Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Azad Engineering Ltd (NSE: AZAD) Q4 2026 Earnings Call dated May. 16, 2026
Corporate Participants:
Rakesh Chopdar — Founder, Chairman, and Chief Executive Officer
Ronak Jajoo — Chief Financial Officer
Vishnu Malpani — Whole-Time Director
Analysts:
Amit Dixit — Analyst
Gaurav — Analyst
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Azad Engineering Limited Q4FY26 earnings conference call. 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. There will be an opportunity for you to ask questions after the presentation concludes.
Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Srakesh Chopdar, chairman and CEO. Thank you. And over to you Mr. Chopra.
Rakesh Chopdar — Founder, Chairman, and Chief Executive Officer
Thank you. Thank you very much. Good morning everyone. Welcome and thank you for joining us on the Q4FY26 earnings call. I’m joined today by Mr. Vishnu Valpani, our Real Time Director, Mr. Rohit Jajo, our CFO and SGA, our Investor Relations advisors. The audited results and the investor presentation have been uploaded on the stock exchanges and to our company website and I trust you have had a chance to look at them. At the start of FY26 we described it as a year of consolidation. A year in which we would embed newly commissioned capacity, convert the qualifications we have been earning over multiple years and put in place the human capital and the systems that the next phase of growth demands.
I’m pleased to report that we have delivered on each of those commitments. Before turning to the numbers, I want to spend a moment on what the growth you are seeing actually represents because it is important to characterize this correctly so the nature of our business and our growth. Azad is a global supplier. We compete head on with established suppliers from usa, Europe, China and Japan and on their own benchmarks for the same global OEM platforms we have done so far for many years now. And our growth today is a cumulative payoff of that long hard work.
Not a function of any short term tailwind, geographic shift or single market opportunity. The products we manufacture Critical rotating components for gas, steam and nuclear turbines, mission and life critical aerospace and defense parts. Complex precision assemblies for oil and gas are among the most demanding components made anywhere in the world. They sit inside engines that operate at extreme temperatures, extreme pressures, extreme tolerances. The cost of failure is measured in lives and in billions of dollars.
Platforms. The reason these companies are made by only a handful of companies globally is straightforward the qualification cycle. To even be allowed to manufacture them take years, sometimes a decade of process validation, metallurgical proof, dimensional verification, first article inspections and serial production audits. Once the supplier earns that qualification, the business is sticky, multi year and high value. The growth you are now seeing in our reported numbers is the conversion of qualifications we earned over the last several years against the backlog of capacity we have deliberately built to be ready for for the next conversion.
Talking on the capacity and customer milestones as promised on our CapEx roadmap, we have successfully inaugurated four dedicated lean manufacturing facilities for our marquee global customers since listing of which two were commissioned during FY26 and the most recent one just last month. In April 2026 we inaugurated a dedicated facility for Baker Hughes, a milestone in a relationship that like all our relationships we earned through one of the most rigorous qualification pathways in the industry.
A dedicated facility represents the deepest possible form of customer integration and we now operate several such facilities for several global OEMs. Mitsubishi Heavy Industries A defining Proof point We are also pleased to share another significant milestone. Azad has been awarded a prestigious contract by Mitsubishi Heavy Industries Japan as a single source supplier partner and we have signed an eight year long contract and purchase agreement for the supply of highly engineered hot section nozzle vane segments for the combustion of a gas turbine engine.
Single source qualification for hot section components of a turbine nozzle vane for an OEM of MHI stitcher is the strongest possible endorsement of our technical and process capabilities. This product is not just being awarded and it is awarded by many many audits and many many qualifications prior to even we even they think of you know, awarding such product to any company. On the Financial Performance Snapshot Q4FY26 was another strong quarter. Revenue stood at 157 crores a year on year growth of 26.4%.
Reported EBITDA margin improved from 36.5% in Q4FY25 to 36.7% in Q4FY26 driven by operational efficiencies, scale benefits and improving product mix packed margins and expanded from 20.9% to 22.3% over the same period. For the full year FY26 revenue was 590 crores against 453 crores in FY25, a growth of approximately 30% plus reported EBITDA margin stood at 36.9% for the year and the packed margin at 22.4%. The consistency of growth across both revenue and profitability reflects strong Execution across every business segment and an increasing contribution from advanced manufacturing programs.
Building the organization for the next phase. This is very important. Equally important to the financial performance is the work we have done on building the organization itself. This is the work that does not show up in a quarter sprint, but it is in the work that determines what the company looks like five years from now. Infrastructure Build out A meaningful portion of management bandwidth in FY26 went into building physical infrastructure, new facilities, specialized equipment, audits, validation cycles, qualification, delta qualification for programs.
That infrastructure phase is now approximately 70 to 80% complete with the heaviest part of the built out. With the build out behind us, the operating focus from here is conversion, throughput and the operating leverage that comes from running a fuller, more integrated manufacturing system. More importantly, the organizational restructuring. We are deliberately restructuring the organization to match the scale we are growing into. We are bringing in senior professionals from the industry leaders with deep functional and sector experience and selectively replacing certain functional roles internally where the role has outgrown what its currently increment was originally hired to do.
This is a planned exercise executed with care and it is essential. The Azad of future need a different organization architecture from Azad of today. And we are building for the company today. Systems and process equally. We are upgrading our systems, our planning, our ERP shop floor execution platform, our quality management system and our governance frameworks. Scaling a complex precision engineering business requires us to grow across every lever, people, process, plant partners and systems. Growing one without the other is how companies stumble at this stage of the journey.
We are determined not to overall outlook Looking ahead, the demand backdrop of the product we make remains strong. Global OEMs across aerospace, defense, energy and oil and gas are scaling their platforms and the supplier base capable of meeting the technical threshold we operate at remains small. We are confident in sustaining strong business momentum and in delivering on our previously communicated top line growth of approximately 25% plus for the current year. In line with growth outlook, we will continue to invest in capabilities, in capacity, in people, in systems and in deepening our customer partnership.
The story of Hazad has always been one of the patient technical qualification led growth. We intend to continue writing this story the same way. With that I now hand over the call to our Vishnu Malpani, our whole time director. Thank you. Thank you Mr. Chudhat and good morning to everyone on the call. The pipeline is set out where it not stands strategically. And let me take you closer to how FY26 was actually executed on the ground ramp up of the new plants and how each segment performed the operational discipline that turns an order book into revenue.
And also what are our few focus areas for FY27? FY26 was a year of calibrated execution for Azab Engineering by every internment measured. It was one of our most productive years. We delivered our highest ever revenue, highest ever EBITDA and highest ever pat. And we did it while commissioning two plants in this financial year, qualifying paths and adding people at record pace. With this we now have four additional plants that we built in the newer facility we’ve always called FY26 a year of calibrated ramp up and not a rust one.
And the difference is really important to understand. Calibrated means we lined up everything right from plant commissioning to customer qualification timelines, lined up hiring with our training and lined up raw material flow with our realities of working capital and WIP cycle. I’m sorry. Every quarter of FY26 was planned in detail and we’ve been able to deliver close to our plan in every quarter. In terms of segmental performance, we’ve been broad based by design. Our growth of FY26 was not dependent on any single customer or any geography or any single segment.
We’ve had tremendous growth every segment. Energy and oil and gas remained the largest contributor for the full year 26 and continues to be one of the main engines of the business, contributing to roughly 81.5% for the full year. In terms of our revenue, which is 481 crores year on year, growing at at least 34% in quarter four. Specifically, the segment generated 128 crores in revenue, again contributing roughly about 81% of our quarterly revenues. The headline number hides the diversity inside.
We’ve grown across multiple customers sub segments within each vertical. Coming to Aerospace and Defense, we’ve delivered another strong year and a milestone number of 100 crores that we were able to reach for the first time. For the full year 2026 this segment contributed to 102 crores, about 17.2% of our FY26 revenue with an year on year growth of roughly 25%. In quarter four alone the segment contributed 28 crores. On the aerospace side, our share of qualified component categories with our key customers have grown materially through the entire year.
Talking about our order book, our order book is at approximately 6500 crores with 600 crores delivered in FY26 and still remains at that level, which is about 1112 times our FY26 revenue. Given the forward visibility, which is very very rare in The Times Today the conversion in our order book is broadly driven by three things and this is a question that we were asked the previous time that the conversion of an order book into revenue is driven by the production schedule already agreed with each of our customers, our capacity availability and ramp up against that schedule and the qualification status of each and every part that is a part of a contract that we are signing with our customers as we exit FY26.
I am very happy to share that all of these three are aligned for the first time at this scale. Capacity is largely in place, qualifications are advancing across sectors and customer schedules are firm and are in place and that’s why we remain confident in delivering through 25% plus top line trajectory not just for FY27 but on a multi year basis. Our focus for FY27 sits on three to four priorities at large. First, ramping up our four new capitalized plants across GE, Siemens, Mitsubishi and Baker huge that we inaugurated over the last few quarters to their committed throughput.
Second, commissioning the remaining plants that are still under construction or are in WIP stages by the balance of the year FY27 with the same discipline that we followed through FY26. Third, deepening our existing customer relationships. Fourth, normalizing the working capital cycle over this period. With that I now hand over our call to our CFO Mr. Ronan Jaju. Thank you,
Ronak Jajoo — Chief Financial Officer
Thank you Vishnu and good morning everyone. I will take you through the financials and operational highlight for the quarter and the full year of FY26. FY26 has been an important investment and transition year for the company. During the year multiple OEM dedicated facility progress simultaneously through commissioning, qualification and stabilization phase. While the result in elevated upfront investment in plant and machinery inventory, manpower readiness and work in progress, it has laid a strong foundation for our next stage of sustainable growth.
We now have fully prepared facility, a robust order book and a strengthened organization structure to support future scale. Let me take you through the Numbers now for FY26. The company reported revenue from operation is 590 crore on standalone basis and 603 crore on consolidated basis. This reflect a healthy year on year growth of over 32% despite several facilities being in ramp up stage, qualification stage and significant part of the year. The other income stood at 46 crores largely comprising of foreign exchange gain and treasury income.
This is expected to moderate going forward as QIP process are deployed toward the growth capex. Our EBITDA margin are around 37.4% reflecting strong execution discipline, supply chain efficiencies and margin benefit driven by backward integration which reduce our outsourcing cost, depreciation and finance cost increase due to front ended capex undertaken during FY26. During the year we have capitalized assets worth 392 crores and record and increase TWI P and capital advance of 191 crores. During the year profit after tax stood at 132 crore on standalone basis and 134 crore on consolidated basis delivering strong growth of 54.5% for the year.
The balance sheet side we continue to invest ahead of the curve. During FY26 we have capitalized assets worth 392 crore. As I mentioned the company utilize incremental term funding of rupees 154 crores to support ongoing capacity expansions and total borrowing issued at 457 crore on gross basis and 272 crores on net basis. Our treasury balance stood at 184 crores including 160 crores from QIT. Proceeds receivable stood at 309 crore broadly in line with historical level. Trade tables were 87 crore translating to approximately 51 days of sales which was in line with historical number.
We have not fully utilized receivable bill discounting facility this year given the current cost dynamics and our adequate liquidity available in the system. As I mentioned that we have a treasury of 184 crore. Additionally we have GST credit of approximately 100 crores accumulated over the past two years. This is on the back of capital expenditure which we have done in the historically which we expected to realize by H1FY28 supporting future cash flow and increase the liquidity in the system. Let me take you through the inventory.
Inventory during FY27 reflect a deliberated and strategic built up to support the ramp up of our newly commissioned OEM facility and ensure readiness of committed production schedules. As mentioned by Mr. Vishnu and Mr. Rakesh Yupdar in their presentation, the build up is aligned with capacity expansion, customer stocking requirement and upcoming order execution. It’s important to note nearly 96% of our inventory is less than one year old indicating that it is primarily linked to recent investment, plant ramp up, qualification requirement and customer driven restocking needs rather than the legacy inventory.
As utilization improved across the new facility, we expect the investment to translate into stronger revenue observation, improved assets ton better return ratio and strong operating cash flow in FY27 and beyond. In closing remark, FY26 was just a year, just not a year of growth. Sorry but Year of purposeful investment to build capacity, enhance capabilities and position the company for long term extension. With the strong order pipeline, operational readiness across dedicated OEM facilities and disciplined financial management, we are confident of converting this investment stage into the earning growth and improve returns in coming years.
Thank you. I would like now like to open the floor for questions.
Questions and Answers:
Operator
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question, 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’ll wait for a moment while the question queue assembles. The first question comes from the line of Amit Dixit with Goldman Sachs. Please go ahead.
Amit Dixit
Yeah, hi, good morning everyone and congratulations for a good set of numbers. Again, a few questions if I may. The first one is essentially if I look at the projections or the commentary of global OEMs including GE, Mitsubishi, Siemens, I mean that seems to be very, very bombastic. I mean they are fully booked for next 10 years. So in this scenario, how do you see the landscape changing for Azad? I mean the growth that we have projected 25% in revenue appears to be actually little bit on conservative side given the overall macro tailwinds that we are see.
So. And we have got of course you know, relationship with all the, all the global OEMs. So just wanted your thoughts on that.
Rakesh Chopdar
Yeah, hi Amit, thanks for the question. Yes, you’re right. There is massive pressure from our existing customers and what we say 25% plus is a growth number as during last call and this call and you know a couple of calls we have been mentioning that we are moving the new facility and it’s not a small facility which is in the making and we could successfully come to a level of stabilization that is 70, 80% done. But we can’t see that massive jump immediately. Right. Because we need capacity, we need infra, we need this audits, qualifications, redo delta qualifications.
So these things will definitely eat up a lot of time and this is bound to happen with any organization. Right. You must be knowing all the stringent processes these OEMs carry or the stringent products, what we manufacture. You’re right. Definitely there will be a jump coming in maybe in coming quarters. I would definitely elaborate on the numbers of the growth we are seeing. But as we get stabilized 100% my take is I would only give a growth number. What we are saying is conservative. You are right and this statement is going to change maybe just because in the coming quarter also we see that 70, 80% is what we see the civilization part done.
Now the spindles are running, the material is being churning out. But the effect will not come overnight. Right. So this takes at least this quarter. You will definitely see some movement of the revenues going up. But it’s always nice to give a guidance. And maybe in the next coming quarter I can change my statement. And definitely we can see after the stabilization is then definitely we see a massive growth.
Amit Dixit
No, great. I mean. Got it. The second one is essentially on ATG engine. So I just wanted to understand the roadmap of delivery. And if I’m not mistaken, there are 18 to 20 engines that you have to deliver in maybe one and a half years. So just wanting to understand where we are on that development process.
Rakesh Chopdar
So Amit, I would just give you an idea. It was years. Years got two months. Now it has come to weeks. So we are not far away. Even we are super excited. Especially me myself, I’m super excited to deliver this to the government. Much needed for the country at this hour. So it’s not far away.
Amit Dixit
Okay, one data bookkeeping question if I may. Is it possible to break receivable and inventory days into segment?
Rakesh Chopdar
As we gave a statement in Last call also 26 was something and we were consolidating a lot of things. Stabilization was most important. A lot of our bandwidth of the entire management went up in trying to make this facilities up and running. That’s most important. Priority one. And then coming to the level where we have already WIP work in progress to cut down these inventories as I promised in H1 H1 you will see a drastic change coming to closer to 200 days. And H2 we get down to 160, 170 days. That’s.
That’s. We have already planned and it’s in execution and we will achieve it.
Amit Dixit
Okay, great, great. Thank you so much and all the best.
Rakesh Chopdar
Yeah,
Operator
Thank you. A reminder to all the participants, please restrict yourself to two questions. Next question comes from the line of Suraj Malu with Katarman Katamaran. Please go ahead.
Rakesh Chopdar
Hello sir. Thank you very much for this opportunity. I have two questions. One is in Q1 FY26, you had mentioned a plan of creating total eight dedicated facilities over 12 to 18 months of which four have been completed. So are we on track to set up four more new facilities over six months? Yes, you’re right. We are on track.
Operator
Okay. And the second question is as and when you you win some long Term contracts you mentioned some contracts are five years, some are six, some are four. Right. So of the existing order backlog of around 6,000 crores, what will be the timeline over which you will need to deliver the.
Rakesh Chopdar
So these contracts have specific delivery schedules. And so every contract has a schedule at a part number level agreed with the customer and then the capacity that we are bringing online. So you know, just coming to the same thing that we were talking about. In the last about 18 months, we’ve gotten about four plants up right now on the basis the ramp up plan and the customer delivery schedules, the capacity is coming online for these four plans. So if you look at it over five to six years, we should be able to, on an average, these contracts extend to over five to six years.
Operator
Got it. And yeah,
Rakesh Chopdar
So if you, and if you just look at, you know, the guidance that we are talking about, 25% plus on the number, you will realize that over the next five years we should be able to more or less consume 6,500.
Operator
Right. Understood, sir. And sir, is it possible to get an, get a split of this 6,000 crore order backlog by segment?
Rakesh Chopdar
Sure. So, so this, I mean, I can, let me, let me tell you broadly between, you know, our customers or you know, let me tell you broadly between our segments. I mean, customers will be difficult for us to communicate. So today, you know, we have over, you know, $400 million worth of orders towards energy, approximately $200 million plus for aerospace and defense and about $100 million plus in oil and gas. This is very helpful. Thank you very much. Thank you.
Operator
Thank you. Next question comes from the line of Gaurav with Avendus. Please go ahead.
Gaurav
Hi. Thanks. Thanks for the opportunity. My first question is on this new contract that you’ve got from Mitsubishi for the nose and veins for the hot section. So just want to understand a couple of things. When you said it’s a single source order, does it mean that these were originally manufactured by Mitsubishi, which is now being outsourced to you, subjected to qualifications or you have won it from some other vendor? Second, how big is this opportunity, especially on the hot section for the noses and veins.
And third question is more on the aerospace which is for the Pratt and Whitney and Rolls Royce order. Where are we in the qualification cycle?
Rakesh Chopdar
Yeah, Gaurav, the first question, just remind me if I’m right. The first question you asked is, is was this parts manufactured by Mitsubishi or some other vendor? So it was manufactured in house, being these parts are very critical in nature. Right. So this is the Combustion area. So a lot of controls and checks are required to produce this part. It’s not just someone has an infra or some kind of equipment dispatches go like that. It needs a lot of, a lot of specialized infra and special talent to handle these kind of components.
So either they keep it in house or they give it to the most trusted partner. So they can’t have multiple partners in this. So it’s decided. Mitsubishi says hey, you have to focus completely on this and we only dedicate this to you and same thing we expect from you. So this is the conversation because of the nature of the product, this is mandatory happens that we have. So once it’s developed in there. Second, if you’re talking about market I would. It’s a very lengthy explanation. So what I can tell you is you can, you can go to the competition now we are going to be head on is you can study with Home Met Aerospace or pcc.
So these are the companies who are the players who are, who are in this segment. So we have, we have stepped ourselves in this door. Right. So that will give you more this thing and if you can have more details because it’s a very lengthy conversation.
Gaurav
Yeah. So
Rakesh Chopdar
We can come back, you can contact us after the call or something. I can explain you more in detail.
Gaurav
All right. Okay. Okay. And on the Pratt and Whitney and the Rolls Royce.
Rakesh Chopdar
Yeah. So Brad, so in this four engine manufacturers on the Air Force what we started, the first one was Rolls Royce. So we have in H2 we are expecting to supply the first qualification batch. And once that is approved and I think from we can see some momentum coming from Q4 of 527 or early of FY28. That’s where the supply starts. And followed by, followed by as you can see it took two and a half to two and a half years to come to the stage and this is normal and we could do it in two and a half years.
It’s also a great thing, you know, it’s not a small thing to do it in two and a half years. So same cycle will be followed, the next is Prad and Whitney, then comes Saffron and then it’s followed by them.
Gaurav
All right, if you allow me just one question on the numbers bit which is on the margins. So what I understand is that you have just commissioned the four plants, they’re underutilized and yet we get to see your margins going up every quarter. So is it the case that we can see more margin surplus from here on? Because we are yet to see any operating leverage benefits from the new plants.
Rakesh Chopdar
We always say 33 to 35% plus and that plus can be anything, you know. So keep expecting some kind of definitely a growth is always because we just don’t make, we just don’t produce. We do a lot of improvements, continuous improvements on the floor. So that’s our team’s culture. So definitely I wish and you know, hope that we deliver that plus every time.
Gaurav
All right. All right, thanks, thanks. Thanks for the answers and all the best for future. Yeah.
Rakesh Chopdar
All right, thanks.
Operator
Thank you. Next question comes from the line of Bhavika Singh Ji with Nimbishai. Please go ahead.
Vishnu Malpani
First of all, many congratulations. So the first question I have is related to the utilization. As currently we are like we have been maintaining quite good utilization. So the upcoming facility like the one we have already installed and the one is going to come in six months. Do we expect the same utilization or it will defer in terms of like how, how much time we can expect it to come at the same level of 90% plus utilization?
Rakesh Chopdar
Yeah Bhagasi, if any plant is inaugurated that means brand new building, brand new machines. We don’t wait for the shop to complete 100%. When like you talk about baker used, we were around 50, 60% of the capacity machines were inside. And when we cut the ribbon we started producing the parts the same day. But when you see the numbers it will take some time to flow of the material to come to the dispatch area. Right. And that, that’s what I was giving an answer in the to Amit also that the Q1 of this current month quarter which is going on, this is the churn out month.
So the revenues will follow once the metal gets started dispatching. So once it’s inaugurated definitely the spindles are running and the metal starts in the flow.
Vishnu Malpani
And the second question I have on the segment side as we did quite good on the energy and oil segment, so I just want to understand what’s driving the growth in the segment is the new addition of the customers or the new products we are adding in the portfolio. If you can give the clarity on that.
Rakesh Chopdar
Yeah. So in that case I’ll tell you these requirements were always there with Azad. Right? Right from day one when we started we just didn’t have the capacity. As we are setting up the capacity as we are innovating these plants, this is where we start taking orders. It’s us who were not taking orders because we didn’t have capacity. Now we are increasing the capacity and we are Opening the door to take more orders. So this is where the growth is coming in. So this, this equipment was not today, it was day from with us from day one.
Vishnu Malpani
Okay, so am I understanding right that we are getting from the same products. We are not adding new products like in this segment.
Rakesh Chopdar
So the right way to understand this is. See, I think it’s not a straightforward approach, right. So every time our growth with a customer happens on multiple fronts, right? So first is you have certain parts that have been qualified. So we are ramping up our market share on those qualified parts over time. Right? So let’s say we were doing a certain kind of volunteer with our customer on those parts. Now because of our progressive deliveries, our wallet share on those parts will continue to grow.
So most of the growth that you see today is coming out of qualifications of parts that have been done and ramp up. That is coming in. Second lever for our growth is that we are also adding adjacent categories or more part numbers to our overall capability. When Mr. Jobdar was talking about how or you know, one of you all asked us a question about how we signed a contract with Mitsubishi. That’s an additional capability, higher entry barrier than the current product and diversified product portfolio with a much higher asset turn, much higher market.
So we are also adding those. And the third lever for our growth is that we are also adding other customers that have where we can deploy our capabilities that we’ve built horizontally. Right? So this industry, right, any of these industries that we are a part of by nature have three or four major players dominating the entire industry. Whether it’s energy, whether it’s aerospace and defense and oil and gas. So the capabilities that Azad is building across our customers are very selectively building it so that we can horizontally deploy it and grow the business in the years to come.
So when we are committing a 25% plus growth that is not on the back of products that we are going to qualify, that is on the back of the wallet share that we are gaining on qualified products. I hope that answers your question.
Gaurav
This is
Rakesh Chopdar
Also very important to understand by a time that whatever we say the growth numbers are on the qualified products. We never have taken in consideration what is going to come, what we have to qualify. Right? Let it be the engine, let it be the hot gas components. Though the markets are big and all we know that we have signed up, we are definitely going to qualify, definitely going to increase revenues. But our culture here is what is achieved, what is qualified, what is the growth numbers coming out from there.
So that’s the Reason we give a very, very decent number and definitely we see upside going forward. Definitely.
Vishnu Malpani
Understood. And this last on the aerospace and defense side, like currently it holds 70% of our total revenue. So do we see the same percentage going forward or we are expecting the aerospace division getting increased in terms of share of the revenue.
Rakesh Chopdar
So let me take this up. I think we’ve tried to address this even in the past. See, Azad’s been trying to build a well diversified business across every sector. So if you look at the history, you will be able to see the demonstration of how we are looking at diversifying. So back in the 2020 or 2021, Azad was largely an energy business focusing on one product category which was compressor airfoils. Right. And over the last five years you see Azad has diversified at multiple levels, whether it is segments and then in the segments product categories as well.
Right. So going forward, so let’s say we want to look at Azad five years from today, you will see that Azad is a fairly diversified business where energy will be contributing anywhere between 55 to 60% and the balance will be contributed by our other verticals such as aerospace and defense and even oil and gas for that matter. So we expect our verticals to continue to grow because we have a lot of headroom and become balanced, diversified over the next four, five years.
Vishnu Malpani
Out of 80% of current energy and oil and gas, how much is the oil and gas segment?
Rakesh Chopdar
Oil and gas, we are working, we are still under qualification. Baker Huge is one of our only customers in the segment and we want, we are in the process of building capabilities right now. So if you look at any revenue contribution for the current year, it was not material. It was under, you know, under about 10 crores between because we are largely doing qualification. But FY27 will be the first year where you will see a ramp up in this and you will be because we’ve just started. In fact, the last notification that we gave in April 202620 was inauguration of the facility.
Right. And this is one month old. But you will be able to see how we quickly ramp up in this industry or in the sector in the current financial year. So we expect to add material numbers by our oil and gas segment this year and it will follow the same tragedy it took us. See, I mean it’s important to understand that it took us from 2008 to 2020 to get to about 120 crores and it took us. We’ve grown 5x in the last about 5, 6 years. Aerospace was started in 2018, 2019 and in 5, 7 years we’ve been able to deliver 100 crores of top line in that vertical.
And similarly oil and gas will not even take five, six years. Oil and gas should be able to breach that number over the next couple years. So this is how the ramp up works and this is the nature of this industry. Right.
Vishnu Malpani
That’s it. Thank you so much.
Operator
Thank you. Next question comes from the line of Pratik Dharmachari with Union Mutual Funds. Please go back.
Rakesh Chopdar
Yeah. Many congratulations for fantastic set of members Rakesh and the team. Just one question
Operator
From the risk side, any risk are you currently observing from this Middle east geopolitical tension on supply chain or its business as usual for us, how are we seeing things?
Rakesh Chopdar
Yeah, see you know, if you take away the, you know, macro risks that are there in every business that is existing today from a, from a, from our business perspective I think we have de. Risked ourselves from, you know, majority issues that can be faced in our business. Right. Our business can get impacted if we do not have demand. We have purchase orders and visibility over the next five, seven years. The other thing that we can have a risk on is capacity creation which we’ve been able to do to a large extent.
Third one was manpower which we are today doing. So it’s about our ability to be able to do all of this together so that execution risk remains. And we today are focusing on normalizing our working capital cycle along with it as well. So, so we don’t see from a risk perspective, I think we’ve been able to manage that because our customer relationships are structured around qualifications which have taken several years to do and are based on multi year contracts. So we don’t see risk from that perspective.
Operator
Got it. Just a follow up in terms of the new theme which is emerging on energy side which is nuclear, do we have any hope or any opportunity which can we can participate or play in the nuclear opportunity?
Rakesh Chopdar
So we are already a player that is working in the nuclear space. In fact our energy segment when we talk about it, we cater to gas turbines, nuclear turbines and thermal turbines as well. So we make critical rotating components for even nuclear turbines. And, and we make it for the world’s largest customer which is based out of France. It is a government owned entity called EDF Arable and a fully owned subsidiary of EDF which is Arable Solutions. So they audited Azad for a few years. We cleared all our qualifications, we cleared all our entry barriers and we’ve been supplying nuclear for the last couple of Years.
So today in fact we are one of the most, one of the only qualified partners in the country to be. To be producing nuclear turbine Air Force. So we are, we are ready and geared up for the opportunity that we are seeing whether in India or globally.
Operator
Great many congratulations once again. Thank you.
Rakesh Chopdar
Thank you.
Operator
Thank you. Next question comes from the line of Sahil Kariya with White Pine Investment Management Private Limited. Please go ahead.
Amit Dixit
Yeah, thank you for the opportunity. Just wanted to ask how many ATPG engines we have the order for and what will be the delivery timelines.
Rakesh Chopdar
So you know, it will be difficult to share that information as it’s. It’s a part of a coveted national defense program and like you know, our chairman addressed this before. I think it’s a matter of, you know, we are in the process of delivering it and soon we will be able to share more updates on it officially but we may not be able to discuss specific numbers about it. We can tell you that yes, there have been great advancements internally. We’ve, you know, we are very confident moving forward on this space.
But sharing specific numbers around this will be difficult. Thank you.
Amit Dixit
Okay, and the next question was what was the capex number for FY26 and planned capex for FY27?
Ronak Jajoo
For FY26 I already covered in my presentation. We have done the capex of around 392 crore capitalization during the year. And for FY27 we are on the trajectory to ramp up the upcoming plants.
Amit Dixit
So what would be the number if you could quantify it?
Ronak Jajoo
Sorry,
Amit Dixit
What would be the number for FY27 if you could quantify the number for FY27?
Rakesh Chopdar
So most of the CAPEX deployment is linked to the race that we’ve done for QIP. Right. So we raised 700 crores in QIP. And you know, if you, our CFO covered that the balance deployment of about there which will happen to us.
Amit Dixit
Okay, I’m. Sir, do we have any plans in entering the heat treatment plants or the software treatment plans? Sorry, can you repeat
Rakesh Chopdar
That? Your, your voice is a little muffled. Can you please repeat your question?
Amit Dixit
Do we have any plans of introducing a heat treatment plants or plants in house?
Rakesh Chopdar
We. So we already have a state of art heat treatment facility. Both, you know we have vacuum heat treatment as well. We are NATCAT approved by the way. We just got MADCAT approved for also on the special processes. Yes, that’s the plan. Because there are some dependencies on our supply chain. So what we’re doing is we are ultimately going to have Every special process in Azad, however, the critical special processes are already in house, like shock painting and, you know, coatings. All these are already in house, but few more left.
That is also going to be in house. Okay, thank you. I just can add on the capex. We had announced our capex. So are we still on track with the plans or is there some data due to the. Sorry,
Operator
Yes, your voice is breaking. Can you just come in the range and talk?
Rakesh Chopdar
Yeah, Am I audible now?
Operator
Yes, please go ahead.
Ronak Jajoo
Yeah,
Rakesh Chopdar
So we had announced
Ronak Jajoo
A capex in Saudi Arabia with baker yokes. So are we on track with the plans or there’s some delay there due to the war?
Rakesh Chopdar
No, so that is still on from an opportunity perspective. I think we are still, you know, going ahead with that. But yes, the timelines have been shifted. We are still in discussions with our customer on how do we best take this forward given the current situation and priorities. So while you see, we had signed an MoU, we inaugurated a baker huge plant for us in our dedicated facility. So our growth plans with our customer remain. And that is an opportunity that is there. But we will have our current management bandwidth is today focused on what is there in the current plant.
And we want to get that capacity up and running. That opportunity which exists in the Kingdom of Saudi Arabia is available for us and will continue. But I think we want to take it up, you know, not as the most important priority today. We want to get our current plans up and, you know, do that and then that can happen alongside. But that opportunity still lives. Thank you. Thank you so much.
Operator
Thank you. Next question comes from the line of Rishika with Goldman Tax. Please go ahead.
Unidentified Participant
Good morning everyone. Thank you for the opportunity. So two questions from my end. When are you guys planning to start civil work for the third plant? And secondly, if you could share your views on the potential benefits from upcoming engine ecosystem in the country.
Rakesh Chopdar
I’m sorry, can you repeat your second question again?
Unidentified Participant
Just your views on potential benefits from the upcoming engine ecosystem in the country.
Rakesh Chopdar
Okay, so the first one, Nishika, I think, you know, we are building our. So we’ve already completed four plants, four lean facilities in the, you know, capex that we were deploying towards creating additional capacity and the balance four plants will be completed in this financial year. Right. Every plant has a schedule that, you know, we are following on on in terms of commissioning. How to. When are we looking at ramping it up? And obviously, as explained by our chairman and cfo, it takes specific time before we are able to get a plant to a reasonable amount of utilization.
Right. That is a natural course. So that is coming up in terms of the engine ecosystem I think, you know, I would, I would make it broad based even further saying that the opportunity that Azad today is sitting on. Azad has positioned itself always as a manufacturer of highly engineered critical components across these three segments which are mission and life critical. With the demand for these engines going up over time, with backlogs of our customers increasing, Azad is obviously looking at a much larger opportunity in this domain.
And which also means that the ecosystem in India should be thriving. And with indigenization plans of the government, with indigenization plans of how we are stacking up, we are moving from building capability for one engine and we will only scale it up like from the engine that we are building. We will move from the current 3.7 to 4 kilonewton engine to a higher capacity going forward and eventually contribute to much larger programs. But the entire engine ecosystem, we are seeing this demand grow and you know, capacity is being added for, you know, a lot of capacities being added in the country.
We won’t be able to talk too much about the Indian program. But yeah, I see we see that India is going through that phase where we will now start contributing meaningfully to our GDP from a precision manufacturing industry perspective.
Unidentified Participant
That’s helpful, thank you. Just one more question. What about the third expansion plan of 85,000 square meter plant that you are planning? When will that civil work start?
Rakesh Chopdar
So ma’, am, as pointed out, you know, this year our focus is very clear. We want to get the current facility and the balance plans committed. And our next priority would be to ramp these up slowly. Once this is done, we will take on the next facility. Because today we are creating capacity basis the schedules that we have with our customers on order book. So once this is completed, our next focus will be building the second plant up over time.
Unidentified Participant
Understood. That’s helpful. Thank you so much.
Rakesh Chopdar
You’re welcome.
Operator
Thank you. Next question comes from the line of Manish Oswal with Nirmalpang Securities Private limited. Please go back.
Rakesh Chopdar
Yes, sir. Yes sir. I joined the call bit late because
Operator
I was in the impression of 12 o’. Clock. So my question might be repetitive. I just wanted to understand your thought process around the the working capital management and the cash flow generation of the company. We have invested a lot of money in the capacity building. But how we are managing working capital and how what sustainable cash flow we can think of in our business. Thank you.
Ronak Jajoo
Yeah. If you see we have upfront invested into the in into the inventory and all the plants are at different level of capacity ramp up as Mr. Chubdar and Vishnu explained. So these plants are at different level of maturity. But your investment has to be upfront. That is the reason this year the inventory is slightly looking elevated. Looking forward from FY27 and onward we see that this inventory will be converted into the revenues and that will ease out the cash flow from that particular perspective.
Operator
All right sir, I go through the entire. After the call. Thank you.
Ronak Jajoo
Thank you.
Operator
Mr. Chauhan, please go ahead with the question.
Unidentified Participant
Hello, good morning and thank you for the opportunity. I’m audible.
Operator
Yes, you are.
Unidentified Participant
Yeah. So congratulations on new contact. Went in the hot section of an order. I just wanted, I guess you break up an order book. I just, you know, reiterating the number, it will be around 9,000, 8,500. Around. Right. 8,500 crores is my understanding correct?
Rakesh Chopdar
No. So, so we are talking about a rolling order book. Right? So that is about 6,500 net of what we have delivered this year.
Unidentified Participant
So my question was basically on the renewals and amendments on the long term contracts that we had and also the new orders that we had after the, you know, the Q3 that you indicated order book was around 6,500 crores. So
Rakesh Chopdar
Yeah, so we, so we, we’ve added contracts and you know, some of these contracts we have, we cannot disclose the order value. And that’s why whatever can be publicly disclosed is about 6,500. But it is 6,500 plus. Right. That is the order book that we from a long term perspective.
Unidentified Participant
Okay sir, got it. And sir, also on the hot section nozzling segment like without getting into the customer confidential details, I just wanted to understand the manufacturing processes. Is it broadly similar to existing airfoil work where you know, you get, you receive a net near shape forecast input and you you know, perform on high pressure machining, finishing or does this require something materially different? So
Rakesh Chopdar
Yeah, so I think see the process of manufacturing hot section components cannot be discussed on the call. We would, we would, if you’re very keen, you know, we would invite you to our company and please visit us. We’ll be able to explain the manufacturing process. But I can only give you one, you know, one statement that there are only three players around the world of precision manufacturing that have been able to crack this materially. Right. So the complexity in manufacturing these components is very, very high.
Yeah, so, so you know, so the process is different than the existing manufacturing process. If you’re keen, you know, if you plan to visit, we’ll, we’ll request our, you know, NGA team to sort of arrange a plant visit and this can be addressed at the clients.
Unidentified Participant
Sure sir, sure. And so like basically like this question was basically around, you know given the higher complexity and single source position, this is definitely, definitely margin accurate. Right. And how would, how will it be during ramp up and mature volumes? And this is obviously above companies bended EBITDA margin band. Right?
Rakesh Chopdar
I mean we won’t be able to share because see this is a single contract and you’re asking us specific information on the contract, it’ll be difficult to share. But you know, once you understand the process of manufacturing, most of these questions that you’re answering will be addressed. So I would request you to please come down and spend some time with us. We’ll be able to explain and you can also look at, you know, to draw parallels, please look at the, you know, top two or three players that are making these kind of components and what is the kind of profitability and bottom line that they do on these segments.
This is publicly available information. You can look it up and you’ll get a sense of it as
Unidentified Participant
True Sir. And also one accounting clarification I guess in the FY25 annual report you mentioned you there is capitalization on new product development program. Can you clarify what exact costs are capitalized and which balance sheet like this in the FY26 quantum. And if you know these costs are fully extinct, what would the EBITDA part margin would have been would look like?
Ronak Jajoo
Yeah, we generally don’t capitalize any development cost in our balance sheet and we extend out as a part of our accounting policies. There can be some tools specifically designed for the customer which are capitalized to that extent but the general development cost or the general expenses are extent out in the pre industry.
Unidentified Participant
Got it. That’s it from my side and thank you.
Operator
Thank you ladies and gentlemen. That was the last question for today. We have reached the end of question and answer session. I now hand the conference over to the management for closing comments.
Rakesh Chopdar
So thank you. So with this I think I’d like to take this opportunity on behalf of Azad Engineering, our chairman, our board of directors and all of us, thank you so much for giving us this opportunity to talk about our business, present our thesis and share how we will be executing FY27 and beyond. Thank you so much. We are very excited about the current phase that Azad Engineering is in our sectors are and how our capacity is coming up online. So we’re only looking at upwards and onwards from this point.
Thank you so much.
Operator
Thank you. On behalf of Azad Engineering Ltd. That concludes this conference. Thank you for joining us. You may now disconnect your lines.