Azad Engineering Ltd

This conference call may contain forward-looking statements about the company, which ale based on the beliefs. opinions and expectations ofthe company as on date ofthis call. -l'hese statements are not the guarantees offuture performance and involve risks and uncertainties that are difficult to predict.

As a reminder, all participants' 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 conf'erence call. please signal an operator by pressing '*' then '0' on your touchtone phone. Please note that this conference is being recorded.

I now hand the conf'erence over to Mr. Amit Dixit frorn ICICI Securities. Thank vou- and over to you, Mr. Dixit.

Yes. Good afternoon, everyone. On behalf of ICICI Securities, I welcome all the paticipants lbr today's call. At the outset. I would like to thank the Management fbr giving us an oppofiunity to host the call. From the Management today, we have with us Mr. Rakesh Chopdar - Chairman and CEO; Mr. Vishnu Malpani- Whole-T'ime Director: and Mr. Ronak .lajoo - Chief Financial Officer.

It has been a glorious year for Azad. where we have seen consistently robust perfbrmance through the quarter. We rvill have brief Opening Remarks tiom thc Management. Post, we will open the floor tbr an interactive Q&A.

Without much ado, I would hand over the call to Mr. Chopdar to take this lbrlvard. Over to you. slr.

Thank you, Amit. Thank you so much. Good afternoon. Good afternoon, everyone. Welcome. and thank you fbr joining us today fbr our Q4 and FY '25 Earnings Cal[. .loining us on this call are Mr. Murali Krishna- our Managing Director: Mr. Vishnu Malpani -

We are also .joined by our lnvestor Relationship partners fiorn SGA. Our Results and Presentations have been uploaded on the Stock Exchanges and the Cornpany Website. We hope you have had a chance to review them. On the Q4 Performance Highlights: Page 2 of 20

We are pleased to report a strong close to the fiscal year. Stand-alone revenue filr the quarler grew to INR 125 crores, representinga34.2o/o increase year-on-year. EBITDA fbr the quafter stood at INR 45 crores, with rnargin improving tiom 33.8% to 36.5% (Clariflcation: Reported EBITDA margin). driven by operating leverage and enhanced prodLrct mix. Net protit grew liom INR 15 crores in Q4 FY '24 to INR 26 crores in Q4 FY '25. marliing an impressive 74.4Yo growth. On the full-year FY '25 highlights:

FY '25 has been a defining year for us, one marked by momentum and meaningful progress across all fionts. Revenue from operations grew by 32.9Yo year-on-year to INR 453 crores. underscoring the strength of our core business and the growing global demand fbr our specialized capabilities. Our EBITDA margin expanded to 36.3o/o (Clarification: Ad.i EBITDA margin), and we delivered a PAT of INR 89 crores, a significant milestone. reflecting both scalc and execution discipline.

This quarter, we secured new orders from global OEIMs such as GE, Vernova. Mitsubishi. Baker Hughes and Rolls-Royce Def'ense as well as Civil. a clear endorsement of our enginecring capabilities and reliability as a strategic supplier. These wins lbllow rigorous global evaluations and reflect Azad's growing prominence in the global supply chain. Beyond these marquee wins. we also added multiple new orders across the year- ta"lling our current order book over INR 6"000 crores.

We have taken bold steps to expand capacity and align with Iongtenn dernand. Our new tacility in Hyderabad became operational in Ql FY'26. marking a pivotal moment in our growth joumey. These facilities are part of our mega-f-actorv vision with dedicated spaces fbr 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, reinfbrcing our belief in the direction we are headed.

Murali brings over 25 years ofrich experience in operations management. corporate flnance and metal forming. Previously, he held leadership roles at Bharat Forge America- Dyson Corporation America. Gerdau Macsteel America. I-le also holds advanced degree in industrial engineering from Ohio State Management and computer science frorn Ceorgia'fech. FIis 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 has an impressive joumey and has built strong credibility in the industry with its niche ofl-ering customized to clients requirements. This has been a truly incredible growth story. To supporl this growth. we have strengthened our balance sheet with a QIP of INR 700 crores in February. I would like to thank all the investors fbr believing in our growth story and showing confidence in our business. ln the last few months. we reached a major milestone r.vith the inauguration of our first lean manufacturing lacility dedicated to Mitsubishi Heavy lndustries. Covering an area of 7,200 square meters. this fhcility marks a crucial milestone in our joumey to increase production capacity tenfold. This achievement was made even more memorable as MIII honored us fbr our decade-long collaboration by awarding us the prestigious2024 Parlner of the Year.

This was followed by a second state-of-the-art plant for our dedicated customer. GE Vernova. spanning 7,600 square meters, this advanced facility is designed to manufacture complex airfbils for GE's next-generation turbine engines. Our subsidiaries. Azacl Plime and Azad V'lC 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 flnancial year. As we enter the ner.r, growth phase. our focus is to build on the success and execute the long-terrn growth tra.ieotory.

We will continue to set new benchmarks and redeflne what is possible.

Now I hand over the call to Mr. Vishnu Malpani. our Whole-l.ime Director, to take this conversation f'urther. Thank vou.

Thank you, Mr. Murali Krishna. FY'25 has been a defining year fbr us- ayear where we didn't just grow in numbers. we grew in capability. direction and ambition. We have rnade meaningful progress across all the 5 pillars of our growth strategy. whether it's Capacity. Capabilitl,, Capital.

Customers or Contracts. Our progress has been well erounded and has set the stage fbr the next chapter of Azad's journey. Page 4 of 20

Let me begin with a quick look at our Q4 numbers:

Our Energy and Oil and Gas segment remained dominant contributor. generating INR 97 crores or 77 .7%o of our Q4 revenue. 'fhe Aerospace and Defense segment scaled beautiful ly contributed to about INR 25 crores or 19.8% of the quafier's revenue.

Stepping back and reflecting on the full year. it was a year ofbroad-based growth. Revenue grerv significantly across verticals, supported by strong execution. customer relationships ancl deeper engagement with all stakeholders.

We expanded not.iust our production capacity. but also our engineering capability this year, which is evident from some of the prestigious arvards that rve have received fiom our customels in India and abroad. We strengthened our capital position with the QIP, and we continue to reinvest in our intiastructure. people and innovatron.

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. rve have invested in our most valuable asset. our people. Over the past year. we have onboarded senior leaders across every major function. giving us the experience and leadership depth needed fbr the future.

Today, we are t'ully staffed, structurally ready to take the opportunities that come ahead. l.ooking atFY '26. we are entering the year with confidence and with momentum. We have br"rilt the base- the teams are in place. the capacity is live and the opportunity is clear. We are excited about what lies ahead.

And with that now, I would like to invite Mr. Ronak Jajoo. our Chief Financial Of'ficer. to walk us through the financials. Thank you.

Thank you, Vishnu. I will first talk about the stand-alone flnancial highlights fbr quarter 4 FY '25. Let me take you through the revenue. Revenue for quarter 4 FY '25 stood at INR 124.5 crores, a significant increase of 34.2o/o compared to the last quarter of FY '24. which rellect our strong business growth.

EBITDA for the quarter rvas INR 45.4 crores with an EBITDA margin of 36.50lo, this make an impressive 44.9o/o (Clarification: Reported EBITDA YOY) -erowth over quarter 4 FY '24. Page 5 of 20

Azad Eng ineering Limited PAT for quarter 4 FY '25 was INR 26 crores with PAT margin of 20.3%o(Clarification:20.9o/o) representing a robust growth of 74.47o year-on-year basis.

Let me now take you through the full-year financials of FY'25:

The company recorded a revenue of INR 452.9 crores in FY '25, up from INR 340.7 crores in FY '24, this represent a robust growth of 32.9%o, driven by strong operational performance of the company.

In the Aero and Defense segment, our revenue has rose to INR 80.7 crores compared to INR 43.8 crores inFY'24, highlighting a successful diversification story, which we have told you over the last 2 eamings calls.

In FY '24 include one-time other income of INR 27.3 crores. And ifyou normalize that particular thing, this year, our other income increased by INR 6.9 crores, which primly driven by interest on fixed deposit and foreign cuffency restatement as per IndAS guidelines.

Our EBITDA for FY'25 was INR l6l crores with an EBITDA margin of 35.5%, the highest ever EBITDA margin which company has achieved in fullfinancial year. This margin expansion was supported by improved employee cost efficiencies and operating leverage and business excellence reach.

Our profit stood at INR 88.5 crores in FY'25 with a PAT margin of 19.5o/o, showing a strong growth of 51.57o (Clarification: 5l.l) compared to FY'24. The operating cash flows of the company has tumed positive this year with INR 63 crores of operating cash flow positive, which reflects our healthy profitability and the cash flow management.

Gross debt for FY '25 was around INR 243 crores., which is approximately l.5x of EBITDA, which our long term guidance. But if you take the net debt position, which is gross debt minus cash and bank balance, is still negative INR 412 crores, and we have a strong liquidity system of around INR 656 crores, because of QIP raised in the last quarter. And this give us the confidence to get into a great quarter next year and the full financial year of FY '26. Page 6 of 20 AZA

Now the floor is open for question-and-answers. -l'hank you.

Thank you. We will nor.v begin the question-and-answer session. The first question comes from the line of Kamlesh Bagmar with Lotus Asset Managers.

Yes. Thanks for the opportunity and congrats Rakesh.ji, fbr the excellent delivery and successful QIP. Sir, first question on the order book. So what is the order book as on date or quarter end'?

Yes. Thank you, Kamlesh ji. fbr the question. Our order book currently stands at r"rpwards of INR 6,000 crores.

And secondly, like we have commissioned the capacity. So roughll,around 95,000 square meters have been there. So this Phase-2. r.vhen do we expect that particular commissioning?

So for the first phase, Mr. Bagmar. we are building 95,000 square meters. And as you would have heard in the call. we are doing I facility after anotlrer. So we have inaugurated 2 lean tactories fbr 2 ofour customers, which have happened respectively, in the Iast financial year.

And now we are going to be getting them online. So those tactories rvould start generating revenues while we start focusing on the rest of the tactories. which rvill come up during the course ofthe year and next. So it will be a staggered approach.

And slowly, we will have all of these factories contributing to revenue I 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. So that's our strategy.

And lastly, do we have any clarity like how much CAPEX would be there over the next 3, 4 years? Like this year, we have spent roughly around INR 270-odd crores for like next year and next after that?

Yes. So Mr. Bagmar, we did a QIP of INR 700 crores. Now the reason the QIP was done to foster the growth of the company, right? So 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. So this is exactly what we are planning to do. Thanks a lot. You are welcome. Thank you.

Thank you. Next question comes from the line of Kinjal with Shah & Savla. Please go ahead. Page 7 of 20

This is Mulesh here. Thanks fbr taking my question. Hearteous congratulations on the great set of numbers, and we welcome Mr. Murali and also happy to note that we are increasing or-rr bandwidth at all the levels.

So now my first question is. sir. we have comrrissioned 2 dedicated lacilities fbr Mitsubishi and GE Vernova. So how is the ramping up happening there? When can we reach the optimum capacity there? And at the optimum level. what can be the revenue generation liom those 2 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. So we did inaugurate 2 f'acilities. 2 lean facilities fbr our customers. So the way this will happen is the facilities are now live. So 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-qua(er.

So this year, FY '26. we are obviously generating revenue out of the nerv facility. Any incremental that revenue comes out over FY '25 rvill come out of the new lacilities. But you will see that progressive development happening quafter-on-qualter. And I think towards the end of this year, we should be able to reach a full capacity in terms of those lean tacilities in terms of output.

So then what can be the revenue expected at the optimum level liom both these facilities?

Yes. So the way to think about this would be the revenue guidance that we are looking at. So il you looked at what Mr. Chopdar had said during his speech. he said that we are anticipating a revenue growth of upwards of 30o/o for this financial year. Ancl this growth that is coming Lrp will be coming out of the newer factories.

Yes. Great. Creat. And how many further dedicated facilities do you think we will be able kt inaugurate in the current financial year? And are there any new customers or new products being developed and being targeted this year?

Yes. So thank you lbr this question. I think there are a few f'actories that are lined up in pipeline.

We won't be able to disclose too much information about it. But yes. there are factories that will get inaugurated during the course of this year. And slowly like we did fbr the current 2 l'actories. those also will come in line and start producing results. So that is there.

FY '26 should be a year of stabilization fbr us in consolidation fbr the next level of growth. Thank you.

Next question comes fronr the line of Rajesh Vora with Jainmay Ventures. Please go ahead.

Good afternoon, gentlemen. Congrats on good set ofnumbers. So. see. I wanted to unclerstand your Company under your able leadership has done great on the energy sicle, and now issuirrg strong texts towards your laith and descent.

With the Contribution this year increasing quite significantly fiom around l30% to l8% of revenues. how are you seeing this panning out over the next 3 to 5 years? And horv will that change the trajectory of margins for the cornpany?

Yes. So thank you for the question. So we are very bullish on each of or-rr ve(icals and each of those are growing at a certain rate. Ifyou look at our business'trajectory fbr the last 4 years or 5 years, we have grown at a cornpounded growth rate of about 40%o. Ow EUITDA CAGR has been higher than 40%o.

Our PAT CAGR has been higher tl-tan 40oh. So the business is looking at continuing the growth momentum. When you look at our businesses growth across verticals, you would see that some of our verticals, fbr example, it's a testament to the fact that we kept talking about diversiflcation.

And this is the first year where one of our verticals other than energy has demonstraterl reasonable numbers. So we closed aerospace with INR 80 crores segmental revenue, up from about INR 43 crores last year. which demonstrates the iact that our clualifications have been completed.

If you look at our other vertical. which is oil and gas, last year. we delivered about INR 4.4 crores. And this year. FY '25, we have been able to deliver about INR I3 crores. Now when you look at the growth of these verticals in the coming year, FY '26, you will see that these vefticals are ramping up verli. very quickly, because from the business perspective, we fbcused on qualification, we have built capacity and now we are ramping up.

So each ofthese verticals will grow at a faster rate than the blended growth rate ofthe business.

So you will see that oil and gas will grow multifbld because the base is srnaller today. Aerospace also will grow upwards of the blended growth rate that I talked about. So this is how we are seeing the business evolve over time.

Okay. Any goalpost lbr the energy as a percent olrevenue? Page I of 20

Yes. I understand. So ideally, we want the business to be tairly diversifled. So we anticipate in the next few years, the business would reach about 55yo^600/0 energy. and the balance35%o,40o/o will be contributed by aerospace and defense and oil and gas.

So it does not mean that any vertical is growing. So we have a lot of headroorrr even in energy. but we anticipate that the growth rates of the business will get us to a point where 55o/o,60%o will be contributed by energy, and the balance between the other 2 verticals in the next f-ew years.

That's useful, Vishnu. And my second question is on. given the massive opportunity, and TAM for the company in each ofthe vefticals. and given that we are taking significant leaps in capacity expansion. with ,l5,000 square feet already booked up of95.000 square meters. in the earlier question you mentioned that it will be a sorl of staggered utilization and ramp-up. So, is it thir to say that we will have with the entire 95.000 square meters to be booked in the next year or so? How much time are we looking at?

I would like to answer this 2 wal's. If you look at what we have delivered" we have deliverecl INR 453-odd crores of revenue last year. If you look at our order book" which I said was upwarcls of INR 6,000 crores, you knorv that the order book to sales ratio is extremely big. So for us. we are looking at progressively adding manufacturing f-acilities with capaoity.

And see, this is a year of stabilization for us. We are trying to build an ecosystem where we are building newer plants, l0x higher capacity and all ofthat. So we intend the business to grow at upwards of 30% while ensuring that each of these things are properly scaled up. So you will see that 95,000 square meters will be completed over the next 12 to 18 months in terms of construction and we will slowly open it up for capacity.

And then we will move into our Phase-2 of expansion, which is the next leg for us. But right now, our focus is to look at FY'26, deliver on the commitments that we have for customers and to our shareholders. So we are looking at that right now.

Great. Thank you, Vishnu. And wish you all the best Rakesh ji 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.

Yes sir, it's Karan here on for Kireet. So.iust 2 clarifying cluestions. What shoulcl we assume is the asset turnover on the incremental CAPEX spend over the next 3 years like directionally'? Page 10 of 20

So the incremental asset turnover for the next year will be 2. blended across verticals 2, right? So on any incremental CAPEX spend, the asset turnover shoLrld end up being about 2, I would think, right? Yes, that's correct. That's correct.

So and maybe this speaks to the conservatism ofthe guidance. I guess ifyou consider that you are going to spend INR 150 crores at the minimum in CAPEX this year. I tbrget the exact number. You are actually only assurning 30% growth. which would equate to INR 120 crores of incremental revenue. So if you simply keep extrapolating that, you are not getting anywhere close to 2, you are close to l. So there is a big discrepancy between what you are saying is your revenue growth guidance for the next couple ofyears, and the asset tumover of2. So I just rvant to reconcile those 2 numbers?

Yes. So Karan thank you for the question. I think fbr us. this year. so we are not looking at getting our capacity line. We are looking at consolidation as a thing. And the asset turn that you are saying, incremental asset turn of2 will happen over time" because now the deployment of capital is also towards infrastructure, towards capacity. So by the time we are investing and returning, you would see that towards the end or quarlelly progressively. you'll be able to see the ramp-up moving fiom ,l.0 to 2.0 of incremental asset tum.

And it will be demonstrated over our progress that you see fbr this business. And our strategic priority lbr this year is to get all our manufacturing facilities Lrp, constructed, filled with capacity.

So 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 at30Yo. because even on a base of INR 140 crores, we are looking at growing this and any incremental revenue that you are seeing from INR 450 crores and upwards is going to come out of the new facility.

So for us, so where the investment is done. right? So we are going through that cycle of stabilizing it, consolidating and then rapidly growing from there. So the elp money will be deployed shortly. It's with us in the...

Yes. Okay. Sorry. Maybe I willjust squeeze in.just one. The question was fbr the 2 f'acilities that have already ramped or are in the process olramping. have we alreacly sourced all the equipment that is needed for those facilities or are thev still in transit?

Yes. So the sourcing has been done. I think a f'ew of the machines have already arrivecl. And so out of the 2 manuthcturing plants. one of the manulacturing plants, about 7\oh of the machines have arrived and have started production already. But the balance machines are on the way. Ancl for the other plant, it's happening. So it will happen over the next I or 2 quarters for us to be able Page 11 of 20

Next question comes from the line of Amit Dixit with ICICI Securities. Please go ahead.

Hi. Good afternoon, and thanks for taking my questions. A f-ew questions tiom my side. The first one is on the advanced gas turbine engines that these are limited production partners with GTRE. So as per my understanding, the first engine was to be delivered by the last quarter ol FY '26 or maybe first quarter of FY '26. So I just r,vanted to understand where we are on this?

And what kind of market you see considering that the recent lndo-Pak conflict was basically drone-based, and these engines are supposed to go in drones and I-RSAM. 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 ofuse case you see for these engines?

Okay. Thanks, Amit. First of all, on this engine, the .iet engine. so it is in production at the moment, and very soon. we are going to deliver the first 2 engines. And looking at the market. if you ask me, it's not really defined to us. because this is utilized in multi platlorms. It's usecl in the UAVs, it is used in anti-ship missiles and it has a mass. quite a f-ew platforms where this engine will be used.

So this engine is a very strategic decision, right? So this is just a key to the bigger door. lt's a small key. And if you see this capability development. we will be the flrst one to manuf'acture this engine in India. And this is more for the country. So this is a need of power, ancl our tbcus is fully on to develop this engine and deliver to the government MoD as soon as possible.

Okay. The second one is on there was an MOU that we executed in Saudi under the meet in Kingdom and used by the Kingdom kind of scheme with Baker Hughes. So .just wanted to understand the progress on that. Are thele any milestones that we have crossed when we expect contracts to be signed. et cetera?

Yes. Amit, so the MOIJ was signed for sure. yes. And we also have this intent to do it. So r,ve are having multiple discussions with the government of Saudi Arabia as well as our customers.

And we are making a proper strategy to set up a shop there. And you are aware that it's not so easy to get out of India, setting up the shop. A lot ofwork is involved in there. So that's ongoing at the moment. So maybe we can update you by the next quarter. we can tell you what exactly the status would be. But still. the discussions are going on. and we are very active in that.

Great. If I can squeeze one more and then I will rejoin the queue. On working capital, I mean pretty pleasant to see that in aerospace and delense actually the working capital days have come Page 12 of 20

down. Inventory days have come down particularly. in a very steep manner,246 to 155. i1'I compare FY '24 versus FY '25.

And even the receivable days have come up. Flowever. we see a little bit of increase in inventory days in energy vertical. So I.just wanted to understand from FY '26. is it the peak working capital days that we will see? And what kind of sustainable rvorking capitat days can we assume fbr both the verticals?

Yes. So Amit, there is a small catch in this. Look. there's one way we ale looking to reduce all the working capital, as I mentioned in the last call as well, that most of the qualiflcations are now done and the inventory which is sitting is now getting off. And not long in a few quarters, you will see declining the number of days. And very soon- you will witness that.

On the other hand, we are seeing these contracts which we are signing, where we need to really showcase the customers that we need to hold sorne kind of inventory for showing the raw material because these contracts are bound orr the OTDs what we do. the deliveries is what we really have to demonstrate that, Iook. we are holding the raw material fbr you.

So there are 2 aspects going on. One. is the past which we flnished midclle of the qualifioations and now you will see next quarters a declining working capital cycle. And it's not far away, okay? A f-ew quarters only you start seeing the decline thing. And other part is on few o1'the contracts, which requires mandatory that. okay, rve need to have some inventory Jbr some short of time where we have this regularized, as the contract is very new, right? So the cycle starts and even that also can be controlled verv well.

Yes. The question was more on what we sa\^/ that aerospace and def'ense. where fbcus is the wrong word, basically. we saw increase in revenue significantly fiom there. llowever, on the inventory flront, we saw a decline.

On receivables, we saw a decline. which is very pleasant to see. So.iust wantecl to understand the genesis of that, and you mentioned that this will continue. So this decline is actually quite welcome. So I 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 rvill see this remaining at this particular level, particularly for aerospace and def'ense?

Yes. So Arnit, as a strategy. we signed something. say" 2 years, 3 years back, and we have committed to the customers. And you are vely rvell aware on the raw materials, which are having massive lead times, 3 months. 6 rnonths, 9 months, sometimes I2 rnonths also fbr the deliveries. right? And this is one time. Page 13 of 20

One time we took these contracts. we got the orders. we bought the materials lying and we flnished the qualification. The entire cycle. it.iust looks like a contract to the qualification. But if you actually see the cycle times for the entire.iourney. right fiom 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 the inventory change as you staft producing in the production orders, ri-eht? That has started.

So going forward, the best part is we have taken up the entire qualifications, and we don't see any more contracts of this new kind of where we have to invest massively in the large inventory for finishing the qualification. Maiority is over. So we have not signed. We don't have anything which is sitting, which needs to be having a big inventorv rvith us. So that way, I think that's the reason I am telling in a 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.

Yes, hi can you hear me. So on the order book. first of all- wanted to understand the INR 6,000 crore order book over how many years it will be completed?

Thank you for your question. So our order book is split over multiple years. So there are 3 years. 5 years, 6 years contracts that we have.

Got it. And on the product side, do you look at in the future. developing more complex. more value-added products? Or will you be scaling up with whatever you are producing right now?

Yes, we are doing that. In fact, ifyou look at our orders that we bagged in the last flnancial year. we have also looked at some very strategic orders where we are increasing our value-additions.

So from a component manufacturing, we are moving into. say, end-to-end assembly of a complete gas turbine engine for Indian defense. right.So Mr. Chopdar talked about it briefly. So we are increasing our capability by going up the value chain in terms ol the manufhctr,rring industry. So from a component manufacturing, we today are building capability and skill set around end-to-end manufacturing as well. So. that is happening fbr our customers. Got it. Yes. That's it. Thank you.

Thank you. Next question comes from the line of Aditya Bhartia with Investec. Please go ahead. Page 14 of 20

Hi, good afternoon" sir. My first question is on the revenue guidance that you have given. Last year also, we had starled off with roughly 25o/oto 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? And is it a case that this year, as you are calling it to be a year ofconsolidation. next year growth can be even significantly fhster?

Hi Aditya. So this. again. it's a mixed answer for rvhatever. Vishnu. mysell'and what we spoke.

As I told you. these facilities which are coming up, they are massive. right? And the equipment. what we are buying, they are not really available off the shelf'. We have to import a lot of machines. right? And the questions which are coming is when the revenues will coming r.rp" when the factories will come up. and what is the guidance we are looking at. So FY '26 is very crucial to us to set up these f'acilities, get the equipment. So the equiprnent which has arrived, say example, GE Vernova, this was not ordered today. This was ordered quite long back. And that's the reason the machines comes in, installs. we commission them, \,ve stalt doing the qualification again, and then we start producing the par1s. So there is a cycle which we have to follow, correct?

So whatever we have done before the QIP what we raised money and befbre thesc equipments, whatever was ordered long back. Similarly. from now, what we are planning to fill up these f'actories up. right? So the equiprnents have been ordered. So as this comes. so we need to give some time fbr them to stabilize. So t-Y '26 is what we look to stabilize first.

So maybe in coming quarters, we can let you know on this question how exactly we are going to give a guidance more. So at the moment, we hold this because it's termed as conservative or aggressive. That's difflcult to say at the moment. So we are just waiting for all these I'acilities to come up and make sure that first the commitments what have been given to the customers to show the facility is up, that's where the focus is at the moment. Anything you want to add, Vishnu?

So Aditya, just adding to \,vhat Mr. Chopdar said. I think if you have seen how we have given quarter guidance and annual guidance in the past also. we have been very accurate about lvhere we want to go. and in all cases. we have 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 about stabilization. ordering of machines. newer contracts. new team members. all of that. And 30% on a basis tike this is a pretty good number to look forward to in my view.

Absolutely. 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 traiectory should we look at. maybe not fiom the perspective of this year" but Page 15 of 20

So I think, Aditya. Mr. Chopdar had attempted to answer this in the previous one. but still-just to give you a broad contours of where we want to head to. So we believe that we want to get to by the end ofthis financialyear, we want to get to about 170 to 180 days ofcash-to-cash conversion cycle. And if you remember why and how this working c1,cle is getting trimmed. you will see our vertical scaling up revenues, right?

So our Aero business ftom INR 40 crores nroved to INR 80 crores and ,,vill continue to grow.

Oil and gas, which is currently about INR l3 crores. rvill signilicantly grow this year. So you would see all of this trimming towards the end of it.

Progressively. yes, overall, quarter-on-quarter, you nright be able to see smaller changes. And thenbytheendofthisyear,weshouldbeatarangeoflT0. lS0daysofcash-to-cashconversion cycle.

Perfect. That's great to hear. Thanks Rakesh, Thanks Vishnu. You are welcome. Thanks Aditya- Thank you. Next question comes from the line of Vignesh lyer with Sequent Investment. Please go ahead.

Hello sir. Thank you for the opportunity. One question from my side. So what I was observing over the last 3 quarters is, there is some movement on part of the employee expenses moving on the higher side. And I heard your comments earlier where you said, we are entirely staffed for the requirement in relation to the new facilities that have opened up. So is it fair to say that the expenses already showcased the additional salaries that is required for the upcoming 7,200 and 7,400 square meter facility?

Okay. So Vignesh, just to go back to what I meant when I was talking about it. So over the last 1 year, Azad has hired a lot ofsenior management resources across various business posts that we had. Now this was created for the future, right? So each ofour business verticals today neecl business leaders that are focusing on how we are going to be ramping up in each of these verticals. whether it's energy. aerospace and defense and oil and gas, because the way we have to scale up fiom this point is very different from 5 years ago.

So that is why the senior managernent positions have been manned. So 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 lorver than where we anticipated it to be today. So toclay, Page 16 of 20

Understand. I mean that leverage will play out lnore...

As a high-growth company this is the capital that needs to be deployed. So we are not looking at it from a cost perspective. We think this is an investment for the f'uture. Today. our order book to sales is about I 0x, I I x. For us to be able to cater that, we need senior leaders fbcusing on each ofthe growth engines and scaling the business rapidly. So that is our view on the business. And you will see employee cost. tapering offover the next few years.

Perfect. And sorry if I missed it earlier, could you tell me what is our EBITDA rnargin guidance?

Will it rernain at the sarne level as FY '25 going ahead?

Yes. So our EBITDA guidance will be consistent. So we would 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. Perfect. Thank you. That's all from my side. And all the best sir. Perfect. Thanks.

Next question comes from the line of .latin Jadhav with Sahasrar Capital.

So sir my first question was regarding how many more dedicated lacilities are we targeting to manufacture or cater to future clients or existing clients? And sir, my second question was regarding the gas turbine engine, which we have made. What are the f'uture prospects? Or are we looking to deploy them in any near time soon in any products? Or what is the overall development over there?

Yes. So thank you for your question. I will start by answering the first one. So 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 clifllcutt to share some insights on to it now, because we are bome by some conlidentiality norms. But during the course of these years, you will see a couple of more manufacturing facilities going live for our customers. So that's one. on the second front, which is gas turbine engine that we spoke about, see. Mr. chopdar brought about the f'act that this is our entry into something really big, fbr us to move fiom a component manufacturing into a cornplete engine rnanufacturing. And this is a strategic path fbr us, right? Page 17 of 20

Sir, just a follow-up on the engine. So currently the design phase is complete? Are we testing it?

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. 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 are welcome.

Thank You. Next question comes from the line of Vishal Dudhwala with Trinetra Asset Managers. Please go ahead.

So first of all, thank you for taking my question. Congratulations for good set of numbers. As my couple of questions already answered, and I have left with one question. I will be squeezing a little bit more on EBITDA margin. At least, tell me your EBITDA margins have expanded to 36.30/o in FY '25 as we have known that the mix evolves with more aerospace and defense work, which may be more engineering and intensive. So do you foresee any risk to margins or could this lead to further operating leverage in the upcoming years?

Okay. Thank you for that. Next question comes from the line of Divy Agrawal with Ficom Family Office. Please go ahead.

So a few questions fiom my side. I actually wanted to know what was the capacity utilization for the old 20.000 square meters facility and the 2 new facilities that came up?

I am sorry, can you please repeat your question, slowly?

So I .iust wanted to know the capacity utilization for the old facility that was around 20,000 square meters and the 2 new facilities that came up recently. Page 18 of 20

Got it. sir. And regarding the 2 new lacilities that you have set up. so approximately how much was the CAPEX that you have incurred for that?

So fbr 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 crores, which will happen over time. And this will be invested in infiastructure and capacity building across all our dedicated units.

Got it. This would include that 95,000 square meters as Sangareddy capacity. right?

Yes, this correct. So this includes the 95,000 square meters only.

Okay. And just a clarification on the Sangareddy fhcility, in the last PPT Q3 PPT mentioned the capacity would be around 75.000. But in this current presentation is around 67.000. So can you help me with that? What's the final number for that?

Yes. Sorry, can you please repeat? Your voice is breaking. Can you please repeat the sarne again?

Sure. So Ijust wanted a clarification regarding the Sangareddy f'acility. So in the last PPl'ofthe Q3, the capacity that was mentioned was around 75.000 square meters. But in this current PPT. the capacity is mentioned as around 67.000. So there's a deviation between the 2 numbers. So can you help me with that?

Yes. So the way to think about this is, so we are constantly improving our capacity, right? So if you look at a few years ago. we were talking about 20"000 square meters of manufacturing capacity available with us and then roughly about l0x more coming up. right? Now the I 0x more coming up was across 2 manufacturing plants. One was about 95,000 square meters and the other one is about 70,000 - 75,000 square meters.

Currently" what we are developing is Phase I of it. which is 95.000 square meters. So all the investments that you are seeing are going in the 95,000 square meters, and this is coming up one-by-one. As soon as this entire 95,000 square meters, all the plants in it come and get completed, we will move on to the second phase, which is 75.000 square meters.

Okay. So it's 75,000 square meters, right?

Second one. Yes, second facility is about 70,000 - 75.000 square meters. Page 19 of 20

Because in the presentation. it's mentioned 67,000 square meters. So I got confused between that, but thanks for the clarification. sir.

Ladies and gentlemen, due to time constraints, we have reached the end ofquestion-and-answer session. I would now like to hand the conference over to Amit Dixit fbr closing comments.

Yes. I would like to thank everyone for attending the call and fiuitful 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, SGA team. Thank you, everyone, for vour time and patience fbr this call. I have nothing much to add. and I think we are good. 'fhanks a lot.

Thank you. On behalfofAzad Engineering Limited, that concludes this conference. Thank you forjoining us. You may now disconnect your lines. Page 20 of 20