Azad Engineering shares remain range-bound post listing; should you hold the stock?

Shares of Azad Engineering Ltd remained range-bound during their maiden trading session on Thursday. The stock was listed at a decent premium on the bourses but trading in a tight range at the bourses as the bout between buyers and sellers continued during the day.

Shares of Azad Engineering were listed at Rs 720 apiece, a premium of 37.40 per cent on National Stock Exchange (NSE) and at Rs 710, a premium of 35.5 per cent on BSE. The company had issued shares at Rs 524 during the bidding process. The stock traded in a range of Rs 700-725 during the first half of its maiden trading session.

Analysts tracking the stock continue to remain positive on it citing its strong growth potential and niche business model. They suggest high-risk investors to hold the stock for the longer-run. However, they see fully priced in valuations and other risks cap the possibilities of any immediate upside in the near term.

Azad Engineering made a solid debut on the stock market, listing at Rs 720 per share, a substantial 37 per cent premium over its IPO price of Rs 524. While this performance demonstrates strong investor interest, it falls short of the pre-listing excitement that anticipated a potentially higher rise, said Shivani Nyati, Head of Wealth at Swastika Investmart.

"For investors seeking exposure to the manufacturing sector with high growth potential, Azad Engineering offers a compelling opportunity, and existing investors in the IPO may consider holding their shares. However, a cautious approach is advised due to the full valuation and potential risks, and thus a stop loss of around Rs 650 is recommended," she said.

Sachin Tendulkar-backed Azad Engineering offered its shares in the fixed price band of Rs 499-524 apiece with a lot size of 28 equity shares between December 20 to December 22. The company raised a total of Rs 740 crore via IPO, including a fresh share sale of Rs 240 crore and an offer-for-sale (OFS) of up to 95,41,985 equity shares.

The issue was overall subscribed a stellar 80.65 times, thanks to robust bidding by qualified institutional bidders (QIBs), whose portion was booked a whopping 179.66 times, while the non-institutional investors' category was subscribed 87.61 times. The quota reserved for retail investors and employees was subscribed 23.79 times and 14.71 times, respectively.

Azad Engineering on its debut stated strong returns of 37 per cent to its Investors. The company is engaged in the business of manufacturing complex and highly engineered precision forged and machined components, said Mahesh M Ojha, AVP – Research & Business Development at Hensex Securities.

"Company supplies to OEM with high global market penetration, long standing and deep customer relationships, company has been consistent with respect to their financial performance. However, the company shows good growth potentials. We believe Investors can hold the stock with a stop loss at Rs 640," he said.

Azad Engineering, incorporated in 1983, is a manufacturer of aerospace components and turbines. The company supplies its products to original equipment manufacturers (OEMs) in the aerospace, defense, energy, and oil and gas industries. Azad Engineering's products are highly engineered, complex, mission-critical and vital.

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