Azad Engineering Ltd (NSE: AZAD) Q4 2025 Earnings Call dated May. 26, 2025
Corporate Participants:
Rakesh Chopdar — Chairman and Chief Executive Officer
Murali Krishna Bhupatiraju — Managing Director
Vishnu Malpani — Wholetime Director
Ronak Jajoo — Chief Financial Officer
Analysts:
Amit Dixit — Analyst
Kamlesh Bagmar — Analyst
Nilesh Dedhia — Analyst
Rajesh Vora — Analyst
Karan Danthi — Analyst
Sarang Joglekar — Analyst
Aditya Bhartia — Analyst
Vignesh Iyer — Analyst
Jatin Jadhav — Analyst
Vishal Dudhwala — Analyst
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Azad Engineering Limited Q4 FY ’25 Earnings Conference Call, hosted by ICICI Securities. 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. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict.
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 in the conference call, please signal an operator purposing star than zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr Amit Dixit from ICICI Securities. Thank you, and over to you, Mr Dixit.
Amit Dixit — Analyst
Thank you. Yeah. Good afternoon, everyone. On behalf of ICICI Securities, I welcome all the participants for today’s call. At the outset, I would like to thank the management for giving us an opportunity to host the call. From the management today, we have with us Mr Rakesh, Chairman and CEO; Mr Vishtu Malpani, Whole-Time Director; and Mr Ronald, our Chief Financial Officer. It has been a glorious year for Abad, where we have seen consistently robust performance through the quarter. We will have brief opening remarks from the management. Post we will open the floor for an interactive Q&A. Without much ado, I would hand over the call to Ms to take this forward. Over to you, sir.
Rakesh Chopdar — Chairman and Chief Executive Officer
Thank you. Thank you, Amit. Thank you so much. Good afternoon. Good afternoon, everyone. Welcome and thank you for joining us today for the Q4 and FY ’24 earnings call. Joining us on this call are Mr Murli Krishna, our Managing Director; Mr Vishnu Walpani, Whole-Time Director; and Mr Jaw, CFO. We are also joined by our Investor Relationship Partners from SGA. Our results and presentations have been uploaded to the stock exchanges and the company website. We hope you have had a chance to review them.
On the Q4 performance highlights, we are pleased to report a strong close to the fiscal year. Standalone revenue for the quarter grew to INR125 crores, representing a 34.2% increase year-on-year. EBITDA for the quarter stood at INR45 crores with margin improving from 30.8% to 36.5%, driven by operating leverage and enhanced product mix.
Net profit grew from INR15 crore in Q4 FY ’24 to INR26 crores in Q4 FY ’25, marking an impressive 74.4% growth. On the full-year FY ’25 highlights, FY ’25 has been a defining year for us, one marked by momentum and meaningful progress across all fronts. Revenue from operations grew by 32.9% year-on year-on-year to INR453 crores, underscoring the strength of our core business and the growing global demand for our specialized capabilities. Our EBITDA margin expanded to 36.3% and we delivered a PAT of INR89 crores, a significant milestone reflecting both scale and execution discipline.
On the strategic wins and market position, this quarter, we secured new orders from global OEMs such as Jee Vanova, Mitsubishi, Vaker Hughes and Rolls-Royce Defense as well as civil. A clear endorsement of our engineering capabilities and reliability as a strategic supplier. These wins follow rigorous global evaluations and reflect Azar’s growing prominence in the global supply-chain.
Beyond these mark evens, we also added multiple new orders across the year, taking our current order book over INR6,000 crores. On the capacity expansion and execution focus, we have taken both steps to expand capacity and align with long-term demand. Our new facility in Hyderabad became operational in Q1 FY ’26, marking a pivotal movement in our growth journey.
These facilities are part of our mega factory vision with dedicated spaces for key clients, this approach enables deeper collaboration and greater agility in meeting demand. We are already seeing strong interest from global OEMs to secure multi-year capacity, reinforcing our belief in the direction we are headed. On the outlook and growth ambitions, in previous years, our growth was constrained by capacity. With our new infrastructure, which is coming online, we now see significant headroom to scale.
We are confident in achieving approximately 30% plus revenue growth in FY ’26, supported by a robust order pipeline, operational readiness and a sharp strategic focus. Looking ahead, our aspiration is anchored in innovation, reliability and global partnerships. Our strategy is simple and but focused, scale with precision, invest with intent and grow with agility. Before I hand over the call to Mr Krishna Muppati Raju, our Managing Director, let me take a moment to introduce him.
Brings over 25 years of rich experience in operations management, corporate finance and metal farming. Previously, he held leadership roles at America, Dyson Corporation America, Mex Steel America. He also holds advanced degree in industrial engineering from Ohio State Management and computer science from Georgia Tech. His passion and holistic approach, accompanied by strong leadership qualities will drive our growth in the coming years. Over to you, Malik. Thank you.
Murali Krishna Bhupatiraju — Managing Director
Thank you, Mr for providing this opportunity. Azad has an impressive journey and has built strong credibility in the industry with its niche offering customized to clients’ requirements. This has been a truly incredible growth story. To support this growth, we have strengthened our balance sheet with a QIP of INR700 crores in February.
I would like to thank all the investors for believing in our growth story and showing confidence in our business. In the last few months, we reached a major milestone with the inauguration of our first lean manufacturing facility dedicated to Mitsubishi Heavy Industries. Covering an area of 7,200 square meters, this facility marks a crucial milestone in our journey to increase production capacity tenfold. This achievement was made even more memorable as MHI honored us for our decade-long collaboration by awarding us the prestigious 2024 Partner of the year.
This was followed by a second state-of-the art plant for our dedicated customer, GE Vernova. Spanning 7,600 square meters, this advanced facility is designed to manufacture complex airfoils for GE’s next-generation turbine engines. Our subsidiaries, Azat Prime and VTC have been a great addition to our capabilities in special processes. These capabilities help us reduce our dependence on our outside vendors and also save on the cost. We expect these subsidiaries to start contributing this financial year.
As we enter the new growth phase, our focus is to build-on the success and execute the long-term growth trajectory. We will continue to set new benchmarks and redefine what is possible. Now I hand over the call to Mr Vishnu Pani, our Whole-Time Director to take this conversation further. Thank you.
Vishnu Malpani — Wholetime Director
Thank you, Mr Krishla. FY ’25 has been a defining year for us, a year where we didn’t just grow in numbers, we grew in capability, direction and ambition. We’ve made meaningful progress across all the five pillars of our growth strategy. Whether it’s capacity, capability, capital, customers or contracts.
Our progress has been well-rounded and has set the stage for the next chapter of Azad’s journey. Let me begin with a quick and look at our look at on our Q4 numbers. Our energy and Oil and gas segment remained dominant contributor, generating INR97 crores or 77.7% of our Q4 revenue. The Aerospace and Defense segment scaled beautifully contributed to about INR25 crores or 19.8% of the quarter’s revenue. Stepping back and reflecting on the full-year, it was a year of broad-based growth.
Revenue grew significantly across verticals, supported by strong execution, customer relationships and deeper engagement with all stakeholders. We expanded not just our production capacity, but also our engineering capability this year, which is evident from some of the prestigious awards that we’ve received from our customers in India and abroad.
We strengthened our capital position with the QIP and we continue to reinvest in our infrastructure, people and innovation. One of the most strategic shifts that happened this year has been our diversification, while energy has provided scale and stability, aerospace and defense represents our next big leap. These sectors reward us with technical strength, reliability and trust of our customers that play to our core strengths. To support this growth, we’ve invested in our most valuable asset, our people.
Over the past year, we’ve onboarded senior leaders across every major function, giving us the experience and leadership depth needed for the future. Today, we are fully staffed, structurally ready to take the opportunities that come ahead. Looking at FY ’26, we are entering the year with confidence and with momentum. We’ve built the base, the teams are in-place, the capacity is live and the opportunity is clear.
We are — we are excited about what lies ahead. And with that now, I’d like to invite Mr Jau, our Chief Financial Officer, to walk us through the financials. Thank you.
Ronak Jajoo — Chief Financial Officer
Thank you, Vishnu. I will first talk about the standalone’s nature highlights for quarter-four FY ’25. Let me take you through the revenue. Revenue for quarter-four FY ’25 stood at INR124.5 crores, a significant increase of 34.2% compared to the last quarter of FY ’24 that is — and which reflect our strong business growth. EBITDA, EBITDA for the quarter was INR45.4 crores with an EBITDA margin of 36.5%.
This make an impressive 44.9% growth over quarter-four FY ’24. PAT. PAT for quarter-four FY ’25 was INR26 crores with PAT margin of 20.3%, representing a robust growth of 74.4% year-on-year basis. Let me now take you through the full-year financials of FY ’25. Revenue from operation, the company record a revenue of INR452.9 crore in FY ’25, up from INR340.7 crores in FY ’24. This represents a robust growth of 32.9%, driven by strong operational performance of the company.
On segmental diversification, in the Aero and Defense segment, our revenue has rose to INR80.7 crores compared to INR43.8 crore in FY ’24, highlighting a successful diversification story, which we have told you over the last two earning calls. Other income in FY ’24 include one-time other income of INR20.7.3 crores. And if we normalize that particular thing, this year, our other income increased by INR6.9 crores, which primarily driven by interest on fixed deposit and foreign currency restatement as per INDS guidelines.
Our EBITDA for FY ’21 was INR161 crores with an EBITDA margin of 35.5%, the highest-ever EBITDA margin which company has achieved in-full financial year. This margin expansion was supported by improved employee cost efficiencies and operating leverage and business excellence reach. Our profit stood at INR88.5 crore in FY ’25 with a PAT margin of 19.5%, showing a strong growth of 51.5% compared to FY ’24.
The operating cash flows of the company has turned positive this year with a INR66 crores of operating cash-flow positive, which reflect our healthy profitability and the cash-flow management. Our debt position, gross debt for FY ’25 was around INR2243 crores, which is approximately 1.5% of 1.5 times of EBITDA, which is our long-term guidance. But if you take the net-debt position, which is gross debt minus cash and bank balance is still negative INR412 crores and we have a strong liquidity system of around INR656 crores because of QYP rates in the last quarter. And this gave us the confidence to get into a great quarter — great quarter next year and the full financial year of FY ’26. Now the floor is open for question-and-answers. Thank you.
Questions and Answers:
Operator
Thank you. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on a touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Thank you. Also, a reminder to all the participants, please restrict yourself to two questions. The first question comes from the line of Kamalesh Padmar with Lotus Asset Managers. Please go-ahead.
Kamlesh Bagmar
Yeah. Thanks for the opportunity and congrats Ji for the excellent delivery and successful. Sir, and first question on the order book. So how much is — what is the order book as on-date or quarter-end?
Vishnu Malpani
Yeah. Thank you,, for the question. Our order book currently stands at upwards of INR6,000 crores.
Kamlesh Bagmar
And secondly, like we have commissioned the capacity, so roughly around 95,000 acre square meters have been there. So this Phase-2, where do we — when do we expect that particular commissioning?
Vishnu Malpani
So for the first phase, Mr, we are building 95,000 square meters. And as you would have heard in the call, we are doing one facility after another. So we’ve inaugurated two lean factories two of our customers, which have happened so respectively in the last financial year. And now we are going to be getting them online. So those factories will start generating revenues while we start focusing on the rest of the factories, which will come up during the course of the year and next. So it will be a approach and slowly we will have all of these factories contributing to revenue one after the other. We are not waiting for the entire plant to be opened. We are going after every factory, one after the other and working on it. So that’s our strategy.
Kamlesh Bagmar
And lastly, do we have any clarity like how much capex would be there over next two, four years, like this year we have plant roughly around INR270 odd crore for like next year and next after that.
Vishnu Malpani
Yeah. So Mr, we did a QIP of INR700 crores. Now the reason the QYP was done to foster the growth of the company, right? So this capital that we’ve raised will be deployed towards building our infrastructure and also capacity and in a way over the next few weeks. So this is exactly what we are planning to do.
Kamlesh Bagmar
Thanks a lot.
Vishnu Malpani
You’re welcome.
Operator
Thank you. Thank you. Next question comes from the line of Kinjal with Shah Savla. Please go-ahead morning.
Nilesh Dedhia
This is Mulesh here. Thanks for taking my question., congratulations on the great set of numbers and we welcome Mr and also happy to note that we are increasing our bandwidth at all the levels. So now my first question is, sir, we have commissioned two dedicated facilities for and Garnova. So how is the ramping-up happening there? What can — when can we reach the optimum capacity there? And at the optimum level, what can be the revenue generation from those two facilities? That is my first question. Thank you.
Vishnu Malpani
Thank you so much for the question. I think this is also slightly related to the last question that I answered. So we did inaugurate two facilities, one — two lean facilities for our customers. So the way this will happen is the facilities are now live. But it will — so this is not a transition that will happen overnight. I think it will take us a few quarters and it will get better quarter-on-quarter. So this year, FY ’26, we are obviously generating revenue out-of-the new facility. Any incremental that revenue comes out of FY ’20 — over FY ’25 will come out as a new facilities, but you will see that progressive development happening quarter-on-quarter. And I think towards the end of this year, we should be able to reach a full capacity in terms of those facilities in terms of output.
Nilesh Dedhia
So then what can be the revenue expected for — at the optimum level from both these facilities?
Vishnu Malpani
Yeah. So the way to think about this would be the revenue guidance that we’re looking at. So if you — if you looked at what Mr had said during his speech, he said that we are anticipating a revenue growth of upwards of 30% for this financial year. And this growth that is coming up will be coming out-of-the newer factories.
Nilesh Dedhia
Great. Great. And how many further dedicated facilities do you think we’ll be able to in the current financial year. And are there any new customers or new products being developed and being targeted this year?
Vishnu Malpani
Yeah. So thank you for this question. I think there are a few factories that are lined-up in pipeline. I mean, we won’t be able to disclose too much information about it. But yes, there are — there are factories that will get inaugurated during the course of this year and slowly like we did for the current two factories, those also will come in-line and start producing results. So that is there. And obviously, if you’ve seen our customer roasted, you would have known that our order book and our customers are backing us and trying and looking at blocking us for a longer period by signing long-term contracts with us. So we are seeing great demand across each of our verticals and very confident of delivering on the execution timelines that we have. FY ’26 should be a year of stabilization for us in consolidation for the next level of growth.
Operator
Thank you. MR. Kindal, please rejoin the queue for more questions. Thank you. Next question comes from the line of Rajesh Vora with JMI Ventures. Please go-ahead.
Rajesh Vora
Hi, good afternoon, gentlemen. Congrats on the good set of numbers. I wanted to understand your comfortable that you are able leadership has done great on the energy side and now issuing strong towards aerospace and defense. With the contribution this year increasing quite significantly from around 13% to 18% of revenues? How are you seeing this number panning out over the next three to five years? And how will that change the trajectory of margins for the company?
Vishnu Malpani
Yeah. So thank you for the question. I think, sir, we are very bullish on each of our verticals and each of those are growing at a certain rate. If you look at our businesses trajectory for the last four years or five years, we’ve grown at a compounded growth rate of about 40%. Our EBITDA CAGR has been higher than 40%, our PAT CAGR has been higher than 40%.
So the business is looking at continuing the growth momentum. When you look at our businesses growth across verticals, you would see that some of our verticals, so for example, it’s a testament to the fact that we kept talking about diversification and this is the first year where one of our verticals other than energy has demonstrated reasonable numbers.
So we closed aerospace with a INR80 crore segmental revenue, up from about INR43 crores last year, which demonstrates the fact that our qualifications have been completed. If you look at other vertical, which is oil and gas, last year, we delivered about INR4.4 crores and this year, FY ’25, we’ve been able to deliver about INR13 crores.
Now when you look at the growth of these verticals in the coming year, FY ’26, you will see that these verticals are ramping-up very, very quickly because from the business perspective, we’ve — we focused on qualification, we built capacity and now we are ramping-up. So each of these verticals will grow at a faster rate than the blended growth rate of the business.
So you will see that oil and gas will grow multi-point because the base is smaller today. You know, aerospace also will grow upwards of the blended growth rate that I talked about. So this is how we are seeing the business evolve over-time.
Rajesh Vora
Okay. Any goal revenues as a percentage of so I guess ideally?
Vishnu Malpani
Yes, yes, I understand. So ideally, we want the business to be fairly diversified. So we anticipate in the next few years, the business would reach about 55%, 60% energy and the balance of, 35%, 40% will be contributed by aerospace and defense and oil and gas. So we anticipate that does not mean that any vertical is growing so we have a lot of headroom even in energy, but we anticipate that the growth rates of the business will get us to a point where 55% 60% will be contributed by energy and the balance between the other two verticals in the next few years.
Rajesh Vora
That’s useful, Vishna. And my second question is on given the massive opportunity TAM for the company in each of the verticals and given that we are taking significant leads in city expansion, with 15,000 square feet already booked out of 95,000 square meters, in earlier question, you mentioned that in India is sort of a standard utilization and. So is it fair to say that we will have with the entire 95,000 square meters we book the for the next year or so, how much time are we looking like?
Vishnu Malpani
So I mean, so the way I would like to answer this two-ways. If you look at what we’ve delivered, we’ve delivered INR453 odd crores of revenue last year. If you look at our order book, which I said was upwards of INR6,000 crores, you know that the order book-to-sales ratio is extremely big. For us, we are looking at progressively adding manufacturing facilities with capacity.
And then see this is an year of stabilization for us. We are trying to build an ecosystem where we are building newer plants, 10 times a higher capacity and all of that. So we intend the business to grow at upwards of 30%, while ensuring that each of these things are properly scaled-up. So you will see that 95,000 square meters will be completed over the next 12 to 18 months in terms of construction and we’ll slowly open it up for capacity. And then we will move into our Phase-2 of expansion, which is the next leg for us. But right now our is to look at FY ’26, deliver on the commitments that we have for customers and to our shareholders. So we are looking at that right now.
Rajesh Vora
Okay. Great. Thank you,, and wish you all the and the team.
Vishnu Malpani
Thank you. Thank you so much for your question.
Karan Danthi
Thank you. Next question comes from the line of Kirit with Global. Please go-ahead. Yeah, hello. Sorry, can you hear me? Yeah. Hi,, go-ahead. Yes, sir, it’s current here. So different places. So just a quick — two clarifying questions. What should we assume is the asset turnover on the incremental capex spent over the next three years like directionally?
Vishnu Malpani
So the incremental asset turnover for the next few years will be two blended across verticals.
Karan Danthi
Two, right? So on any incremental capex spend, the asset turnover should end-up being about two, I think, correct?
Vishnu Malpani
Yeah, that’s correct. That’s correct.
Karan Danthi
So then I guess — and maybe this speaks to the conservatism of the guidance. I guess if you consider that you’re going to spend INR150 crores in the minimum in capex, I forget the exact number. You’re actually only assuming 30% growth, which would equate to INR120 crores of incremental revenue. So if you simply keep extrapolating that, you are not getting anywhere close to 2, you’re close to 1%. So there is a big discrepancy between what you’re saying is your revenue growth guidance for the next couple of years and the asset turnover of two. So how does one reconcile those two numbers?
Vishnu Malpani
Yeah. So, thank you for the question. I think for us, this year, we are looking at it from, so we’re not looking at getting our capacities lined, we look at consolidation other thing. And the asset turn that you’re saying, incremental asset turnoff too will happen over-time because now the deployment of capital is also towards the infrastructure towards capacity. So by the time we are investing and returning, you will see that towards the end or quarterly progressively, you’ll be able to see the ramp-up moving from 1.0 to 2.0 of incremental asset tone. And you’ll be able to see — it will be demonstrated over our progress that you see for this business.
So, and our strategic priority for this year is to get all our manufacturing facilities up, constructed, filled with capacity. So we do not have any challenge in terms of capacity for the years that we are looking-forward because order book is already there. So 30% is — this is how we’re looking at 30% because even on the base of INR140 crores, we’re looking at growing this and any incremental revenue that you’ve seen from INR450 crores and upwards is going to come out-of-the new facility. So for us, so where the investment is done, right? So it’s — so we are going through that cycle of stabilizing it, consolidating and then rapidly-growing from there. So the QYB money will be deployed shortly. It’s with us in the —
Operator
Yeah then your voice is breaking. MR. Your voice is breaking. Can you come a little closer to the hello.
Karan Danthi
Hello, can you hear me? Hello, can you hear me the better? Hello?
Operator
Yes, please go-ahead.
Karan Danthi
Okay. Yeah. Sorry. Sorry maybe I’ll just I’ll just squeeze in just one. I’m sorry. Yeah, I’m unable to hear you okay. Sorry, we can move on. We can move on. So then can you please repeat your question? Yeah. The question was for the two facilities that have already ramped or are in the process of ramping, have we already sourced all the equipment that is needed for those facilities or are they still in?
Vishnu Malpani
Yes. So the sourcing has been done. I think a few of the machines have already arrived. And so out-of-the two manufacturing plants, one of the manufacturing plants, the machines, you know about 70% of the machines have arrived and have started production already, but the balanced machines are on the way. And for the other plant, it’s — it’s happening. So it will happen over the next one or two quarters for us to be able to ramp this up, okay. But the machines orders have been placed and so everything is pretty much done from our side. We are just waiting for it to be delivered to us and then we get them operational.
Operator
Sat Lori, are you done with the question?
Karan Danthi
Yes.
Operator
Are you next question comes from the line of Amit Dixit with ICICI Securities. Please go-ahead.
Amit Dixit
Good afternoon and thanks for taking my questions. The few questions from my side. The first one is on the advanced gas turbine engines that these are limited production partners with GTRE. So as per my understanding, the first change in what to be delivered by the last quarter of FY ’26 or maybe of first-quarter of FY ’26. So I just wanted to understand where we are on this and what kind of — what kind of market do you see considering that the recent Indo Park conflict was basically drone base and these engines are supposed to go in drones and LRSM, which are the flavor of the town now. So just wanted to get a brief on where we are on this development and what kind of use-case you see for these engine?
Vishnu Malpani
Okay. Thanks, Amit. First of all, on this engine, the jet engine. So it is in-production at the moment and we are very close to — I mean, very soon we are going to deliver the first two engines. And looking at-the-market, if you ask me, it’s not really defined to us because this is used — it lies in multi-platforms. It’s used in the UAVs, it is used in anti-ship missiles and it has a — it has a mass you know quite few platforms where this engine will be used. So this engine is a very strategic decision, right? So this is just a key to the bigger door. It’s a small key. And if you see this capability development, we’ll be the first one to manufacture this engine in India. And this is more for the country. So this is the need of our and we are yes, our focus is fully on to develop this engine and deliver to the government everybody as soon as possible.
Amit Dixit
Okay, got it. The second one is on. There was a MOU that we executed in Saudi under the making kingdom and used by the Kingdom kind of team with Baker. So just wanted to understand the progress on that. Is there any — are there any milestones that we have cropped when we expect contracts to be signed, etc?
Vishnu Malpani
Yeah. Amit, so was signed for sure, yes. And we also have this intent to do it. So we are having multiple discussions with the government of Saudi Arabia as well as our customers and we are making a strategy, a proper strategy to, you know, set-up a shop there. And you are aware that it’s not so easy to get into a, you know tour of India setting up the shop, a lot of work is involved in there. So that’s ongoing at the moment. So maybe we can update you by the next quarter, we can tell you what exactly the status would be. But still the discussions are going on and we are very active in that.
Amit Dixit
Great. If I can squeeze one more and then I will join the queue. On working capital I see — I mean pretty pleasant to see that in Aerospace and defense, actually the working capital days have come down. Inventory days have come down particularly, you know in a very steep manner 246 to 155 if I compare FY ’24 versus FY ’25 and even the receivable days have come out? However, we see a little bit of increase in inventory days in energy verticals. So just wanted to understand from FY ’26, is it the peak working capital days that we will see? And what kind of sustainable working capital can we assume for both the verticals?
Vishnu Malpani
Yeah. So Amit, in this — there is a small cash-in this. Look, there’s one-way we are looking to reduce all the working capital, but as I mentioned in the last call as well, that most of the qualifications are now done and the inventory which is sitting is now getting off and not long in few quarters you will see declining the number of days and very soon you will witness that.
On the other hand, we have seen these contracts which we are signing where we need to — we need to really showcase the customer that we need to hold some kind of inventory for showing the raw-material because these contracts are bound on the OTDs what we do, the deliveries what we really we have to demonstrate that, look, we are holding the material for you.
So there are two aspects going on. One is the past which we finished of the qualifications and now the — you will see next quarters a declining working capital cycle and it’s not far away, okay, few quarters only you will start seeing the decline thing. And other part is on some of the — few of the contracts which requires mandatory that, okay, we need to have some inventory for some — for some short of time where we have this recognized as if the contract is very new, right? So the cycle starts and even that also can be controlled very well.
Amit Dixit
Yeah. Yeah, the question was more on what we saw that aerospace and defense where our focus is. I mean, focus is the wrong word. Typically we saw increase in revenue significantly from there. However, on inventory front, we saw a decline. On receivables, we saw a decline, so which is very pleasant to see. So just wanted to understand the genesis of that and whether — and you mentioned that this will continue. So this decline is actually quite welcome. So just wanted to understand more that what lies ahead as we go for more qualifications, whether this number will increase and then decrease or we will see this remaining at this particular level, particularly for and different.
Vishnu Malpani
Yeah, yeah, yeah. So Anit, as a strategy, we signed something, say, two years, three years back and we have committed to the customers. And you are very well aware on the raw materials, which are having massive lead times, three months, six months, nine months, sometimes 12 months also for the deliveries, right? And this is one-time.
One-time we took these contracts, we got the orders, we bought the material is lying and we finished the qualification. The entire cycle, it just looks like a contract to the qualification. But if you actually see the cycle times of this — the entire journey is right from receiving the contract till you finish the qualification and till that you will not see any moment in the inventory change. You will only see the inventory change as you start reducing in the production orders, right? That has started. So going-forward, the best part is we have taken-up the entire qualifications and we don’t see any more contracts of this new kind of massive where we have to invest massively in the large inventory for finishing the qualification. That part is majority is over. So we have not signed. We don’t have anything which is sitting, which needs to be having a big inventory with us. So that way, I think that’s the reason I’m telling in few coming quarters, you will see the decline.
Karan Danthi
Great, sir. Thank you so much and all the best.
Vishnu Malpani
Thank you.
Operator
Thank you. Next question comes from the line of Saran with Capital. Please go-ahead.
Sarang Joglekar
Yeah, hi. Can you hear me?
Operator
Yeah.
Sarang Joglekar
Yeah. So on the order book, first of all, we wanted to understand the INR6,000 crore order book over how many years it will be exported?
Vishnu Malpani
Thank you for your question. So our order book is split over, you know, multiple years. So there are three years, five years, six years contracts that we have?
Sarang Joglekar
Got it. And on the product side, do you look at in the future is developing more complex, more value-added products or really scaling up whatever you are producing right now.
Vishnu Malpani
Yeah. Yeah, we are doing that. In fact, if you look at our orders that we’ve backed in the last financial year, we’ve also looked at some very strategic orders where we are increasing our valuation. So from our component manufacturing, we are moving into say end-to-end assembly of a complete gas turbine engine for Indian defense, right? So Mr talked about it briefly. So we are increasing our capability by going up the value chain in terms of the manufacturing industry. So from a component manufacturing, we today are building capability and skill-set around end-to-end manufacturing as well. So that is quite a of those customers here.
Sarang Joglekar
Got it. Yeah, that’s it. Thank you.
Vishnu Malpani
Thank you.
Operator
Next question comes from the line of Aditya with Investec. Please go-ahead.
Aditya Bhartia
Hi, good afternoon, sir. My first question is on the revenue guidance that you’ve given. Last year also, we had started-off with roughly 25% to 30% growth and we ended-up delivering almost at 35% growth. Do you think that you are being a bit conservative given that we are expanding our capacity quite sharply? And is it a case that this year, as you’re calling it to be a year of consolidation, next year growth can be even significantly faster?
Rakesh Chopdar
Hi,. So, yeah, hi. So this again, it’s a mixed answer for whatever I wish to myself and what we spoke. As I told you, these facilities, which are coming up, they are massive, right? And the equipment what we are buying, they’re not really available off-the-shelf. We have to import a lot of machines, right? And the questions which are coming is when the renews will come in — coming up, when the factories will come up and what is the guidance we are looking at. So FY ’26 is very crucial to us to set-up these facilities, get the equipments.
So the equipment which has arrived, for example, GE. This was not ordered today, this was ordered quite back — quite long back and that’s the reason the machines comes in, installs, we commission them, we start doing the qualification again and then we start producing the pass. So there is a cycle which we have to follow, correct?
So whatever we have done before the QIB, what we raised money and before these equipments, whatever there is ordered long back. Similarly, from now what we are planning to fill-up these factories up, right? So the equipments have been ordered. So as this comes, so we need to give some time for them to stabilize. So FY ’26 is what we’ll look to stabilize first. So maybe in coming quarters, we can let you know on this question how exactly we are going to give a guidance more. So at the moment, we hold this because it’s — it’s termed as conservative or aggressive.
That’s difficult to say at the moment. So we are just waiting for all these facilities to come up and make sure that first the commitments what have been given to the customers to show the facility is up, that’s where we are focusing that. Anything you want to add, Mr? Yes. So Adity, just adding to what Mr said, I think we — if you — if you — if you’ve seen how we’ve given quarter guidance and annual guidance in the past also. We have been very accurate about where we want to go and we’ve been — in all cases, we’ve over-delivered on our guidance. This is — this is our estimate of what we will be able to do by achieving various aspects of growth in the organizations about stabilization, ordering of machines, newer contracts, new team members, all of that. And 30% on a basis like this is a pretty, pretty good number to look-forward to is in my view?
Aditya Bhartia
Absolutely, absolutely. My second question is on the working capital side, wherein you did speak about a likelihood of working capital coming down. Anything more than you can share on that, that what kind of trajectory should we look at, maybe not from the perspective of this year, but over a slightly longer period of time also, where-is it that you would like the working capital to be settling?
Vishnu Malpani
Okay. So I think added to this, Mr had attempted to answer this in the previous one, but we still just to give you broad of where we want to head to. So we believe that we want to get to about — by the end of this financial year, we want to get to about 170 to 180 days of cash-to-cash conversion cycle. And you know, if you remember why and how this working cycle is getting from, you see our verticals scaling up revenues, right? So our aero business from INR40 crores more to INR80 crores and will continue to grow. You know, oil and gas, which is currently about INR13 crores will significantly grow this year. So you would see all of this trimming towards the end of it. Progressively, yeah, overall quarter-on-quarter you might be able to see smaller changes. And then by the end of this year, we know we should be at a range of 170 days of cash-to-cash conversion cycle.
Aditya Bhartia
Perfect. That’s great to hear.
Vishnu Malpani
Thanks, Jakesh and. You’re welcome. Thanks all it.
Operator
Thank you. Next question comes from the line of Vignesh Ayal with Sequent Investment. Please go-ahead.
Vignesh Iyer
Hello, sir, thank you for the opportunity. Just one question from my side. So what I was observing over the last 3/4 is there is some movement on part of the employee expenses moving higher — on the higher side. So — and I heard your comments earlier where you said we are entirely staffed for the requirement, I mean, in relation to the new facilities that have opened up. So is it fair to say that this expenses already showcased the additional salaries that is required for the upcoming 7,200 and 7,400 square meter facility.
Vishnu Malpani
So okay, so, just to go back to what I’ve — what I meant when I was talking about it. So the last one year, Azaj has hired a lot of senior management resources across various business posts that we had. Now this was created for the future, right? So each of our business verticals today need business leaders that are focusing on how we are going to be focused ramping-up in each of these verticals, whether it’s energy, aerospace and defense and oil and gas because the way we have to scale-up from this point is very different from five years ago.
So that is why these senior management positions have been banned. So in terms of the manpower cost, yes, you can say to an extent, we do have the people that we needed, but the ideal manpower cost for our business is significantly lower than where we anticipated to be today. So today, we are at about 20% 21% of manpower cost right for the business, but we anticipate this was to over-time normalize to about 15% 16%, 17%, but this will happen over the next few years.
Vignesh Iyer
Understandable. I mean that leverage will stay — play-out very much.
Vishnu Malpani
As a high-growth company, right, as a high-growth company, this is — this is the capital that needs to be deployed. So we are not looking at it from a cost perspective. We think this is an investment for the future. Today, our order book-to-sales is about 10 times, 11 times. For us to be able to cater that, we need senior leaders focusing on each of the growth engines and scaling the business rapidly. So that is our view on the business. And you will see employee cost tapering off over the next few years.
Vignesh Iyer
Perfect, perfect. And sorry if I’ve missed it earlier, could you tell me what is our EBITDA margin guidance? Would it remain at the same level as FY ’25 going ahead?
Vishnu Malpani
Yeah. So our EBITDA guidance will be consistent. So, we would maintain the EBITDA guidance that we’ve done for the next — for the last financial year, whatever we’ve delivered, we would want to continue at the same rate.
Vignesh Iyer
Perfect, perfect. Thank you. That’s all from my side and all the best, sir. Perfect.
Vishnu Malpani
Thanks.
Operator
Thank you. Next question comes from the line of Jatin with Capital. Please go-ahead.
Jatin Jadhav
Hello. Am I audible, sir?
Operator
Yeah, you are audible. Please go-ahead.
Jatin Jadhav
So my first question was regarding how many much — how many more dedicated facilities are we targeting to manufacture or cater to for future clients or existing clients? And sir, my second question was regarding the gas turbide engine which we have made, what are the future prospects or are we looking to deploy them in any near time soon in any products or what is the overall development over there?
Vishnu Malpani
Yeah. So thank you for your question. I’d start by answering the first one. So yes, we are looking at putting up more dedicated factories and I think we are working on it as well. Over the course of this financial year, you’d be able to see some updates regarding that. It will be difficult to share some insights onto it now because we have gone by some confidentiality norms.
But during the course of these years, you will see a couple of more manufacturing facilities going-live for our customers. So that’s one. On the second front, which is gas turbine engine that we spoke about, see, Mr brought about the fact that this is our entry into something really big. For us to move from a competent manufacturing into a complete engine manufacturing and this is a strategic path for us, right?
So this is the first step towards the major development that is happening towards the defense ecosystem in India and we are doing it for the first time. And India is also doing making engines for the first time and this is their first step. So we are very confident of it. The development internally, the results look promising and we hope that this continues and this step that we’re taking will lead us to bigger and more bigger engines in the future.
Jatin Jadhav
So, just a follow-up on the engine. So are we currently the design phase is complete? Are we testing it?
Vishnu Malpani
So our scope, so the design is with GTRE, we are looking at end-to-end manufacturing and supply of it. So the design is already achieved and we are in the process of manufacturing. Got it. And then testing will be happening at DRDU once the manufacturing is completed at.
Jatin Jadhav
Correct. That’s pretty much from my side. Thank you so much and all the best.
Vishnu Malpani
Thank you. You’re welcome.
Operator
Thank you. Next question comes from the line of Vishal Dutwala with SP Asset Managers. Please go-ahead.
Vishal Dudhwala
Hello, am I audible?
Vishnu Malpani
Yeah. Yeah, Vishal, please go-ahead.
Vishal Dudhwala
Yeah. So sir, first of all, thank you for taking my question and congratulations for a good set of numbers. As I hope my couple of questions already answered and I have left with one question and I’ll be squeezing a little bit more EBITDA margin. Can you tell me your EBITDA margins have expanded to 36.3% in FY ’25 and as we have known that as the mix evolves with more aerospace and defense work, which may be more engineering air. Do you foresee any margins or could this lead to further operating leverage cost in the upcoming year?
Vishnu Malpani
So our margin guidance is consistent with what we’ve delivered in FY ’25 and we anticipate that we will grow the business at 30%, sustaining our EBITDA margins and PAT margins.
Vishal Dudhwala
Okay. Okay. Okay. Thank you for that. Thank you, thank you.
Operator
Next question comes from the line of DV Agarwal with Family Office. Please go-ahead.
Unidentified Participant
Thanks for taking my question. So a few questions from my side. I actually wanted to know what was the capacity utilization for the old 20,000 square meters facility and the two new facilities that came up?
Vishnu Malpani
I’m sorry, can you please repeat your question?
Unidentified Participant
So I just want — yeah, I just wanted to know the capacity realization for the old facility that was around 20,000 square meters and the two new facilities that came up recently.
Vishnu Malpani
So for the existing facility, we operate at an average of about 84%, 85%. And the new facilities that are coming up online, we are in the process of getting all equipment setting it up, etc. But our aim towards the end of this year should be we should be able to reach an optimum utilization of 70 plus percent helpful.
Unidentified Participant
Got it, sir. And regarding the two new facilities that you have set-up, so approximately how much was the capex that you have incurred for that.
Vishnu Malpani
For us, we would not want to share numbers at a unit-level, but our investment in the business will be to the tune of INR700 crores, which will happen over-time. And this will be invested in infrastructure and capacity building across all our dedicated units.
Unidentified Participant
Yeah, sir. This will include that 95,000 as well as somewhere in the capacity, right?
Vishnu Malpani
Yeah, that’s great. So this includes the 95,000 square meters only.
Unidentified Participant
Okay. And regarding just a clarification on the facility. So in the last PPD in the Q3 PPD had mentioned the capacity would be around 75,000, but in this current presentation, it’s around 67,000. So can you help me with that? What’s the final number for that? Thank you.
Vishnu Malpani
Yeah. Sorry. Can you — can you please repeat? Your voice is breaking. Can you please repeat the question?
Unidentified Participant
Sure. Sure. So I just wanted a clarification regarding the facility. So in the last PPT of the Q3, the capacity that was mentioned was around 75,000 square meters. But in this current PPT, the capacity is mentioned is around 67,000. So there is a deviation between the two numbers. So can you help me with that? Thank you.
Vishnu Malpani
Yeah. So okay. So the way to think about this is, so we are constantly improving our capacity, right? So if you look at a few years ago, we were talking about 20,000 square meters of manufacturing capacity available with us. And then roughly about 10 times more coming up, right? Now the 10 times more coming up was across two manufacturing plants. One was about 95,000 square meters and the other one was about 70 35,000 square meters. Currently, what we are developing is Phase-1 of it, which is 95,000 square meters.
So all the investments which you are seeing are going-in the 95,000 square meters and this is coming up one-by-one. As soon as this entire 95,000 square meters, all the plants in it come and get completed, we will move on to the second phase, which is 75,000 square meters.
Unidentified Participant
Okay. So it’s 75,000, right?
Vishnu Malpani
Second one. Yeah, second facility is about 70,000 to 25,000 square.
Unidentified Participant
Yeah, the facility in the presentation mentioned around 67,000. So I’ve got confused between that, but thanks for the clarification, sir. Thank you.
Vishnu Malpani
Yeah. Thank you.
Operator
Thank you. Ladies and gentlemen, due to time constraints, we have reached the end of question-and-answer session. I would now like to hand the conference over to Amit Dixit for closing comments. Thank you.
Amit Dixit
Yeah, hi. I would like to thank everyone for attending the call and fruitful discussion that we had today. I would now like to hand over the call to Mr for any closing comments. Over to you, sir. Thank you.
Rakesh Chopdar
Thank you,. Thank you, SGA team. Thank you everyone for your time and patience for this call. I have nothing and nothing much to add and I think we are good. Yeah. Thanks a lot. Thank you.
Operator
Thank you. On behalf of Azad Engineering Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.