Azad Engineering hits upper circuit ahead of Q4 results; why is the stock rallying?

Shares of Azad Engineering, a supplier of components to the aerospace and defence industry, was locked in the upper circuit shortly after the opening bell on Friday, May 17.

The shares rallied by 5% minutes after the trading session began. It remained in the upper circuit till the closing bell. The scrip was valued at ₹1,442.95 apiece on the National Stock Exchange (NSE), as against the last closing price of ₹1,374.25.

Notably, the stock has grown by 111% in 2024 so far. The value has more than doubled as compared to the IPO listing price of ₹720 per share. The company was listed on the exchanges on December 28, at a premium of 35% as against the upper end of the IPO price band.

Among the notable investors in the company is former cricketer Sachin Tendulkar, whose pre-IPO investment of ₹5 crore in the company grown manifold to ₹35 crore following the listing.

What's behind the fresh surge in Azad Engineering shares?

While the company's stock has consistently remained in the green, the fresh spike of 5% was seen as unusual, say analysts. The surge is likely due to the strong performance logged by sectoral peer Hindustan Aeronautics Ltd (HAL) in the quarter ended March 2024.

The state-run HAL on Thursday posted a 52% year-on-year growth in net profit to ₹4,308 crore in Q4FY24, whereas the revenue from operations increased by 18% to ₹14,768.7 crore. After the results were out, the company's shares zoomed by up to 11%.

The strong earnings scorecard of HAL has led to similar expectations from Azad Engineering as both the entities cater to the same industry, analysts added. The latter is scheduled to post its results for the March quarter on Tuesday, May 21.