Azad Engineering Ltd (NSE: AZAD) Q3 2026 Earnings Call dated Feb. 14, 2026
Corporate Participants:
Rakesh Chopdar — Founder, Chairman, and Chief Executive Officer
Ronak Jajoo — Chief Financial Officer
Vishnu Malpani — Whole-Time Director
Analysts:
Vikas Singh — Analyst
Amit Dixit — Analyst
Manish Otswal — Analyst
Mulesh M. Savla — Analyst
Gaurav — Analyst
Vinayak Kariwal — Analyst
Koushik Mohan — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Azad Engineering Limited Q3FY26 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. Before we begin, a brief disclaimer. This conference call may contain forward looking statements about the company which are based on the beliefs, opinions and expectations of the company as on date of this call.
The statements are not the guarantees of future performance and it may involve risk and uncertainties that are difficult to predict. I now hand the conference over to Mr. Rakesh Chopdar, Chief Executive Officer and Chairman. Thank you. And over to you sir.
Rakesh Chopdar — Founder, Chairman, and Chief Executive Officer
Thank you. Good morning everyone and thank you for joining us for the Q3 and 9 month FY26 earnings call. I’m Rakesh Jobdar, Chairman and CEO of Azad Engineering Limited. On the call with me today are Mr. Mishri Balpani, Full Time Director and Mr. Ronak Jaju, our CFO. The results and investor presentations have been uploaded on the stock Exchange and the company website. I hope everyone has had the opportunity to review them. Let me begin by saying that this quarter reflects disciplined execution across all fronts. Revenue growth, margin stability, new customer onboarding, contract expansion and steady progress on our capacity creation roadmap.
Let me talk about the performance overview for Q3FY26. We reported revenue of 155.8 crores registering growth of over 31% year on year. EBITDA for the quarter stood at 60.1 crores registering growth of over 40.7% year on year. Profit after tax was 34 crores, registering growth of over 40.1% year on year. Despite expansion related costs and ongoing ramp activities, margin remained strong and stable. This reflects operating discipline, strength and execution consistency. For 9th month FY26 revenue has grown nearly 32% year on year. EBITDA and PAT have shown significant growth over last year. Importantly, our 9th month profitability has already exceeded the full year of FY25 level.
This demonstrates the structural strength of our business model. Our focus continues to remain on profit growth. We are not chasing scale at the cost of margins. Every growth initiative is aligned with long term sustainability and value creation. Order book and customer engagement. Our order book remains strong at over 6500 crores plus providing multi year revenue visibility. Since listing, we have consistently grown our order book quarter after quarter. This reflects increasing trust from global OEMs and the expansion of wallet share across both new and existing customers. A key highlight this quarter is our engagement in contract progression with Safran and Pratt and Whitney for highly engineered critical rotating aerospace components.
These partnerships are built over years of engineering validation, qualification and performance consistency. They represent high entry barriers and deep integration stickiness into customer programs. Energy and oil and gas continue to contribute the majority of revenues. At the same time, Aerospace and Defense is steadily increasing its share and will play an increasingly important role over the medium term in creating a well diversified business mix on the Capacity expansion As we have stated in previous calls, FY26 is a year of stabilization. The new plants dedicated to ge, Mitsubishi, Siemens programs have been capitalized. Each plant is currently at a different stage and under stabilization qualification of both facility and products while scheduling the customer demand.
It is important to understand that stabilization in our industry is not immediate. Aerospace and energy components require stringent validation, certification and customer audits before full capacity utilization is achieved. We expect. Stable operating levels by FY27 and maximum utilization starts by FY28. The capacity we are creating is substantial. These are not incremental expansions. We are building multifold scalable infrastructure designed to support long term growth. Visibility already secured through firm contracts. Managing. Simultaneous constructions, equipment commissioning, workforce training, certifications and deliveries is complex. However, our team have executed this phase with discipline and focus on the growth outlook. Based on plant readiness, secured order book and customer demand visibility, we remain confident of achieving 25% plus revenue growth over the coming years. FY26 remains a transition year where stabilization efforts continue. The larger operating leverage benefits will be more visible. From FY27 onwards as capacity utilization improves, we are building capacity against firm contracts and and long cycle programs. There is no speculative expansion. With that I will now invite Mr. Meshnowalwani to provide operational insights.
Thank you.
Vishnu Malpani — Whole-Time Director
Thank you Chairman for a insightful discussion on the quarter results. Now I’m Vishnu Malpani, whole time Director of Hazard Engineering. I will take you through some additional information of our operational performance this quarter. From an operational perspective. Q3 and the nine month period have been about disciplined execution like Chairman mentioned and structured ramp up. This quarter also represents our highest ever quarterly and 9 monthly performance. We’ve delivered revenue growth across all our business segments during this quarter. Our operational efforts have been focused on strengthening execution and discipline across the organization. We have continued to embed lean principles into our newly built facilities.
These manufacturing facilities that have been designed have been designed with absolute precision around workflow based layouts, monitoring systems and world class infrastructure. As our volumes build and operating leverage comes in, we will improve through natural fixed cost absorption and cycle time optimization. At the same time, we are also strengthening our supply chain reliability. We are seeking customer approvals and progressively improving our domestic sourcing to improve agility and reduce our lead times, also helping us manage our working capital better. However, all such initiatives remain fully aligned with OEM qualification requirements. Traceability compliance and quality integrity remain non negotiable.
Equally important has been for us to build capability. Scaling infrastructure without scaling human resource or people is unsustainable. We’ve added in this financial year, skilled engineers, machinists, quality professionals across the organizations across levels and training still remains an important part of our entire employee journey. Aerospace and energy manufacturing demand repeatability, documentation, discipline and audit readiness. Operational capability is therefore a structural investment and not a tactical one. From an operational standpoint, FY26 remains a year of calibrated ramp up stabilization will continue through the year and by FY27 we expect these facilities to start operating at stable levels enabling stronger operating leverage.
Our approach remains measured, we’re scaling against firm contracts long term revenue visibility. We are maintaining quality leadership and ensuring that our growth is both disciplined and sustainable. With this I will now hand over the call to Mr. Ronald Jaju, our Chief Financial Officer to give us a quick overview on financials. Thank you. Over to you Ron
Ronak Jajoo — Chief Financial Officer
Thank you Vishnu. From a financial standpoint, quarter three and nine months 26 reflect both strong growth momentum and margin stability even as we continue to execute one of the largest capacity expansion in the history of the company. Let me walk you through the key. Highlights of the results. For quarter three, FY26 revenue stood at 155.8 crore reflecting over 31% year on year growth. For the nine month period, revenue growth remained close to 32% supported by the strong execution across energy program and steady scaling within the aerospace segment. Importantly, this growth is broad based. It is not dependent on single customer geography or a segment that diversification provide resilience and visibility. EBITDA for quarter three was 60.1 crore. On a sequential basis this represents growth of approximately 16.9% and for the nine month period EBITDA has grown by approximately 38.4% year on year basis.
Despite the initial ramp up cost associated with the new facility and higher depreciation from recent capitalization of assets, margins have remained stable. This stability reflect a combination of improved product mix, pricing discipline across long term contracts and better absorptions of the fixed overhead and ongoing supply chain optimizations. As utilization level improved from FY27 onward we remain confident our long term EBITDA margins profile is in range of 33 to 35% is sustainable over a longer period of time. Profit after tax for quarter three stood at 34 crores reflecting strong year end year growth for nine months.
26 PAT hedge grew by 55% year on year basis significantly outpaced revenue growth. This is timely driven by operating leverage, stable margin and interest income from fixed deposit of QIP proceeds. Notably our 9 month profitability has already exceeded full year FY25 level. As CMN explained, this enforced the scalability of our operating platform from a capital allocation perspective. Capital deployment continue in line with our expansion roadmap. Every major investment is directly linked to the secured order visibility and long cycle for customer programs. We are not building speculative or idle capacity. Each facility has defined demand backing it.
At the same time we remain financially disciplined. Balance sheet prudence remains a priority even as we support long term growth. Even the strength of our order book, plant readiness, progressive stabilization and stable margin structure. We remain confident in delivering 25% plus revenue growth over the coming years with a sustainable margin in range of 33 to 35% at EBITDA levels. Our financial approach remain conservative in planning while enabling ambitious and disciplined operational executions. Thank you. Now floor is open for question and answers.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may please press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Vikas Singh from ICICI Securities. Please go ahead.
Vikas Singh
Good morning sir and congratulations on a very good set of numbers. So my first question pertains to our next four sheds which we are under commissioning. Could you give us the timeline and is there any more dedicated shed which we have already tied up with any OEMs at this point of time?
Rakesh Chopdar
Yeah, so thank you for the question. Look, the facilities which are already inaugurated, right? So that, that, that when we say it’s inaugurated. So the building is up, machines are in and it’s ready to you know. Start the. The production wise. But as I mentioned before we even start the production though like we were doing in our existing facility here. And the new facility requires a lot of, you know, the audits. They have to re audit the facility. You know there’s A certifications, the validations that, that took, that will take some time. And as it is finished with, you know, with ge, Mitsubishi and Siemens, we have, we have, we are in progress and almost, we are in the finishing stage. So as we finish the validations, we start the production. So not all the floor happens together.
So it goes with few machines and few product line. And once they are approved then the production starts. So that’s what we mentioned. Like it will be done by you know, FY26 stabilization and FY27. We can see that we can start the operating stable, we can stabilize the operations and maximum utilization start by FY28. So it’s a process, It’s a process that we all have to follow.
Vikas Singh
Yeah, noted sir. So the second question pertains to. Now we have tied up with Safran and there is a huge possibility of that Indian manufacturing ecosystem for Rafale to get developed in India. How do we see our, you know, wallet size with them? Is there any clear idea you wish you can give and effectively given our capacity constraints, the main hurdle for the higher growth do we expecting to now go for that 75,000 square feet third facility simultaneously? How should we look at the growth plans from here onwards now?
Rakesh Chopdar
Yeah, if you speak, if you talk especially about Safran, just to remind you any of the OEMs which Azad is working today, it’s not on the offset policy. We work with them. We are a global supplier. Right. So if, if Safran or GE or Mitsubishi or any OEM are giving business to Azad, that’s not under obligation of the offset policy. We are a global supplier. So whatever requirement comes in, it goes to the global, global benchmark. Right. So we, we will not know which country is using our product line and which, which country they are selling their engines. However, now Safran coming to India, that gives an additional boost to Azad. You know, companies like Azad where we have extra benefits coming in. So Azad is playing global as well as will benefit from the obligations what Safran must be having of, you know, doing business in India with the domestic suppliers, you know, so this is nothing but a bonus. So that way I would clarify, Azad is just not a domestic supply. It’s also a global supply.
Vikas Singh
Noted, sir. And so lastly on the development of that small engine which you were doing, any update on the same?
Rakesh Chopdar
Yeah, that’s, that’s still in the progress. We have finished, I think good progress. We are around 70, 75%. We are as you asked me, the progress scale we are around 75% on that.
Vikas Singh
And by when you can expect the. Hundred percent
Rakesh Chopdar
we are planning very soon, I mean couple of months I think we should be able to be positioned to deliver the engine.
Vikas Singh
Notice. Thank you and congratulations everyone for very. Good set of numbers.
Rakesh Chopdar
Thank you.
operator
Thank you sir. The next question is from the line of Amit Dixit from Goldman Sachs. Please go ahead.
Amit Dixit
Yeah, hi, good morning everyone and congratulations for a very good set of numbers on all the friends. Couple of questions from my side. Now if we see the overall ecosystem, I mean the Mitsubishi, GE all are raising their guidance on energy front. Safran reported a couple of days back again a very good set of numbers. In increasing guidance even some of your peers like Arrow Edge for example has increased its guidance on the leap engine, leap components delivery. So in this context, I mean how do you see the traction in your line of business? Since we are also now we have a foothold in most of these key accounts.
So how do you see actually you know, these foreign OEMs kind of coming to you, the engagement with them has it increased? And in that sense just wanted to ask that this order book that we are having 6500 crores, how do we see the trajectory of this let us say in next couple of years. I’m not expecting a quarter or a six month review, it’s like over a couple of years kind of.
Rakesh Chopdar
Thanks Amit. Thanks for the question. And if we talk about the engagement with the OEMs, right. So if we see when we started with Energy, Mitsubishi or GE and Siemens or any other good grade customers we have and in the years 2010s and 12s and 14, what we remember as we started engagement with these, all these OEMs and we were at exactly the. Same stage what we are with today. With Saffron’s or Rolls Royce or a GE or you know, Brad and Whitney. So I would say as we progress, as we progress it’s with the qualifications we are doing with the existing, you know, the customers which are in hand. Like we signed up with Safran, we signed up with Pratt and Whitney, we signed up with Rolls Royce. And as we move the, as we move forward with the contracts which we have signed in the product line which we have already secured. All right, but that gives us an edge that we are not new to them now.
It’s not that. Knock, knock, here we come. We are Azad, you know, to introduce and we start a thing. It has already started. It has already started and it is started taking a shape once this is established. You know the best part is Azad has got a beautiful track record of delivering, you know, the most complex solutions we can. Any OEM is seeking today, they come to Azad. That’s the beauty of Azad here, that we can give all kind of solutions that a customer needs. So that has been established. So what are we waiting for is to just finish the cycle of this qualification once this tick in the box is there and then the door opens and it’s already open for us and we know what’s coming, we know what are the pipelines they have, we know we have the visibility what each and every OEM is looking at.
As you know that these parts are not quarter, as you rightly said, we cannot gauge this by quarter, quarter. This goes, this goes in a very long strategy, right? They replan it very. We look at a very look at forward looking thing which has to be very well managed before they even give us a production order. So all these preparations are going on well.
Amit Dixit
Great. The second one is essentially there were a lot of I think concerns on the investor side on the possible tariffs by the US but we’re now US India deal is mostly done. I believe those concerns would be over now. In that context, how do you see the opportunity for us shaping up both in terms of US and in terms of Europe of course with eu, India, FDA also in place. I’ll give you context. I was speaking to the, you know, the India head of Pratt and Whitney the other day and he made a remark which was very interesting that you know they are looking to increase their delivery from India by 10x.
Earlier it was 6x by the way. But after US India trade deal they are looking to increase it multifold. So how do you see the US India trade deal as an enabler for your business? Of course in all the concourse you have maintained that this doesn’t really matter for your kind of product. But just wanted to get your thoughts on this new.
Rakesh Chopdar
I was about to answer that in my previous calls also I mentioned that these tariffs won’t affect the products what Azad is holding because they are essential. They are something long, long, very long qualification products where even the tariff goes double, it will not, it will just not go away from Azad because it takes a lot of time to develop any other supplier. So in that angle there’s no effect before, there is no effect after. However, the customers at ease, you know, they are more happy that okay, we don’t have to pay the tariff and we are back on track with Azad.
So that is where the best part what having is happy, happy environment. That’s what that is only changed, nothing else has changed.
Amit Dixit
And in terms of cost competitiveness now earlier there were some, you know, lingering I would say doubts that okay with 50, 55% addict maybe the cost competitiveness of Azad could be compromised. But with now 18% I think you should be very, very comfortable.
Rakesh Chopdar
Yeah, exactly. That’s what I’m saying. Customers are very happy now. Before they were like you know, okay we are paying some tariff but we have no choice. But now we are happy that we are back with Azad and we are happy with Azad and we are, you know nothing has, you know it is back, back the olden days where how we used to work and they were more happy than working with Azad on the pricing, the quality, the deliveries. So I think it’s, it’s, it has turned around more positive.
Amit Dixit
Wonderful sir, great. Congratulations and all the best.
Rakesh Chopdar
Thanks.
operator
Thank you sir. The next question is from the line of Manish Otswal from Nirmal Bank Securities Private Limited.
Manish Otswal
Yes sir, thank you for the opportunity and good set of numbers and maintaining the extraordinary execution track. Sir, I was have a slightly longer term question on the company’s growth and the capital decision making. So I was taking like since the IP of the company have built a formidable customer profile and 39% revenue CAGR which is quite impressive and we have raised money through QIP and the IPO almost 940 crores and for the funding work capex program as well as the some deleveraging because of that. As I model or visualize agile engineering towards a journey of 1800 crore to 2000 crore company by 2030.
Given our order book and the growth trajectory which we guided in the past in the current quarter the growth trajectory achievable without any equity dilution. That is a question. And the financial leverage can increase. That is a question sir in the investor minds and when we interact with the investor that the question is when the Azad business will move from capital consuming growth model to self sustaining growth model. And I want your comment on the management commitment on that trajectory. How we should think, how we should build our expectation for that journey for a job.
Thank you.
Vishnu Malpani
Thank you, thank you for your question. So, so let me start by saying we raised 240 crores in IPO but out of that 180 crores were towards debt reduction and hardly any capital from IPO proceeds was used towards building CapEx. Right. So we started deploying capital in the newer facility only with the proceeds of largely through QIP where we had raised about 700 crores. Our guidance to the market has always been that we are Investing roughly about 200 odd crores in infrastructure, 200 to 250 crores in infrastructure and the balance 450 odd crores to 500 crores will be deployed towards actual plant and machinery.
Right. Which will be leading towards an output from an asset turn perspective blended across our business. We believe that we should be able to do the journey of. So we were already doing about 450 crores which we delivered last year through our existing facility and through this incremental deployment of 500, 450 to 500 crores in machines we should be able to generate anywhere around, you know, anywhere around 1.722 asset turn of 500 crores. So if you look at that, so that gives us another, you know easily between 800 to about thousand crore sort of a visibility incremental to the 450 that we delivered last year.
Now if you add that it gives you, it gives you you know the entire roadmap from 400 crores to say 1500, 1600 crores and beyond. Right?
Manish Otswal
Yeah. This is the second I think sir, I just looking the QIP proceedings, no. 2 accounts of our filing where you mentioned that there’s a use of general corporate expenses of 156 crore which is almost 34% of our revenue. So can you just brief about the nature of this expenditure where we spend that money and how the the company will benefit out of that. Can you just highlight for us?
Ronak Jajoo
Yeah, sure. So as Vishku mentioned that we are deploying around 450500 crore in plant and machinery that required around 1510 to 15% has to be deployed toward the ancillary which required your install installation cost and all those things which amount to around 150 crore out of 250 crore. 100150 crore has gone toward the deck to stabilization debt and balance has gone toward the long term working capital and few of the machines which are not part of the qip we have funded that.
Manish Otswal
All right, and what is the CAPEX in nine months and the CAPEX guidance for next couple of years for our business.
Ronak Jajoo
So for nine months we have capitalized plant and machinery as we have mentioned that we have capitalized MHI, GE and Siemens plant during the last nine months which amount to around 250 crores on the plant and machinery side. And going forward I wish to mention that balance PYP money has to be deployed over the next one to two years going forward from here in FY27 and 28.
Manish Otswal
All right sir, thank you very much for answering my question. All the very best for the future execution.
Ronak Jajoo
Thank you.
operator
Thank you sir. The next question is from the line of mules from Shah and Savla. Please go ahead.
Mulesh M. Savla
Thanks for taking my question and heartiest congratulations to team for the excellent numbers. Especially when we are ramping up the production facilities. Plant and machineries are being installed. Employees and people are being hired and there are a lot of other expenses. Sir, we have this. My first question is to Mr. Chopdas. We have excellent product profile. We have long standing customer relations and our manufacturing additional manufacturing facilities are being ranked up. We have already grown at about 30% plus in the past. Recent past. Still what is restricting you to guide us for the 25 plus growth on the top line and not 30% plus? That is my first question.
Rakesh Chopdar
No. Good. Good question. Thank you for the question. As I mentioned know the that stable with the stabilization is very important. Right. So FY26 I want to stabilize. We want to stabilize hazard FY20. FY27 is where we start the operating levels. You know as as I mentioned the earlier statement also that qualifications, audits, product qualifications. That that’s going to take time along with the execution and the ramp up. And when it comes to maximum utilization for FY28 I’ll change my statement of the growth. You know that that time it will be nice to give that this statement at that time.
What do you say?
Mulesh M. Savla
Right, right. I. I appreciate your conservative guidance and over delivering but still I feel that we are too much conservative because all in. During all these years we have been facing these challenges of expanding capacities and all and still we have delivered 30% and with these specific dedicated facilities and other facilities coming up I’m sure we should be able to cross percent plus guidance.
Vishnu Malpani
This is what we expect. This is what we expect because we. We are. We’re struggling. You know what we are struggling building this massive facility. It’s not a small facility, making a world class factory, having these world class customers, having the world class product and such. Such thing. I should. I’m hats off and I’m lucky to have a team. You know what. What are everyone is handling so beautifully. We have a great coordination going on. So all this we’re still giving us. You know on the growth of what we are delivering now which is commandable at this stage is I would. I would say that and as it settles down there’s nothing that there is nothing that we can, we can be stopped. Right?
Mulesh M. Savla
Great, great, great answer. My second question again to you is that you said that our gas turbine engine is likely to be ready within another couple of months. So I believe it should be before the end of this financial year. So can you throw some light on kind of potential that can throw up for our company?
Rakesh Chopdar
Yeah. See I’ll tell you this, this, this will be the first jet engine of India.
Mulesh M. Savla
Correct.
Rakesh Chopdar
100% indigenous. Right. And this is the first. And the 100% engine is manufactured in Azad. So when we say it’s first and when we are, when we try to. We anticipated that we’ll finish off the deliveries in Q4 and Q3. Q4. However there are certain things which are jointly done by Azad and gtre. Correct. So there are certain challenges which comes in back and forth being the first. Right. So we anticipate some kind of challenges but we don’t anticipate the timelines. So these timelines are just. We are hopeful that we should. We are in the last leg right of the design phase what GDIR is doing and we are in the last phase of manufacturing. So I don’t see any more delays in this. But however, a couple of months we never know if we see some more surprises as this is the first engine.
So we all should be very happy that we are very near to get the first, India’s first jet engine out.
Mulesh M. Savla
So that will be our nascent’s pride. But if you can just give rough numbers to what kind of business that it can throw up to hazard.
Rakesh Chopdar
Now right now we are not looking at business right now. We are looking at to get this engine successful. That’s, that’s my main focus now. I’m not, I’m not concerned but this is the need of our, the country and we all should be proud of it.
Mulesh M. Savla
Great, great. I wish you all the very best. That’s all from my side. If I have any question I’ll join back that you. Thank you so much.
Rakesh Chopdar
Thanks. Thanks.
operator
Thank you sir. The next question is from the line of Gaurav from Avendus. Please go ahead.
Gaurav
Yeah, thanks for the opportunity. First question is on the aeroflows opportunity that we have. So given that gas turbines are in. Very high demand currently because of from. The data centers we have seen globally. Gas turbine prices have gone up considerably. In last one year. So the question is that have you also seen any benefit of that gas turbine price increase as OEM passed on that benefit to you as well which, which you are seeing in, in A good margins currently. That’s question number one. And second question is that where are. We in the qualification cycle especially for. The engine aerofoils and how much time. You think it will take for you. To get the qualifications?
Vishnu Malpani
Fine. So, so thank you for the question. Let me answer it into two parts. The first question I think, see we are definitely experiencing a lot of demand which is coming back to back from our customers directly. And because we are the only qualified partners in India, we are a direct beneficiary of this and we’ve been doing it. And plus with, you know, with the global situation, we are seeing extremely high demands coming to us now. It’s our only its own. It’s only our ability to be able to build up infrastructure and execute which will keep growing our wallet share.
In terms of the price, we are not seeing any. So pricing decisions are not being done. And for us, our contracts are longer term where we maintain our 30 to 35% margins and continue to grow on that front. We are not looking at short term gains from this perspective. We are building a very, very robust relationship, strategic relationship with our customers, which is not a supplier customer relationship but a partnership. So this is our intent to do so. We. But we are experiencing heavy demand so as to say. So that’s part number one of your question. The second is we are aggressively progressing on our airfoil qualification on the aerospace side as well. In fact, if you see these developments that are happening with our customers on this side is a testament to the fact that there is progress that’s happening and customers are recognizing it. That’s why we are becoming a part of not just legacy platforms, but also a lot of new engine platforms that will be driving the aviation for the future. Right. And across all of our engine manufacturers.
So we’ve recently done, you know, a contract and finalization with Pratt and Whitney which we notified. You know, there’s been progress that Mr. Chopdar spoke about on Safran, Rolls Royce. We started working in 2024. We should be starting to supply something in FY27. So all of these things are a mixed bag. But let me bring about one point which is important to understand and I think our chairman also touched upon it. See today what journey we are with Rolls Royce, Pratt and Whitney, Safran and all of these engine manufacturers is what we were with ge, Mitsubishi and Siemens a few years ago.
So while we are ramping those up because we finished qualifications, this will be a journey of qualification. We will build qualifications to a point and slowly this will be the next Leg of growth for us in the but qualifications are progressing really well and you should be able to see some revenues coming out of the Aero Engine department in the coming year.
Gaurav
All right, I have 2 more questions on the accounting side for Ronak. Number one is in this quarter have you seen the sales of services going up considerably compared to last quarter which has benefited the gross margins and EBITDA margins? That’s number one.
Number two, what are the inventory days and working capital days in this quarter?
Ronak Jajoo
Yeah, coming to the first question, the business is quite stable and more or less it’s in the same line in the historical numbers. And as I mentioned you last time also we don’t track business on that particular front like that. On the working capital side, H1 as I mentioned that we are targeting around 190 to 200 days. We have working started working on that directions and the results are coming. But it will take some time to. Stabilize and it will take time to have. And for H2 we are targeting around 140 to 150 days because once we completed all the things on the distribution supply chain and discounting part, we are quite confident it still come to 140, 250 days time.
Gaurav
No, but my question is have we seen inventory days going up in this. Quarter given the growth?
Ronak Jajoo
Not really. Yeah. Wip, this is into the WIP and. You start reflecting this in H1 and H2 as I mentioned. But right now it’s still on the sustainable basis. What we have seen in the historical. Period,
Vishnu Malpani
this is, this is progressive change. Right. All of these things that we’re doing will start reflecting over time. You know, our endeavor was to finish this by the end of this current financial year. But I think this is while the complexity in our business that we spoke about, we are in the ramp up phase, transition phase. All of this should. So probably in the next about 2/4 you will see the first milestone being hit and then it will start reflecting for in H2 for the second milestone. And we should be able to do this in our H1 commentary for next year.
Gaurav
All right. Okay, thanks. Thanks a lot and best wishes for the future.
Vishnu Malpani
Thank you.
operator
Thank you sir. The next question is from the line of Vinayak Kariwal from Exponent Tribe. Please go ahead.
Vinayak Kariwal
Hi. Thank you for the opportunity. I just remember Mr. Vishnu Parikumalkani posting about the hiring of at least thousand workers for our new plants in the next three months. And on the same booth I remember. Someone commenting that they hired hundred workers and that took them 12 months to hire. So I Just wanted to understand how is the aerospace and decision engineering workforce situation in the area where we are. Operating in and what is the progress on that?
Vishnu Malpani
Sure. So I think. Very good question. So first of all, I think while you can manage everything else with capital, I think capability or recruitment or skill is something that will only be built over time. So Azad Engineering recognizes that for us to be able to achieve these goals that we are setting for ourselves, these aggressive goals, we will need a very, very strong team to support this. Right. And that’s why we are onboarding talent at every level, building the skill, training them to be future ready. Right. So if you look at, if you look at.
I know, I know you’re referring to my post on LinkedIn where I said I want to recruit thousand people over the next. So the idea is that we do not want the business to be deprived of manpower because the cost of having employees versus the cost of not having employees is disproportionately high in our business. Right. So we build an execution engine today that we are able to source about 150 to 200 people per month. We have created a training center internally in a program where we are able to, in about 50 days, we’re able to put a person on the training program and deploy them on the shop floor.
We are running several, you know, engagement programs in the company which are, you know, which are interesting, which are helping us train, retain employees as well. So it’s important and I think, yeah, it’s not an easy thing to be cracked. But then I think we’ve taken enough and more measures to solve the entire piece of human resource and we are well in control giving our, given our targets for the next few years.
Vinayak Kariwal
Sure, sure. And so how on the, on the margins part do you expect the margins to dip for the next fy, considering the fact that we are coming up with three weeks faculty and the utilization won’t be up to the mark, which will only hit maximum utilization in FY28. So do you expect a margin dip for the next year?
Vishnu Malpani
So I’ll go back to, you know, like on every call we say, you know, we would want to maintain our guidance to be in the range of 33 to 35%. But even this year, this quarter, you can look at our EBITDA margin, It’s been at 38%. Right. So I would want to still continue to guide 33 to 35% EBITDA margins in our business for the longer term. But you know, there are always positive shoots that we would want to Bring to the market, you know, like we did this quarter. Fingers crossed.
Vinayak Kariwal
And so last question on the, on the requirement from the three gas turbine OEMs. The data center, the data center compute. The data center compute is expected to get CX every year for the next four or five years. And that is a similar requirement of power that, that the data center industry expect to be ramped up, right? And, and the front, and the front runners in the, in the, in the power, in the power on site power Generation are these three OEMs which you are the only qualifier in the country qualified pair in the country.
How what are the conversations you are having with these OEMs in the kind of ramp up we are expecting from you and what is the situation if you could give us a broad view.
Vishnu Malpani
So I think you correctly summarized this, that there’s a lot of demand. See the demand for electricity over the next about 15 years is going to double with what the world needs today. And the only way you can power the world’s demand for electricity is by putting up these gas turbines, nuclear turbines, steam turbines and so on and so forth, right? So this demand is being experienced by all of our OEMs aggressively, right? So if you look at their order books, if they’re, if you look at their order backlogs and how much, how much orders are they taking quarter on quarter, there’s a lot of pressure for them in delivery because data centers have presented this opportunity and this entire industry has changed structurally, right? So our conversations are how quickly can we ramp up on the existing product line? How quickly can we move into, you know, adjacent product lines which are also critical and ramp up, right? So our existing Azad is today, right, holding with our existing 100% ramp up etc.
We will still be doing a single digit wallet share with our customers, right? So if you look at this is this is going to grow, right? And giving you an example, right, if you look at how much aerospace, even at $700 million worth of scale that they’re doing, they’re still growing at 25% year on year, right? The same, they’ve delivered a 25% growth. So this is a brilliant time to be in this industries. And we are constantly just looking at newer demand coming to us, newer capacity and even the existing business is, is to be done over the next few years.
So the backlog is constantly increasing for our customers and so is, and that is just channeled to us directly. And like you said, since we are the only qualified partner in the country and the only qualified Partner this demand, we will be a direct beneficiary of this. So it is in Azad’s best interest to sort of keep scaling up and improving our wallet, share existing and then also enter into newer product portfolios which we are, which we have the opportunity today. Right. So these are low hanging fruits for Azad to get into adjacent categories as well.
And we are also expanding, right? We are building capability, don’t talk about it, you know, in our earnings call as much. But there is a lot of capability development that we are doing that you know, will only lead to, you know, revenues in the coming years, which is our long term plan. Right. We are entering into combustion, you know, from compressor. So every aspect of a turbine. Right, right. From a compressor airfoils to really complex combustion parts also for land, sea and air turbines, we are building capabilities. For gas, steam and nuclear turbines, we’re building capabilities.
I think Azad is very beautifully present in terms of capabilities that we have and capabilities that we are building right now from our customers perspective. So yeah, these are some of the conversations.
Vinayak Kariwal
So just for clarification, so could we expect like more than 40, 50% growth once you stabilize these facilities with the three turbine OEMs for the next four, five years?
Vishnu Malpani
Demand is there. There is obviously a lot of demand. You see our customers are signing. So if you look at just the contracts that we signed with Mitsubishi, right. So we signed roughly 100 million contract, 70 to 80 million contract in phase one. And it was immediately in about one, one and a half, you know, less than a year, we were able to sign a phase two of the same contract of a similar value. Right. So the demand is obviously there. But our ability to execute these contracts depends on infrastructure, stabilization, all the things that Mr.
Chopdar mentioned, right. So all the new plants that we’re building up, it’s not just about building a factory, putting machines and starting, right. This industry does not have a very linear growth, right. It all the other industries, this, this needs a lot of time. And then you see in azad’s case also 2008 to 2020 we did 100 crores. And 2020 to 2026 we’re talking about a number like this. This year we’ve delivered five times of what we were in more than five times of what we were. So definitely the opportunity to grow is there, but it relies on Azad’s ability to execute and take contracts and execute at that scale.
While you were asking me questions on how are we also doing on manpower. So this is a complex project management, right? So you will have to manage every aspect of the business. While you’re managing customer expectations, you’re building infrastructure, you’re ensuring that your current deliveries are not impacted. Also hiring planning for the next year quarter. So it’s a very complex mess. And that’s why while we still grow at 25% we, we say that with absolute confidence. And that’s why we believe that there is a definitive opportunity in the future to see this demand.
Vinayak Kariwal
Thanks. Thank you so much.
operator
Thank you sir. Ladies and gentlemen, to ask a question please press star and one. Now the next question is from the line of Kaushik Mohan from Ashika Group. Please go ahead.
Koushik Mohan
Hi sir, I just wanted to understand with the missile engines that what we are trying to do is those also numbers being considered in the growth rates that we are talking about.
Rakesh Chopdar
No sir, thank you for the question. But so see the number of projections that we’ve spoken about, we’ve only spoken about the customers, what we have in hand today and not something that we haven’t. Right. Which is in the future. So the engine development that we’re doing and is not a part of our revenue projections if you’re asking us, but this is a capability that we’re developing.
Koushik Mohan
And what can be the market size, if it is possible to be told or anything, what is the market size and what can we capture over here?
Vishnu Malpani
So I think the market is huge. You should be able to understand that this is, these are strategic defense drones. This will be used in strategic defense, UAVs and drones, etc. You know, single shot device. From that perspective it will be used in anti ship missiles, etc. And this is the first strategic jet engine that will be made out of India. So you should think about it. And I will, I will request Mr. Chopra to sort of give us a little more insight on this.
Rakesh Chopdar
Yeah. So your question is when we can know because in Azad what, whatever we say or whatever we project, we project whatever is there in hand. Okay. What is confirmed and what we can deliver, maybe in Q1, Q1 we can give you more good news on the engines, we can give you some projections, we can give you some revenues. Because as, as we have a practice, we, we just, whatever is confirmed, whatever there is in hand, we can, we can definitely talk about it. This is a great movement for sure. The volumes can be substantial as this engine is currently being imported by government of India and this is an import substitute.
So there is a massive pressure from the country to develop this engine. And we are with the same, we are on the same page with them. And we are putting all the efforts to develop this engine. Hopefully fingers crossed. We very soon will give you good news in Q1 and we can talk more on the projections, we can talk on the revenues, we can talk on the numbers.
Koushik Mohan
Got it sir. And like I just wanted to understand another thing. With the current order book that we have, the revenue growth rates that we are talking about will be substantially fulfilling its numbers. But I just wanted to understand what kind of growth rates that we can see in the current existing products and with the current existing clients on what is will be the market share that we can increase over next three, four or five years down the line.
Rakesh Chopdar
It’s a long question, is good short, but the answer is very long to this. Can I invite you to Azad and I can show you. You know, because every customer has its own product line. Every, every customer has their own design and nothing is common within these customers. So I have a very long answer for this. So I would request you to please visit Azad so they can show you more in detail
Koushik Mohan
post this quarter. We will definitely come this.
Rakesh Chopdar
Yeah. Most welcome. Most welcome.
Koushik Mohan
Thanks for this.
operator
Thank you sir. Ladies and gentlemen, in the interest of time, that was the last question for today. I would now like to hand the conference over to management for closing comments.
Vishnu Malpani
So on behalf of Raad Engineering Board of Directors we would like to thank everyone for joining the call and listening to the performance updates of quarter three FY26. We will. We are very happy to share that this was an excellent quarter and we. Believe that we will be continuing the. Momentum and the guidance that we’ve shared with the market. Thank you.
operator
Thank you sir. On behalf of Azad Engineering Ltd. That concludes this conference call. Thank you for joining us and you may now disconnect your lines. Thank you.