Azad's profit rises despite a 6.93% year-on-year fall in PBT
Lower taxes masked higher interest and depreciation, while operating margin narrowed 0.67 percentage points sequentially as costs grew faster than revenue.
Filed 07 Aug 2026, 17:42 IST · after market close · Azad Engineering Ltd (AZAD)
Key takeaways
- Consolidated net profit rose 19.47% year on year to Rs 35.16 cr, helped by a 19.93-percentage-point fall in the tax rate.
- Revenue grew 25.90% year on year while expenses grew 23.20%, lifting operating margin by 1.38 percentage points to 37.29%.
- Quarter-on-quarter profit before tax fell 23.93% as other income contributed 9.11% of PBT and the tax rate fell 18.39 percentage points.
Price around the results
Operating growth held up, but reported profit quality was mixed
Azad Engineering's consolidated revenue grew 25.90% year on year, with expenses increasing more slowly at 23.20%; this supported a 30.73% rise in operating profit. Yet PBT fell 6.93% because interest rose 74.62%, depreciation rose 83.63% and other income fell 59.15%. Net profit still increased 19.47%, mainly because the tax rate dropped to 9.77% from 29.70%.
Sequential margin decline follows the Q4 contraction
Quarter on quarter, revenue rose 6.85% but expenses grew 8.00%, narrowing operating margin by 0.67 percentage points. Interest increased 4.67% and depreciation increased 10.83%, while other income fell 78.59%; together, these factors pushed PBT down 23.93% and net profit down 4.46%. Operating margin has now declined for two consecutive quarters, from 39.20% in Q3FY26 to 37.96% in Q4FY26 and 37.29% in Q1FY27.
Margin remains well above the Industrials peer median
Azad's 37.29% operating margin was 23.01 percentage points above the 14.28% median among 78 Industrials companies that had reported the quarter. This places the company at the top end of the reported peer set, even as its own margin has eased from the Q3FY26 peak. Other income was 9.11% of PBT, so the quarter's earnings were not solely from operations.
Management links the next expansion phase to new facilities
Management said civil construction at the Azad Centre of Excellence in Tunki Bollaram is expected to finish within FY27, while four dedicated lean manufacturing facilities are being commissioned. The company told analysts it expects a measured ramp-up, with a more substantive P&L contribution from H2-FY27 onwards. Its presentation also flags a Saudi Arabia expansion MoU and planned strategic inorganic acquisitions, alongside automation, lean manufacturing and capacity-utilisation initiatives.
Results were filed after market close
The consolidated results were filed after market close, so there is no post-results move to assess yet. Across the last eight results reactions, the stock rose after five and fell after three, with a median absolute move of 3.18%; the historical pattern has therefore been mixed rather than one-directional.
Q1FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹173 cr | ₹162 cr | +6.85% | +25.90% |
| Other income | ₹4 cr | ₹17 cr | -78.59% | -59.15% |
| Expenses | ₹108 cr | ₹100 cr | +8.00% | +23.20% |
| Operating profit | ₹64 cr | ₹61 cr | +4.96% | +30.73% |
| Operating margin (%) | 37.29% | 37.96% | — | — |
| Interest | ₹10 cr | ₹10 cr | +4.67% | +74.62% |
| Depreciation | ₹19 cr | ₹17 cr | +10.83% | +83.63% |
| Profit before tax | ₹39 cr | ₹51 cr | -23.93% | -6.93% |
| Tax | ₹4 cr | ₹14 cr | -73.60% | -69.37% |
| Net profit | ₹35 cr | ₹37 cr | -4.46% | +19.47% |
| EPS (₹) | ₹5.53 | ₹5.57 | -0.72% | +21.27% |
Operating margin of 37.29% compares with a Industrials sector median of 14.28% across 78 peers that have reported Q1FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
Guidance & outlook
- The company expects a measured ramp-up, with a more substantive P&L contribution from H2-FY27 onwards.
Expansion
- Civil construction at the Azad Centre of Excellence in Tunki Bollaram is expected to be completed within FY27.
- The company is commissioning four new Dedicated Lean Manufacturing Facilities to support revenue growth.
- Azad has signed an MoU for expansion into Saudi Arabia.
- Azad plans strategic inorganic acquisitions to complement and enhance its capabilities.
New initiatives
- The company plans technology-led optimization through automation, lean manufacturing, quality enhancement and improved capacity utilization.
- Azad is expanding into end-to-end manufacture, assembly and integration of Advanced Turbo Gas Generators.
- Azad describes its move from component manufacturing to propulsion systems as a pivotal step in its evolution.
Competition
- The company says machining-time reductions and strict quality provide competitive strength against manufacturers from China, Europe, the USA and Japan.
What to watch
- Whether operating margin holds above 37.29% after two consecutive quarterly declines.
- Whether interest and depreciation growth moderates from 74.62% and 83.63% year on year.
- Whether the four dedicated lean manufacturing facilities begin contributing to the P&L as management said more substantive contribution is expected from H2-FY27.