Azad Engineering Limited submitted its Business Responsibility and Sustainability Report (BRSR) for FY26 to the Bombay Stock Exchange and National Stock Exchange on September 7, 2026. The filing outlines the company’s sustainability practices, governance structures, and environmental metrics for the financial year ended March 31, 2026.

Operational Overview

The company reported a turnover of ₹5,903.75 million and a net worth of ₹15,519.78 million, triggering Corporate Social Responsibility (CSR) applicability under Section 135 of the Companies Act, 2013. Its business activities are primarily focused on manufacturing, with the energy sector contributing 79.71% of turnover and aerospace and defence accounting for 17.15%.

Exports constitute a significant portion of the company’s revenue, making up 93% of total turnover. The firm serves customers across 12 international countries and 10 Indian states. Its product portfolio is dominated by airfoil/blade components, which contributed 69.35% of total turnover, followed by non-airfoil products at 29.29%.

Workforce and Human Capital

As of March 31, 2026, Azad Engineering employed 533 permanent and non-permanent employees alongside 2,315 workers. The workforce is predominantly male, with men comprising 91.93% of employees and 97.49% of workers.

The company reported a permanent employee turnover rate of 29.24% in FY26, down significantly from 71.63% in FY25. Permanent worker turnover stood at 39.80%, compared to 45.88% in the previous year.

Spending on employee and worker well-being measures rose to 0.44% of total revenue in FY26, up from 0.16% in FY25. The company provided health insurance coverage to 82.79% of permanent employees and 79.81% of permanent workers.

Environmental Metrics

Azad Engineering disclosed its energy consumption and greenhouse gas emissions for FY26. Total energy consumed was 12,19,997.43 Giga joules, primarily from non-renewable sources. This resulted in an energy intensity of 206.65 GJ/Rs in Millions of turnover.

Scope 2 greenhouse gas emissions were recorded at 5,528 metric tonnes of CO2 equivalent, a decrease from 13,287.875 metric tonnes in FY25. Scope 1 emissions remained at zero. The company generated 263.49 metric tonnes of hazardous waste, compared to just 0.41 metric tonnes in FY25. No water discharge occurred during the year.

Governance and Compliance

The Board of Directors oversees sustainability matters, with Chairman and CEO Rakesh Chopdar responsible for policy implementation. The company holds multiple certifications, including AS9100D, ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018.

In terms of regulatory compliance, the company paid penalties totaling ₹11,48,862 to the Joint Commissioner of Central Tax and GST regarding blocked input tax credit and non-payment of GST for FY20 and FY21. No complaints related to corruption, conflict of interest, or sexual harassment were recorded in FY26.

What the Numbers Show

The divergence between revenue scale and waste generation warrants attention. While the company’s turnover stands at ₹5,903.75 million, hazardous waste generation surged to 263.49 metric tonnes in FY26, a sharp increase from 0.41 metric tonnes in FY25. This suggests either a change in reporting methodology or a significant shift in operational processes that increased hazardous byproducts relative to output.

Azad Engineering Limited reported a 21% year-on-year increase in standalone net profit to ₹363.52 million for the quarter ended June 30, 2026 (Q1FY27), driven by a 27% surge in revenue from operations. The company achieved a significant strategic milestone by successfully manufacturing, assembling, and delivering India's first indigenous expendable turbojet engine to the Gas Turbine Research Establishment (GTRE) and the Ministry of Defense. This delivery marks Azad's evolution from a precision component manufacturer to a fully integrated propulsion system player, expanding its total addressable market in aerospace and defense. Management has confirmed an expectation of over 25% long-term annual revenue growth while maintaining strong profitability.

The Board of Directors approved the unaudited standalone and consolidated financial results on August 7, 2026, pursuant to Regulations 30 and 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Statutory Auditors M S K A & Associates LLP issued an unmodified conclusion on the limited review of the results. The earnings conference call was held on August 8, 2026.

Financial Performance Highlights

Standalone revenue from operations jumped to ₹1,705.19 million in Q1FY27 from ₹1,345.12 million in the same period last year. Total income stood at ₹1,745.38 million, up from ₹1,436.60 million. Despite a rise in employee benefit expenses to ₹406.56 million and other expenses to ₹572.02 million, profit before tax increased to ₹400.87 million from ₹424.29 million. Basic earnings per share (EPS) were ₹5.63, compared to ₹4.64 in Q1FY26. Standalone EBITDA came in at ₹641 million against ₹993 million in Q1FY26, with the EBITDA margin at 37.60% versus 73.83% year-on-year.

On a consolidated basis, revenue from operations reached ₹1,725.99 million, up from ₹1,370.92 million. Total income was ₹1,761.48 million. Profit before tax was ₹389.65 million. Net profit attributable to owners of the company was ₹357.45 million, compared to ₹297.17 million in Q1FY26. Consolidated basic EPS was ₹5.53.

The following table summarises key financial metrics across both standalone and consolidated bases:

Strategic Milestones and Capacity Expansion

The delivery of the turbojet engine represents a profound architectural shift for Azad Engineering. By taking up end-to-end manufacturing, assembly, and integration of the complete engine assembly, the company has moved up the value chain. Management indicated that the engine is currently under testing, with weapon integration expected within four to six weeks, followed by worthiness certification. The company has been advised to prepare for a significant scale-up in production volumes once testing is completed.

In parallel, Azad continued its infrastructure expansion at the Tuniki Bollaram Industrial Park. In April 2026, the company inaugurated its fourth dedicated lean manufacturing facility, a 7,600 square meter plant custom-built for Baker Hughes. This follows successful commissioning of dedicated lines for Mitsubishi, GE Power Systems, and Siemens Energy. Civil construction for remaining units at the Azad Center of Excellence is on track to wrap up within FY27. Management expects substantive revenue contributions from these new lines to crystallize in the second half of the financial year.

What the Numbers Show

Azad Engineering's Q1FY27 results highlight a divergence between operational leverage and non-operating income volatility. While standalone EBITDA grew 32.1% year-on-year to ₹641 million, reflecting improved operating efficiency and cost indigenization through domestic supplier onboarding, other income moderated sharply to ₹40 million from ₹91 million in Q1FY26 and ₹170 million in Q4FY26. This normalization of foreign currency gains underscores that the core operational growth, driven by a 26.8% rise in revenue, is the primary engine of profitability rather than one-off treasury benefits. Additionally, the company's working capital cycle remains elevated, with debtor days currently around 170-180 days, though management targets a reduction to 90 days by Q4FY27 through bill discounting facilities.

Management Outlook

Management reaffirmed its long-term annual revenue growth guidance of over 25%, citing structural tailwinds in energy security, advanced gas turbines, and defense self-reliance. Chairman Rakesh Chopdar noted that FY26 was a stabilization year for capacity expansion, with 80% of initiatives stabilized in Q1FY27. The company expects accelerated growth from Q3FY27 onwards as new facilities reach full throttle production. Vishnu Malpani, Whole-Time Director, emphasized that each dedicated facility at the new park is poised to generate ₹1,500-1,800 million in revenue at full utilization, providing multi-year supply chain visibility with global OEMs.

Capital Allocation and Utilization

The company continues to utilize proceeds from its Qualified Institutional Placement (QIP) completed in March 2025, which raised ₹7,000.00 million. As of June 30, 2026, ₹5,402.73 million has been utilized, with ₹1,105.80 million remaining unutilized. Of this, ₹1,078.80 million is earmarked for capital expenditure and ₹27.00 million for issue expenses. Unutilized funds are temporarily invested in bank deposits. Additionally, the company granted 80,000 options under its Employee Stock Option Scheme on May 12, 2026, with an exercise price of ₹1,050 per share.

Source: https://lodr-files.dhan.co/lodr-inputs/Company/INE02IJ01035/2071173e-9e7e-49b8-a02c-2b0621aaf82d.pdf