IPO Alert: Debt-free company with 77 per cent market share in SLCMs; should you subscribe?
Between FY22 and FY24, it achieved a Compound Annual Growth Rate (CAGR) of 52 per cent in revenue and 85 per cent in net profit.
About the issue
Ajax Engineering Ltd is preparing to launch its Initial Public Offering (IPO) for equity shares. Below are the issue details.
| IPO Details |
| IPO Opening Date |
February 10, 2025 |
| IPO Closing Date |
February 12, 2025 |
| Issue Type |
Book Built Issue IPO |
| Face Value |
Re 1 per equity share |
| IPO Price |
Rs 599 to Rs 629 per equity share |
| Min Order Quantity |
23 shares |
| Listing At |
BSE, NSE |
| Total Issue |
2,01,80,446 shares of FV Re 1* |
| (Aggregating up to Rs 1,269.35 Cr)* |
| Offer for Sale |
2,01,80,446 shares of FV Re 1* |
| (Aggregating up to Rs 1,269.35 Cr)* |
| QIB Shares Offered |
50% of the Offer |
| Retail Shares Offered |
35% of the Offer |
| NII (HNI) Shares Offered |
15% of the Offer |
| *At Upper Price Band |
|
Objects of the Issue
Considering that the issue is exclusively an offer for sale, it is crucial to note that the company will not receive any offer proceeds. Instead, all offer proceeds will flow to the selling shareholders, distributed in accordance with the number of offered shares they sell as part of the offer.
Promoter holding
Krishnaswamy Vijay, Jacob Jiten John, Kalyani Vijay, Madhuri Vijay, Prashanth Vijay, Rachel Rekha Hansen, Savitha Christeena Alexander, Sean Alexander, Green Haven Trust, Ohana Trust, Jacob Hansen Family Trust and The Johns Loaves Trust are the promoters of the company. The promoters currently hold a pre-issue shareholding stake of 87.88 per cent in the company.
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Company profile
The company is a leading manufacturer of concrete equipment, offering a comprehensive range of equipment, services, and solutions across the concrete application value chain.
Since its inception 32 years ago, it has built an extensive product portfolio that includes self-loading concrete mixers (SLCMs) and batching plants for concrete production, transit mixers for transportation, boom pumps, concrete pumps, and self-propelled boom pumps for placement, slip-form pavers for paving, and 3D concrete printers for depositing concrete.
As of September 30, 2024, the company has developed over 141 concrete equipment variants catering to the concrete application value chain and has sold more than 29,800 concrete equipment units in India over the past decade.
Furthermore, between FY22 and the six-month period ended September 30, 2024, its SLCM sales registered a CAGR of 45.70 per cent, highlighting the rapid adoption and success of SLCMs in the construction sector. The company is a leading manufacturer of SLCMs in India, holding approximately 77 per cent market share during the six months ended September 30, 2024.
In addition to its extensive dealer network in India, it has expanded its global footprint, establishing 25 dealers and distributors across South and Southeast Asia, the Middle East, and Africa as of September 30, 2024.
Financials
| Rs (in crore) |
FY22 |
FY23 |
FY24 |
H1FY25 |
| Revenue |
772 |
1,173 |
1,780 |
794 |
| Profit Before Tax |
90 |
183 |
302 |
137 |
| Net Profit |
66 |
136 |
225 |
101 |
The company has consistently demonstrated notable growth in revenue and profits over the past few years. Between FY22 and FY24, it achieved a Compound Annual Growth Rate (CAGR) of 52 per cent in revenue and 85 per cent in net profit.
Annualized figures from H1FY25 indicate a considerable decline in revenue and profit compared to FY24. However, based on past trends, management remains optimistic about a stronger performance in the second half of the year.
Engineering and construction companies see higher revenue and profits in the second half of the year due to accelerated government spending, milestone-based payments, favourable post-monsoon conditions, and increased private sector investments, boosting project execution and financial performance.
As of September 30, 2024, the company is debt-free with reserves of Rs 984 crore.
Valuation & Returns
| Company Name |
P/E |
P/B |
RoE (%)* |
| Ajax Engineering Ltd |
36 |
7 |
25 |
| Listed Peers |
| Action Construction Equipment Ltd |
41 |
11 |
31 |
|
BEML Ltd
|
52 |
5 |
11 |
|
Escorts Kubota Ltd
|
32 |
4 |
12 |
The issue is priced with a P/BV ratio of 7.23 times, calculated using its Net Asset Value (NAV) of Rs 87.04 as of September 30, 2024. Considering the company's annualized FY25 earnings and fully diluted equity capital, the price-to-earnings (P/E) ratio is calculated at around 36x.
The company delivered an impressive return on equity (RoE) of 25 per cent and a return on capital employed (RoCE) of 33 per cent for FY24. As a result, the company has notably outperformed its listed peers in terms of both valuation and returns.
Outlook
Infrastructure development is expected to drive demand for mechanized concrete equipment in India, supported by rising cement consumption and increased public and private capital expenditure in infrastructure, irrigation, housing, and renewable power projects. This growth will, in turn, boost the demand for construction materials and equipment.
The company is well-positioned for future growth with a strong market presence, long-standing customer relationships, diverse product offerings, and a proven financial track record.
The company's debt-free status and impressive reserves enhance its financial stability, providing a strong foundation for potential expansion opportunities.
Hence, we recommend investors subscribe to the issue with a long-term perspective.