Azad Engineering Ltd

As a remindcr, all pafticipant lines will be in the listen-only modc, and there rvill bc an opportunity for 1,ou to ask questions alter the presentation concludes. Should you need assistance during the conf'erence call, please signal an operator by pressing star then zoro on your touchtone phone. I'lease note that this conl'elence is being recorded.

I now hand thc conference over to Mr. I{akesh Chopdar, Chairnran and Chiel'l-]xecutivc Ol'fioer. -l-hank you. and over to you. sir. 'l'hank you so much. (iood rnorning to everyone. Welcome, and thanks lbr.joining us today on the Ql FY '26 earnings call. On this call, we are .joined by Mr. Murali Krishna. Managing Director; Mr. Vishnu Malpani. Whole-['ime Director; and Mr. Ronak.la.joo. CFO; and SGA. our Investor I{elations Advisor. Results and prcsentations are uploaded on thc slock exchangc and the company website. I hope everybody had a chance to look at it. l'm glad to update that we startcd the year on a prornising note with our best-ever linancial perlormance and deliverecl stand-alone revenues of INRl35 crores, looking at a year-on-year growth ol' 36.7%o. 'l'his robust growth was acconlpanied by margin irnprovement in both Fllll'lDA and PAT. EBITDA margin grew fi'om 33.6% in Ql IrY '25 to 36.1% Ql F-Y '26.

Similarly, PAT margin rose lrom lT.4oh irr Ql FY '25 to 22.3%o in Ql FY '26. 'lhis glor'vth rellects oul conlinucd ellorts across rnultiple areas, including capacity expansion in thc new plant, qualifications of new components across business verticals and operational excellence among other initiativcs. With a vcry strong order book position of INI{6.000 crorcs plus, we arc confident that wc will continue to nraintain this trajectory. 'l'hc energy sector, rvhich is our oldest business segment constitutes the largest parl of our bclok of approxirrately around $400 rnillion, that's around INR3.400 crores. And this is lollowcd by the Aerospace and Def-ense at $200 million. That's around INRl,700 crores. And then oil and gas at approximately Xil00 million. That's around tNR850 crores. This order book providcs us with slrong revenue visibility across all business segments.

In anticipation o1'this growing demand, we are gearing up with our new manufacturing lacilitics.

As you are well aware. we havc alrcady inaugurated two of our dedicated lcan lactories in March and April 2025. Overall. in the ncxt l2 to l8 months, we plan lo havc a total 8 dcdicatecl lean Page 2 of 18

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We anticipate to similarly address these challenges to continue fbr a couple of upcorning quarters. Towards this expansion, we plan to deploy a capex ol tNIl.450 crorcs during FY '26.

Also very happy to share the two subsidiaries that we acquired Iast year are now IIBITDA neutral and should contribute to growth and profitability from FY '26.

Guidance, we arc progressing with our strategy of positioning the comparry lor sustainablc differe ntiated growth and reiterating our top line growth guidan ce ol- 25oh,30% cluring FY '26.

Now I hand ovel the call to Mr. Murali Krishna Bhupatira.ju, our Managing Director. 'l'hank you. 'lhank you, Mr. Rakesh Chopdar. It is heartening 1o see broad-based groivth across all scclors.

While we remain focused on scaling operations, we're equally cornrnitted to dliving greater efficiency across our value chain. which is reflected in our growing nrargin profile. Azad being a key supplier in global supply chain fbr the OlrMs, we see a sizable market opportunity fiom our end-use industrics.

IJnergy OEMs are making unprecedented investrnents with the need for reliable porvcr. infi'astructure and decarbonizalion. We also sce a demand for turbines in industrial applications as well as a replacement market.

Likewise, the Aerospace and Defensc segment is also witnessing strong dcmand. lvhich is driven by increased commercial ait'craft orders. fleet modcrnization programs and heightened def'ensc spending. Our existing ordcr book resonates with these growing opportunities. Wc are actively working with existing and neu, customers to enhance our wallet slrare in this spacc.

Now I hand over the call to Mr. Vishnu Malpani, our Whole-Time Director, to take this l'urther.

Thank you. Mr. Murali Krishna. The growth tra-iectory demonstrated by Azad thus lar echocs out comnritment to high growth while achieving operational excellence.

Focusing on our stand-alone segment-rvise busincss performance this quarler. let rne share with you the contribution from Energy and Oil and Gas segment lor us in Ql F'Y'26 is at INI(109 crores, contributing to approximately 81.2% of the total revenuc. 'fhis growth represents a healthy 47.7o/o year-on-yeal inclease, which is largely on account of'capacity addition. With Page 3 of l8

We are conlldent about the upcoming quarters by taking srnall steady steps now, rve can build rnomentum in FY '26. These effofts will lay the lbundation for a signilicant I'uturc -- growth in the future, allowing us to progress fi'orn small steps to larger leaps and eventually ar:hicving great strides.

Lastly, I woulcl also like to updatc that our credit ratings have now been updated frort A- to A by CARE Ratings. We view this performance ol' quarter as a strong endorsement lor our operational resilience. commitment to excellence, and it positions us well as we continue to scale new heights.

Further'. I now hand the call over to our CFO, Mr. Ronak Jajoo, to lurther talk about our financial perforrnance. Thank you.

Thank you, Vishnu. I would like to begin by sharing our stand-alone f inancial performance fbr quarter I FY '26. I-et me take you through revenue from operations. Revenue lrorn opcrations stood at lNRl35 crores. reflectinga36.7oh year-ol.)-year growth compared to quarler I of'I-'Y '25 and 80% grorvth over quarter 4 of FY'25.'l'his growth was primarily driven by thc GLISPS plant. which was operationalized in quarter 4 of PY '25 and started contributing to rcvenue fl'orn this quarter.

On the consumption side, our gross margins has improved by 3.4Y, on a year-on-year basis and rernained stable oompared to Iast quader largely due to product and segment mix. Ernployee cost has increased by 60 bps during this particular quarter. This is attributable towards the onboarding ofkey personncl as we prepare the organizalion for the next phase ofgrowth. l'hc FIBITDA IbT the quartcr came at [NR48.5 crores, rnaking a46.8o/o growth year-on-year basis from INIt33 crores in cluarter I IrY '25. Our EBI'I'DA margin guidance remain continue to bc in the range of 33Yo to 35oh depending upon ploduct and segment mix.

We arc pleased to announce that wc have operationalized the lirst licility at'l'uniltibollaram plant with 3 additional units scheduled to go live during FY '26. As a result, we expect our depreciation to step up and pro.iecting to be INR48 crores in depreciation lor the full year FY '26. Other ir.rcome saw an increase during the quafter, primarily from the treasury irtcornc Page 4 of 18

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Azad Engineering Lim ited because o1'unutilized QIl'] lirnds. T'his is expected to taper down in corning quartel'as these lirnds are dcployed lor capacitl crparrsion.

Profit after tax lbr the quarter stood at INI{30 crores with a PAT margin of 20.88%. Llere, I'm taking denourinator as a total inconre 1br caloulating the PAT margin. up from 17 .3Yo in quarler I of FY'25 and20.29o/o in quafter 4 FY'25. Lastly, I'rn happy to share that both Azad Prime and Azad V'lC has lurned EBI'I-DA neutral within just a ferv quarters of operations, and rvc arc confidcnt they will become I)A'l'positive by quarter 4 of FY'26.

With this, we conclude oul prcserrtation and open the floor for question and answers. '[.hank you.

We have first question lrom the line of Amit Dixit Ii'orn Goldman Sachs.

Congratulations for a very good sct of numbers. I have a couple ol'questions.'l'hc llrst onc is esscntially on the domestic aerospace and def-ense segmel'rt. Il we scc thc focus of the governnlent is now for thc indigenization o1'the engine that would be probably fitted on AMCA, thc co-production of "l'ejas Mark 2 and there have been funds allocated fbr Kaveri as well. So in light of these deve lopmcnts, I.iust wanted to get your thoughts on thc potential that Azad sees in the dornestio rrrarket, particularly aerospace and defbnse. That is my first question.

Okay. Amit, thank you so much. On the Indian defense, as Azad's lbcus is mainly on thc nichc components o1'thc engines. And you're right, our lbcus is only on the conrponents rvherc we can value add, and that's the first engine what we are manufacturing for DIiDO. So our fbcus wish to stay here because we havo to deliver 2 engines in FY '26. And once they are delivercd, and that opens the big door for all the programs which arc live going on in lhe Indian def'ense as this will be the first jet engine to be manufaotured, right. lor this -- in India for this capacity.

And thafs definitely going to open doors, and we arc confident once we deliver these cngines and the def'ense MoD will recognize Azad for its efforts, and we look forward and fingcrs crossed.

Okay. 'l'he second one is essentially on anothel'segment of energy, nuclear power. A lot ol-your custolrers ancl peers havc been quite vooal aboul the potential ollhis space. Now Azad, as we understancl, is the only con')pany in lndia, which is accrcdited by EDF. So just wanted to gct your thoughts on the potential that we see in both global and local rnarket from nuclear cnergy segment.

Yes, Arnit, like thc maior worldwide EDIr controls the nuclear power and there arc stringent approvals you need to get fi'om llDF and which wc broke all the qualifications and we could really get thele, and we arc now qualificd by EDF as an approved supplier globally, notjust lbr I pro.lect or 2 projects. And that has helped us get recognized worldwide wherevcr nuclear plants arc coming up. Page 5 of 18

We havc our next question frorr, the line of Karan fi'om .letha Global.

Congratulations again on great results. I.just wanted to address, obviously, thc topic du.iour, which is tarills. We don't know how this is going to play out for sure. But if you can hclp contextualizc lor us, lct's say, thc 25% holds, how would that, if in any way. irrpact your business?

And then I guess the seconcl question would bejust, I guess, more generally, on thc order book, we've obviously started executing against a very large order book. But what woulcl also bc interesting to see is that order book grorving and doubling and tripling I'rorn here. So as you think about the drivers of what may -- I think you mentioned the domestic def'ense side .

I think youjust -- wejust talked through nuclear, those could be drivers ofthe order book growth.

Are there any other drivers that you would like to kind of call out or tease out that could manil'est over the next l2 to l8 rnonths?

Yes. Karan, Iirst thing, thank you so much fbr the question. I would like to clarily on this tarilT thing. It's a big question rnark fbr everyone in lndia, what's going to happen, right? So let rne be very specific on this part. Onc thing is very sure is if we have got this business now or bcfbre, right? Delinitely, it's beforc. So wc have competed someone and got this business. And the ncxt corrpetition to us is China.

So if you talk about the Azad's competition. it's in China. Europe, Japan, America ancl Korea. right?'l'hesc are our competitions. Now ilthe business has come, so I can givc you an idea flom China, rvc are 20oh.25oh cor-npetitive. lirom liurope, and Japan, we are around -- l-]]urope, wc arc around 307o, 35Yo. Japar"t. we are 407o, 45Yoand similar to the global levels where we conrpctc therr.

So today. if we talk about the closest competition, that's China, okay'/ Now wc are 25%o already very -- we are cornpeting them. And China has a 30o/o lariff. India has a 25% taril'l'. So thc situation doesn't change for Azad. It remains the sarne fbr the customer. So still, wc are the only option, again, no mattel'if another tariff goes up by l0%, l5%, it will not matter us, right?

So that -- and il'China is the closest and then Europe and ifyou talk about Japan or somconc, they are alrcady 40%, 50% higher than us. So definitely, it's not going to alf'ect Azad lbr its product line where we are competing the global peers, what wc have at the morrent, right'/ -['hal's one point. Sorry. Karan, I need to have your second question again. I just lost it. Page 6 of 18

Surc. Just in terms o1'order book growth, I just wanted to understand what the drivers of'that would be? Wc talked about nuclcar. We talked about domestic defense. What would be the olher drivers over the ncxt l2 to l8 rnonths?

Yes. So look, our lbcus is like wc -- what the facilities which are coming up, there is -- there are already we have order books in our hand and already corlnritments arc being given, contracts have been signed, and we are committed fbr next 4 to 5 years l'or the ccrtain contracls we have signed and the preparations are going wcll accordingly. Wc arc setting up the plants corring up.

However, thcre are many more opportunities which we are discussing. And rvc will .just pick them up as we got the right time up, right? So current focus is what wc have in hand. the conversion of -- the setting up the plant. lt's not easy to set up one massive facility. right? And such 8 are going on in parallel.

So you can imagine how tough thc situation is lbr thc team to handle the grorvth, to handle thc day-to-day comrritments, to handle the new facility coming up, the certilications, thc nrachincs coming in. So I think next 2 qualters is what we assume that we have to just stay calm and fbcLrs on rvhat we are doing at the moment, set this up.

Oppofiunities are dclinitely lined up, and we are not going to stop here sornervhere. So there is a r.nassive opportunity lining up before Azad. So rve'll take it at the appropriate time. We'll not lose it.

We have our next question from thc line of Aditya Bhartia from Investec.

My first question is on the capacity acldition that we have already underlaken. With this kincl of capacity addition, what would be the revenue potential that we can achieve? Ilow rnuch more can we kind of generatc frorn the existing capacity that we are already having? And il I heard you correctly. you spoke about roughly INR450-odd crores o1'capex lbr this year. So what kind offurther addition would we see once that kind ofcapex number gets concluded?

Ycs. Thanks, Aditya. So sec, again. I would like to again get the same answer what I gave in the previous queslion, what I answered, is the setup is still going on, right? We are talking aboul a massive facility. We're not talking of adding a few machines or we are not adding -- we are not seeing the capacity just buying the machines and putting, there's a whole factory is corning up. right? So it's a very -- it's a very, very big challenge to marlage everything.

IIowever, the growth trajectory, what wc are seeing is thc guidance what we are giving,25%o, 30%, definitely, that's going to be maintained, right? And wc have to have these facilities conring up, which wc see in l'Y'26, we stabilize ivith almost all the facilities coming up in the ncxl l2 rnonlhs. Page 7 of18

And then we can definitely see an upside once the factories are up, right? So this is where I could answer on the capacity and the growth. So we should give at least 2, 3 quarters more to stabilize everything, keeping the growth 25%,30% together, which goes in parallel.

Sure, sure, sure. Rakesh, the way we were kind of thinking about it earlier is that these are modular facilities. We'll keep kind of making one operational after the other, ramp them up and then go for the other expansion. Has there been a change in that thought process wherein we want to be making operational a few more manufacturing facilities at tandem? And is it a reflection of the confidence that you're driving from the order book? And in that context, can this growth be much, much higher than 25o/o to 30yo that we are speaking about?

I agree with you, Aditya. That's why I mentioned the25yo,30%o is coming from the existing orders and as we are adding machines, as we're adding capacity. And definitely, once it is up, definitely, we expect a shift, yes.

So from the perspective of next year. would you be anticipating a much stronger growth than this25%o,30%? And... Yes, we expect that, Aditya.

Sure. And even for this year, Rakesh, like we have started the year at a good rate, and you also mentioned that you expect this kind of momentum to be continuing. But for the year as a whole, we are retaining the guidance. So is it that we're just being conservative and we actually -- from our internal targets, we are looking at more like a 35o/o, 40o/o growth, but speaking of 25%, 30%o only?

Yes. Look, I have to be a little conservative, right? I should have -- once the facilities are up because it's -- again, I mentioned it's not a small thing what is happening here in Azad, right?

And managing altogether and25%;o,30% is what we look forward. But definitely, we all know once the factory is up, once things stabilize, we'll definitely see a shift for sure.

Understood. And one just last kind of follow-up on the same aspect. We have spoken about, let's say, fixed asset tums of over lx, closer to like 1.5x. Now that we are doing INR450 crores of capex, does that mean that we have the additional lever of doing maybe somewhere around INR500 crores, INR600-odd crores of revenues over and above what we are already doing?

Is that the magnitude of investment that we are undertaking? And consequently, growth over the next couple of years can be significantly faster, not by a magnitude of l0%o, 20o/o, but significantly faster than what we've seen in the past?

Vishnu, would you like to take this? Yes.

Aditya. thanks lbr thc qucstion. Ycs. So Aditya, r.ve are looking at a dcploymcnt ol'roughly INR450 crores. And this deployrnent would happen towards three bload areas. One is Page 8 of 18

Az a d En gineer ing L i nt i t e cl infrastructure, one is towards plant and rnachinery, and wc arc also investing in somc strategic assets like lbrging harrrmers, et cetera.

So if you look at the overall deployment, we should be deploying anywhere between lNR250 crores to INR300 crores towards cleating capacity. Now lvhen you look at a INI{300 crorc investment, I would suggest that with an asset turn of roughly about 1.8, we should be able to generate INR550 crores of incremental rcvenue, right? Now wc had already delivered INI{450 crores. So this should be good to go to take us to about lNRl,000 crores. That's how -- that's thc right rvay to look at it. lJnderstood. And frorn that perspective, this year possibly is the peak capcx ycar and fl'om next year, capex drops rneaningfully...

So we rvill efficiently deploy capex tooking at the demand that we are having, looking at the capacity that is needed to achieve thc numbers that we have comrrritted to our custorncrs. So it takes us back to the guidance where we are pretty confident of delivering 25Yo lo 30% that Mr. Chopdar said in the coming yeals.

We havc our next cluestion from thc line of Vikash Singh from ICICI Securities.

Congratulatiorls on a very good set of numbers. Sir, coming back to the tarill again, you explained about the orders. We arc cheaper than most of the countries. But what about thc existing orders? Is there any clauses, which protects us for the existing orders, any tarill'changes and doesn't impact our margins?

Yes, thank you fbr the question. Now this is what I'm trying to say is we have already competed and got these contracts. It's already done. It's nothing that there is going to be efl'ective more from this. 1'his is already -- wc are compcting thcm alrcady. Wc are compcting with the rvhole world, right? So we are the best cost. 'l'he other -- the next competition to us is around 207o, 25o/o, they are expensive than us. So example -- I'll give you an exaurple like exarnple, China is l 00 for a component A. At-ad is 7 5 for the same cornponent for tl.re customer, right? And China has got 30%olo 40%o tarill. Now lndia, they have put 25%o Lariff . Still rve compcte. We still compete.

So where I'm ooming lionr, so we have. lct's say, conrpeted and got thc ordcrs already. And post tha1, there isa25oh tariff rvhich has been irrposed. We have exposure to [J.S. as well. So is thc additional tarifl'would be borne by the buyer that is in the clock because ifyou have to bear that, then your margins witl get eroded. That's what...

Okay. I'll give you another -- again, I'll take back you to 100. So 100 plus, say exarrple,307, China is the tarifl'. So it becomes 130 frorn China.75%op|us25Yo tarifl'. Still we compete. right? Okay. So wc are still at 93. Page 9 of18

N AZA D\Y

Just adding to Mr. Chopdar's point, also, it's important to note that our scope of production or manufacturing is FOB Hyderabad, right? So it works, and so that's why it does not impact us to that extent. And also, see, we need to understand that this is an ever-evolving situation for all parties in this ecosystem, right? So, so far, I think our deliveries are lined up perfectly for the next few months and quarters, and we don't see any impact as of now. No, there is no impact...

Noted, sir. Sir, my second question pertains to the Aero and Defense segment. Now that we have already 29Yoin the order book, you have a long-term plan oftaking itto 40yo. Sojust from the margin perspective, would aero and defense incremental share in the revenue will have a positive impact on the overall margin in the longer term? And how should we look this segment increasing on our working capital requirement as well?

Yes. So first of all, the product line what Azad is very differentiated. We don't do what this -- we do only the niche, right? As we spoke - I spoke earlier on the engineering. So we are the only company. We are the only company in India who's producing those engines. There's no competition to us today. It's 100% awarded to us. right?

So we don't go in such segments where we see a lot of competition or we participate in this kind of programs where we need to look at sometimes like if you talk about the Indian MoD, Ministry of Defense requirements coming up, we don't participate every, We parlicipate where we can value add, right? The engine is a nationwide project. It's a need of the hour. And we are contributing to such projects.

It's really, really appreciable for us to be there and keeping the growth in A&D in total. Likewise, in MOD, what we are doing in India is also in the global scale. We have only chosen the products which -- where we can really have a value add. So we are very secured in whatever margins we are adding while we take our orders. So that's also secured.

So I would just want to echo Mr. Chopdar's thoughts that the way we are estimating these components across sectors, we ensure that these are not margin dilutive in nature and the blended margins of the business will remain consistent at 32o/o to 360/o.

We have our next question from the line of Pratik Dharmshi from Union Mutual Fund.

Many congratulations, Rakesh and tear.r.r. for a splendid set of numbers. A couple of clucstions fronr rrry side. On the product side, do we see in terms of new product introduction, is thcrc a Page 10 of 18

Rakesh Chopdan Azad Engineering Limiled Atrgust 05, 2025 material scopc lor improving the wallct share and introducing a lot morc products lirr our custolrers whcre we can do more of R&D and get through with highcr sharo of thc wallet of thc cuslomers l'rom here? Or is winning new clients our goal basically? l-[ow should onc see it fl'om a slighf ly rnccliurn-tcrm poirrt olvicw?

Yes. Yes, good question. So as the products where Azad plays in are vel'y niche. okay? '['hat's very clear that it's very, vcry nichc and it's not easy tojust produce thcse cornponents. right? So it takes massive time to get the qualifications approval per product, pel I'amily, right? So if you talk about the wallet shale, firs1 ol all. rve are on average around 2oh -- l.5yo to 2olo o1' every cuslomer's r.vallet share Azad is holding today for the product line which we have already qualified and approved.

So one rvay, it's going to increase the wallet share from lo/oto2o/oto3ohto 5%, okay?'l'hat's one way in which the lacility is conring up. 'lhe other way to look at it is to what to add more to add more families in qualification and all. That's the second activity parallelly which is going on. rvhioh r.ve're just waiting for -- like that is a continuous process. That will never stop. 'l'hal's keep on going.

Only thing is to ramp up -- once you get approvals, you have to ramp up immediately. So that's why these facilities are coming up. So rve're very curious and very excited to close all the growth -- I mean, to close all the upcoming facilities to start the production ASAP Got it. And when we hear likes of Boeing, Airbus talking about a lot of opportunities corning 1o our side of the world in terrns of their older backlog is completely full. 'I'hey want to rnove thc value chain outside the Western side. Considering the Iarge opportunity rvhich lies ahead o1'us in terms of catering the global clients as well, rnargin tra.jectory frorn what wc havc been guiding. lhat32%oto 35yo,36% band, as more and more niche and morc and morc aerospacc-rclated stull' would come through. trajectory-wise -- I'm not lalking about the next l or 2 years. but trajectory- wise, ideally, this band should go up. Is my understanding right? Or horv should onc see it?

Yes, yes. Prirnarily, again, Az.ad is conrponent rnanul'acturcrs lor the engines, components and assemhlies, right? Boeing and Airbus doesn't manufaclure engines. 'l'hey buy engines Iiom Rolls-Royce, {iom GE,, fi'om Pratt & Whitrrcy, from Safian. So our main focus is thesc companies. Also. we want to do a lot olbusiness with Boeing and Airbus. but not all. right?

Not all. and we would like to entcr in the niche segments also in Airbus and Boeing olgetting into the landing gear systems or something, which is again nichc. So again, thc primc focus stays with the engines where rve have already comrnitted, rve lrave already taken the responsibility ol' committing -- completing a lot ol'pro.jects in this coming next 2.3 quarters. And definitcly. as you rightly said, the massivc growth opportunity is already there. and we'll be going step by step.

We have our nexl qucstion lrom the line ol'Jayesh Shah fi'om Ohm Portfolio EqLri llescarch. Page 11 of18

My question is to Rakesh. And again, it's on the similar lines as the previous question. Based on your answer, do I really come to a conclusion that Azad will continue to operate in niche areas and perhaps over time, will cap the customer wallet share to 4%o,5Yo to protect the margins?

Or Azad has ambitions to really grow with each customer and perhaps become a system integrator where the long-term margins may come up to 20%,25%. So I mean, at what point would you choose growth versus margins? And when would the trajectory change? Is that 5 years, l0 years down the line? Or what is it?

Okay. On a lighter note, what if we have both? Growth as well as...

That's an ideal scenario. We will be very happy to go wrong here.

So just for information, the contracts which are signed have already covered these both aspects, right? Here, we are saying 25%,30% growth, consistent growth with high margins, right? So these are already captured, covered, signed off. So that's a good news for everyone, right?

Right. Right. But when we have seen companies like -- global companies like Apple, Airbus, Boeing beyond a point, they do end up checking your bill ofmaterials and do really negotiate and come to some kind of a cost plus understanding because they become as meaningful for you as you become as meaningful for them.

Okay. So I'll tell you one thing. Now Mitsubishi, like -- okay, I'll not name a customer, but I'll say Japanese customer is placing an order. We know we arc 40%o to 50Yo cheaper, right? If they're spending $100 in Japan, we are at $40 to $50, right? We are -. while maintaining our EBITDA.

Would -- and I know -- and they know that we know they're paying $100, okay? Will they come and ask us, okay, reduce further? Rather, we can say, okay, you want me to increase the prices further.

So again, this is again on a lighter note, right? So I don't see any challenges. That's the transparency Azad maintains with all and enjoys the customers' attention that we are very transparent. They know everything about us. We know everything about them. So we don't -- I don't think we'il see any kind of such kind of thing of having this price thing. They may not challenge us or something like that, though everything is open.

And I think just adding to Mr. Chopdar's point, I think it's really about a balance that we are trying to strike. We do not want to compromise on our growth or our margins. We're trying to balance both of them simultaneously. If you look at our growth for the last 5 years between FY '21 to'25, we've grown at a CAGR of about 40%.

But if you look at our CAGR in terms of EBITDA, we have grown at upwards of 45%. If you look at our CAGR in PAT, we've grown at a CAGR of 600/o. So ultimately, for us, I think the Page 12 of18

N AZA D\Y Azad Engineer ing Limited focus has been to scale the business by improving our wallet share and keeping our margins intact or attempting to further improve margins. So we are on the same path.

We have our next question from the line of Rakesh Roy from Boring AMC.

Sir, I missed, sir. Sir, how much is our order book, sir, currently?

Sir, our order book is approximately INR6,000 crores.

Okay, INR6,000 crores. Sir, my next question regarding, sir, now oil and gas prices is coming down, do you see any decline in the future order inflow in oil and gas?

No, we don't. We see no impact because we -- yes, so we focus on a very niche segment, which is mission-critical and life critical. So these are essential components for the segment, and we don't see a demand drop there.

Okay. And defense business, we are mostly focused on aerospace. Do you see any new product addition for other like Army or Navy in near future, sir?

So I'd just like to slightly correct you. So we're not just an aerospace company, we are an energy, aerospace, defense, oil and gas. So we focus on each ofthese sectors equally. So that one, and we are adding a lot of products. So if you look at the way we are diversifring our business in product, 4 years ago, 90% of our product was airfoils in energy.

So today, that business is about 75%. 25% in energy, we have diversified. Aerospace and defense, we are adding a lot of new products. Components, like we said in our previous call, we are also working on nation-pride contracts where we are looking at manufacturing and engine end-to-end. So a lot ofproducts have been added to our portfolio, Okay. And sir, last question, sir, you have guiding for 25%o to 30yo revenue growth. So this growth will come from energy same like Ql, energy and oil and gas?

Sorry. Can you please repeat that question again?

Sir, for FY '26, you have guided 25%o to 307o revenue growth. So this growth will be supported by, again, like in Ql energy and oil and gas sector?

No, no. I think we are anticipating aerospace. So all of our segments shoutd be delivering one of the best performance in their history. So we anticipate aerospace also to grow significantly this year, including our energy and oil and gas business also. So each ofthese verticals will be contributing to phenomenal growth. And I think we should towards the end of this year, have record performance in each ofthese business segments.

We have our next question from the line of Manish Ostwal from Nirmal Bang Securities. Page 13 of 18

Aza d Engi n eer ing L im ite cl Cood set of numbers. My question on your slide nurnber 25, where you meutioned that thc company has signed MOL.I with the -- for cxpansion into Saudi Arabia. So what are thc plans 1br that rnarket? What we have clonc so far? And in the rredium term. what wc can anticipate fitm...

Yes. So yes, this MOIJ was signed with Saudi government. 'l'his is fiom our custorr.)ers tvho arc already spending massive money there to do a localization program. And as I mentioned. our I'ocus right norv is tn come up with our orvn laoilities herc. And so those discussiotts arc going on, but we have put it in thc sccond priority fbr that. But definitely, we'll go there. but our primc focus is right norv to build all the factories hcre in this F-Y'26 currently in l.lyderabad here.

Okay.'lhe second question, sir. on the -- in terms oltechnical capability with respect to human resources, so how is the attrilion rate, how -- in the cornpany? And secondly, on a yearly basis, how rnuch money we are spending on R&D and the h'aining stufl'to increase the capability and improve the efficiency for the delivery ofour products?

Yes. So human capital, Ithink ilyou've noticecl the commcnlaly that Mr. Ronak.la.joo shared. we'vc added a lot ol'key lcaders irr our business. So today, our business is fully manned. I1'you arc looking at the key management people. all the senior management pcople thal wc'vc hired.

We've onboardcd business leaders for each business segment as well. So last year, wc had senior lcaders from Mahindra, who had.joined us.

Senior leader ltom T'ata. who had.joined us, senior leader from another aorospacc olganization that has come on board. Mr. Murali Raju. he came on board from another largc precision manufacturing company. And this process is a continuous process fol' us. We are also hiring a lot of people in the middle management and lower management, and there is a dedicatcd training and development progran.r wherc cach of these indivicluals arc put to in-housc ancl then they arc cventually dcploycd on thc real proiccts.

So this is what we're doing from a lruman capital perspective. We don't spend a lot of money on R&l) because we are a build-to-print company. We have a leam which locuses on new product dcvelopmcnt, but we wouldn't call thern as R&D but NPD.

Okay. And the last poinl..just a small clarification. Is it right the compally was not taking orders because of capacity constraint. Now with the 8 facilities, we -- our order book will I'urther grow in a faster way. That is the right way 10...

No. I think that's a wrong statement because if we were not taking orders, we wouldn't -- our order book to sales wouldn't bc 8 to 9x rvhat it is today. right? So we've always becn pro at taking orders. But at the samc time, this is an industry where our comrnitrnent is valued. So we do nol go ahead and do it if we see challenges in terms of delivery. So rve've always been supportive ol'taking newer ordcrs, grorving in newel segments with our customers.

We have our next question fi'orn the line of Jainis Chheda fi'om Kernfln Fanrily Office. Page 14 of 18

Il'you can give us what were the clients that rvere there as olMarch'25 -- as of Junc'25? And what are the new clients that rve are likely to add going forrvard considering the order book -- clarity that we have?

Yes. So we won't be ablc to shale a lot o1'customers that we would be adding, but I can tell you that we are in advanccd conversations with some ofthe sector leaders in each ofthese busincss segments thal we operate in. And in the next coming quarters, you should be able to see announcements that will give you rnore info on this.

I understand not naming it, bu1 can you justsharc a ballpark number, iI'that's possible'? Sorry, we won't be able to share that.

We have our next question lrom the line of Maitri Shah from Sapphirc Capital.

Congrats on the great rcsults. And wc have a lot of capacity expansion happening. We're also introducing new products and the new pro.jects that we havc signed in. So our peak revcnuc capacity expectalion is about lNItl,000 crores. So do we expect to achieve that by FY'27? Is that a correct assumption?

Ma'am, the right way to think about this would be to take our guidance and do it because we are very confident of meeting our guidance and also delivering. You've secn our historical perfbrmance. We've always beaten the management guidancc. So we want to stick to it. But yes, we are working vely hard internally trying to push everything to beat our estirnates as wcl1.

And the INR6,000 crore order book untit what kind of tirnelines do we havc on that, il'thaf s possible?

So we are looking at developing this entire plant, and all the investments that we would do this ycar and the next couple of years. Wc anticipate all of this to get realized over the next 5 to (r years.

We have a next question from the line of Kamlesh Bagrnar from Lotus Asset Managers.

Just one question on the part of workforce. t,ike, if I see last year, we had I ,300 ernployces. And as of the quarter. it is 1,3 13. So where all we have seen these increase because it's.iust l% if I compare it year-over-year or cvcn quarter.

So thank you, Karnlesh Ji. So I think we are adding people acloss donrains. And some of'thc peoplc -- employees that get onboarded fbr us, which are on the lowest leg, so thel, 31c a parl ol the contract workcrs initiatly sometimes. And then once they are trained and ready to be deployed, then they move into a skilled workforce that we have. So that is generally thc model. Page 15 of 18

But if you look at the top heads for us, all the positions are perfectly manned with respect to SBUs. So that's something that's happening, yes.

And lastly, like I believe 80-odd percent or you are not providing that how much is the U.S. share in our revenue. So if I assunre like roughly around 75-odd percent would be going to U.S.

So how are we navigating rvith this tariff imposition? So is it like entirely it is taken up by the custorrcr? Or how are we procccding on thal? I'low are we navigating that particular issuc'/ Ycs. So Kamlesh Ji, I think trvo things. Our exposurc to LJ.S. is not70o/o. Por thc last 2 years. it's been consistent at about approximately 40%. So one point is that. Second point, I think Rakesh Ji in his previous questions, tried to explain this. See, lor us, I think as o1'now. wo arc not secing any impact in our business. We are good to go. Our deliveries for thc next couplc ol months and quarters are lined up with absolutely no change in the way wo are doing business.

We have our next cluestion from the line of Balasubramanian fiom Arihant Capital Markets.

Congratulations lbr a good set ol'numbers. Sir, on the order book side, we have INR6,000 crores kind of order book. What's the mix of long-term contracts versus short-cycle orders?

So our order book is all in tenns of long-term contracts, et cetera, because our long-tcrnr contracts convert into purchase orders, right? So every purchase order that we have is a Iunction -- is corning out of the long-term contracts only. So if you want to know the split of long-terrr contracts, Rakcsh Ji mentioned it, but I will repeat it. It's about $400 million tbr encrgy. $200 million lbr aerospace and defense and about $100 million for approximately 1or oil and gas.

Okay, sir. Sir, ws are moving components to f'ull engine assemblies, especially 1'or G'l'ltlJ, gas turbinc engine projects. What's the margin implications and the scalabilily challengcs?

So we are not saying that we are moving. Wc are building capabitities in that department. See. thc current market fbr us in component manuflacturing, where we're doing mission and lif'e critical parts is extrenrely huge.

But for us to build a layer of capability in component manufucturing to assemblies and subassemblies is sornething that we are doing toclay. Because the moment rve cnter thal space. it enters -- it irr-rproves our targot addressable market to a really large extenl. So that is what rvc'rc doing, but that is molc fi'orn a capability development perspective today. tlut thc malket is significantly large on the component manufacturing piece that rve are today doing. So we want to keep lbcusing on that and improving our wallet share, while al the samc time. we kccp building capabilities in moving up the value chain for manufacturing.

Okay, sir. Sir, on that export sidc, we have more than 90oZ of revenue and the segment sidc also like energy gas, these things are more than 807o ofrevcnuc. IIow do you look at thc cxports and the segrnent side, whether we 'll rraintain same kind of share? Or like is there any plans to re ducc it to focus on other sectors?

We have our next question from the line of Nitiksha from Anvil Capital.

Congratulations, sir, on a great set ofnumbers. Ijust wanted to unclerstand, sir, as you ntentiorrccl, we are a build-to-print cornpany. ln general, we havc seen that build-to-print companies have lower margins, sometimes like lorv single digits. So how do wc distinguish ourselves for a B'l-P company to havc such good set ofmargins, sir?

Cood question. But again, what we have been telling is we operate in niche. So that's exactly when we say it's niche, everything is mission backed, right? And when we say we are thc only one company for maior of the components r-nanufacturing in the counlry, that means there is nothing called rvhat evely -- it's not a normal business. 'fhey are 3D components, 3-dimensional components, right? So it's not easy to manufacture thern. And it's more of a process errgincering what we do on the 11oor, and this is where we generate the rnargins from.

Okay. So the technology is provided by the customers, right?

No, no, rra'am. No. it's all in-house. It's the teanrwork what we do here.

Okay. Because generally BTP, the technology and everything is provided by thc customers. that's why the margins are lower. And in build-to-spec, it is more the process is innovatcd lrom our end. So then where do we fit in actuallv?

Correct, ma'am. It's a very long story. I request yoLr -- I invite you to the facility herc. You would -- I would like to demonstrate how rve do this. It's a very long story.

We have our next question lronr the line of T'e-jas Mehta fi'om Norwest.

Congratulations on a great set of numbers. One quick question. Between Q4 FY '25 and Ql FY '26, lhe aero revenue just had a slight dip. What would you attribute this to? Would this rnainly bc cyclicality that you see along the quarters?

Yes. See, the first thing what I would like to rnention is we have a lot of families of cornponents per OEM, per segment, per paft rrumber, right? So there is a cycle o1'qualillcations and there's a cycle of -- after you quali|, you get approvals and then you add capacity and then you start doing the revenue. So it's definitely -- there ale not one farrily. There are many farnilies of many OE,Ms, which are falling in the pipeline, in the queue, right?

So unless you don't qualil'y. don't get approvals, you can't generate much revenue. So that's thc cycle. 1-hal's the process. So this is not that rve have declined somewhere or it's not that we havc Page 17 of 18

So we are going in energy, we are going in aero, we are going in defense, we are going in oil and gas. So all the four simultaneous capacities are getting increased. So definitely, I would say that there is - there are a lot of parts which are under qualifications and qualifications don't generate much revenue. And if you don't qualiff, don't get approval, you may not generate revenue. So it's a cycle.

Yes. Having said that, just to add to Mr. Chopdar's point. So there's no -- so I wouldn't call it decline if the number has gone down by a few crores, I wouldn't call it decline. I think the right way to look at the segment, which is aerospace and defense, I would suggest please look at, say, our overall number, when you look at it over a period, when you look at our numbers for, say, Hl or when you look at our numbers for the full financial year, you will see that this vertical would demonstrate one of the best growth segments for this year. We don't see any challenge from that perspective.

Appreciate the robust growth demonstrated in the past.

This will be the last question for today. And I now hand the conference over to the management for closing comments.

Well, thank you so much. Thank you, everyone, for the time you guys have spent over the last I hour, and we appreciate your suppol't, and we appreciate your insightful feedback. And they're most welcome. Please keep giving us feedback so that we can deliver -- we can perform much better. Thank you so much.

Thank you. Thanks, everyone. Thanks, everyone, for your support. Thanks a lot for your support.

Thank you. On behalfofAzad Engineering Limited, that concludes this conference. Thank you forjoining us, and you may now disconnect your lines. Page 18 of18