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Ajax Engineering, a leading manufacturer of concrete equipment for the construction industry, is set to raise up to INR 1,269.4 crore via an offer for sale by its promoters and investor Kedaara Capital. Kedaara Capital will divest its entire 6.5% stake, reducing the promoter group's holding from 93.5% to over 82% post-IPO. The company dominates the self-loading concrete mixer (SLCM) market with a 75% share and benefits from the government's infrastructure push. However, its performance is tied to economic conditions, and the promoter group must reduce its stake to 75% over the next three years. With a robust business model and an asset-light approach, the company offers an attractive investment opportunity for long-term investors.
Ajax Engineering, a prominent manufacturer of concrete equipment catering to the construction sector, is planning to generate up to INR 1,269.4 crore through an offer for sale by its promoters and investor Kedaara Capital. Kedaara Capital intends to offload its entire 6.5% stake, while the promoter group's holding will decrease from 93.5% to slightly above 82% following the IPO. Advertisement
The company operates across the entire concrete application value chain and holds a dominant 75% market share in the self-loading concrete mixer (SLCM) segment. The increasing demand for infrastructure, supported by government initiatives, bodes well for the company's future. However, its financial performance remains closely linked to economic conditions, making it vulnerable to slowdowns. Additionally, the promoters must further reduce their stake to 75% or lower within the next three years. Given its extensive industry experience, investors may find the IPO appealing for long-term investment.
Established in 1992, Ajax Engineering specialises in manufacturing and supplying spare parts and services for SLCMs, bin batching plants, self-propelled boom pumps, 3D concrete printing machines, and slip-form pavers. As of the end of September 2024, the company had a network of 51 dealers across 23 states in India, serving more than 19,000 customers, up from 15,700 in March 2024. The company maintains a diversified client base, with no single customer accounting for over 5% of its revenue, thereby reducing dependency on individual clients. Its asset-light approach, which relies on sourcing materials from 546 suppliers, has also contributed to operational efficiency, with imports making up less than 10% of material costs.
The company experiences seasonal fluctuations in business due to its reliance on construction activities, which slow down during the monsoon season. Revenue generation is typically skewed, with the first half of the fiscal year contributing 40-60% of annual revenue, depending on the pace of project execution. Over the past two financial years, the company's revenue has more than doubled, increasing from INR 763.3 crore in FY22 to INR 1,741.4 crore in FY24. The SLCM segment accounted for 85.1% of revenue in FY24, up from 77.4% in FY22. Net profit surged from INR 66.2 crore to INR 225.1 crore, while the EBITDA margin improved from 11.9% to 15.8% during this period. The return on capital employed also doubled to approximately 33% over three years leading up to FY24.
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