Azad Engineering Q2 FY27 Results Analysis: Revenue Jumps 31%, PAT Slips 5%
Azad Engineering Ltd's Q2 FY27 numbers came in mixed, with revenue of Rs. 190.94 Cr (+31.11% YoY) and PAT growth of -5.16% YoY. Here's a quick read of what worked, what to watch, and what management said.
| Results date | November 06, 2026 |
|---|---|
| Revenue (Q2) | Rs. 190.94 Cr (+31.11% YoY) |
| PAT (Q2) | Rs. 30.93 Cr (-5.16% YoY) |
| EBITDA margin | 37.85% (+177 bps YoY) |
| EPS (Q2) | Rs. 4.79 (-5.15% YoY) |
Quarter Snapshot
Q2 FY27 revenue grew 31.11% YoY to Rs.190.94 Cr with EBITDA margin of 37.85% exceeding management's 32-35% guidance band, but PAT fell 5.16% YoY as other-income run-off, finance costs (+85.49%) and D&A (+93.10%) absorbed the entire EBITDA gain. The key watch items are negative H1 operating cash flow of Rs.(43.62) Cr, a Rs.200.83 Cr rise in net debt, and working-capital days worsening ~33 days. Meeting the reiterated 25%+ FY27 revenue guidance requires H2 acceleration to ~+37% YoY, which management expects as stabilization closes from Q3-Q4 onwards.
Q2 FY27 Expectations vs Results
| Driver | What happened | Verdict |
|---|---|---|
| Revenue "likely ahead, on a broad, corroborated tailwind" | +31.11% YoY consolidated | Played out |
| Margins "flat to modestly expanding vs the year-ago 36.0%, with the guide already exceeded" | 37.51% standalone (+149 bps YoY) | Played out |
| FX tailwind "supports reported PAT" | Other income −65.95% YoY; PAT −5.68% YoY (owners) | Contradicted |
| Q1 deferred-tax credit "will not necessarily repeat" | Q2 ETR normalized to 25.46% | Played out |
| Watch: "consolidated-vs-standalone PAT gap (subsidiaries loss-making) persists" | Drag narrowed from Rs.(6.07) Cr to +Rs.0.05 Cr | Partially |
| Watch: "visible inventory-to-revenue conversion is the proof point" | Inventory +Rs.98.24 Cr; CFO still negative | Contradicted |
| RR first parts / turbojet orders "not externally verifiable" | Not addressed in the filing | Not observable |
| Oil & Gas ramp vs Middle East delays | Vertical split not disclosed | Not observable |
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Management Guidance vs Delivery
| What management said | What happened | Verdict |
|---|---|---|
| FY27 revenue growth 25%+ ("We proudly reiterate our long-term annual revenue growth guidance of over 25%" — Q1 FY27 call, Aug 8, 2026) | H1 FY27 standalone +29.27% YoY; Q2 +31.64% | On Track |
| EBITDA margin 33%–35%+ (open-ended; 32%–35% "for calculation and guidance purposes" — Q1 FY27 call) | Q2 FY27: 37.51% standalone / 37.85% consolidated — above band | Met |
| Working capital 160–170 days by H2 FY27 (Q1 FY27 call) | Company-definition days not disclosed in the filing; my-basis proxy worsened ~33 days vs Mar-26 — target period H2); proxy moving away | Too Early |
| Stabilization of FY26 expansion fully closed by Q3 FY27 (Q1 FY27 call) | No completion metric in the filing; employee cost +23.87% QoQ and D&A +93.10% YoY show the cost of the build still stepping up | Too Early |
| Remaining QIP funds into capex by March 31, 2027 (Board extension, Feb 13, 2026) | 85.61% of capex object utilised; Rs.75.54 Cr remaining | On Track |
| "Pure-play manufacturing operations are absorbing fixed corporate overhead efficiently" (Q1 FY27 call) | Employee cost rose to 27.08% of consolidated revenue (from 23.13%), though EBITDA margin still expanded YoY — margin held, overhead absorption not yet visible in cost ratios | Partially |
| "Growth will unlock based on the ongoing stabilization efforts… from Q3 and Q4 onwards" (Q1 FY27 call) | Q2 revenue +10.62% QoQ — steady, no acceleration yet | Too Early |
Key Investment Insights
Key Positives
- Consolidated revenue grew 31.11% YoY and 10.62% QoQ to Rs.190.94 Cr; H1 FY27 revenue Rs.363.53 Cr (+28.59% YoY)
- Consolidated EBITDA margin expanded ~177 bps YoY to 37.85%, above management's 32-35% guidance band, and held flat vs Q1 FY27 despite four newly commissioned plants ramping
- Consolidated EBITDA grew 37.54% YoY to Rs.72.27 Cr
- Subsidiary drag swung from Rs.(6.07) Cr in Q1 FY27 to +Rs.0.05 Cr in Q2 FY27
- H1 operating cash outflow improved to Rs.(43.62) Cr consolidated from Rs.(76.53) Cr standalone a year ago
- QIP capex object 85.61% utilised with Rs.75.54 Cr remaining, on track for the March 31, 2027 deadline
Risk Factors
- Consolidated PAT fell 5.16% YoY to Rs.30.93 Cr and basic EPS declined to Rs.4.79 from Rs.5.05 despite 31.11% revenue growth
- Other income fell 65.95% YoY as QIP-deposit interest runs off, while finance costs (+85.49%) and D&A (+93.10%) consumed the entire Rs.19.73 Cr YoY EBITDA gain
- H1 consolidated operating cash flow was negative at Rs.(43.62) Cr (CFO/PAT −0.66x) and free cash flow was Rs.(183.38) Cr
- Working-capital proxy days worsened ~33 days vs March 2026 (inventories +Rs.98.24 Cr, receivables +Rs.92.47 Cr)
- Net debt rose Rs.200.83 Cr to Rs.490.56 Cr (0.31x equity vs 0.19x at March 2026)
- Q2 PAT margin of 16.4% (standalone) is the weakest of the last five quarters
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Disclaimer: This results analysis is published for educational and informational purposes only. It is not investment advice, not a recommendation to buy, sell or hold any security.