customers were making this in-house, and we will be the most critical player supplying this. As a part of our realization, you have seen that this year we would start contributing revenue from oil and gas as well. Last financial year, we contributed roughly about 3.5 crores. This financial year, you should be able to see that some of these parts that we have qualified, we would be moving them into production very, very quickly.
Great. Okay. Thank you. That's a very comprehensive answer. Thank you, and all the best.
Thank you.
Thank you.
Thank you.
Thank you. That was the last question. I would now like to hand the conference over to Amit Dixit for the closing remarks.
Yeah. Thanks, everyone, for attending this call, and thanks to the management for the fruitful discussion that we had today.
Sure.
I would now like to hand over the call to Mr. Chopdar for any closing remarks. Over to you, sir.
That is all. Thank you so much, Amit, for hosting this, and thanks a lot, SGA team, and thanks to all of everyone who has joined this call and took time to talk to us, listen to us. We are very happy and delighted, and we will keep on here excited also.
Yes.
I hope that we continue this good work. Thank you so much.
Yeah.
And please remember, I think Azad's just getting started. We've just started.
On behalf of ICICI Securities-
Thank you.
On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your line. Thank you.