Ajax Engineering, co-founded by Krishnaswamy Vijay, the late Jacob John and the late Anil Kumar Singh, is engaged in the business of design, develop and engineer innovative and high-quality concrete equipments.

Since its inception 32 years ago, the company has developed a comprehensive range of concrete equipment product portfolio across the concrete application value chain. Its product portfolio includes equipment such as self-loading concrete mixers (SLCMs) and batching plants for the production of concrete, transit mixers for the transportation of concrete, boom pumps, concrete pumps and self-propelled boom pumps for the placement of concrete, slip-form pavers for the paving of concrete and 3D concrete printers for depositing concrete. As of September 30, 2024, it has over 141 concrete equipment variants catering to the concrete application value chain.

As an engineering-focused concrete equipment company, it has built a large and comprehensive portfolio of designed and developed concrete equipment. One of its significant innovations is the SLCM with a load cell, where the machine is equipped with load cell technology that provides quality assurance in concrete production by enabling precise measurement of cement, water, sand, and aggregate. Notably, it is the only Indian company to have developed a slip-form paver entirely in-house in 2019 and the first to commercialize 3D concrete printing machine developed in-house in 2023.

It also continue to assist customers throughout the life of the equipment, and with that aim, it provide spare parts for the equipment sold by it and facilitate the provision of after sales service by its dealers.

As of September 30, 2024, it have developed over 141 concrete equipment variants catering to the concrete application value chain, and over the last ten years, we have sold over 29800 concrete equipment in India.

The company is a leading manufacturer of SLCMs in India, with an approximately 77%, 75%, 77% and 86% market share in the SLCM market in India in terms of number of SLCMs sold during the six months period ended September 30, 2024 and Financial Years 2024, 2023 and 2022, respectively. Moreover, during Financial Year 2024, about 12% of the concrete produced in India was through its SLCMs.

In addition to its wide range of SLCM product portfolio, the company also has a large and diverse range of non-SLCM equipments that cater to various aspects of the concrete production, transportation, placement and paving processes.

Its non-SLCM product portfolio includes batching plants for concrete production, transit mixers for concrete transportation, boom pumps, concrete pumps, self-propelled boom pumps for concrete placement, and slip-form pavers.

In FY24 about 85.13% of its revenue came from sale of SLCMs, 8.85% from sales of non SLCM concrete equipments, 5.65% from sale of spare-parts and 0.26% from services.

The company have been steadily gaining market share in non-SLCMs, driven by its commitment to innovation and quality. Between Financial Year 2022 and the six months period ended September 30, 2024, its non-SLCM sales experienced a CAGR of 25.90%, reflecting its increasing presence in this market.

As of September 30, 2024, it operate four assembling and manufacturing facilities at Obadenahalli, Gowribidanur and Basethahalli in the state of Karnataka, each specializing in distinct product lines. The Obadenahalli facility, with an area of 39,660.38 square meters (sqm), is among the largest SLCM facilities globally in terms of area as on March 31, 2024. Gowribidanur and Basethahalli with an area of 78920 sqm and 19340 sqm are into manufacturing of Batching plants/transit mixers and stationary/boom pumps respectively. It’s assembling and manufacturing facility at Adinarayanahosahalli (Karnataka) will have fungible capabilities to assemble a variety of concrete equipment, once it becomes operational in August 2025.

Its equipments are sold through dealers in India and outside of India to a diverse range of customers, including individual contractors, small and mid-sized contracting companies, rental companies, large construction companies and government construction agencies. As of September 30, 2024, the company has 51 dealers across 23 states in India and 25 dealers/distributors outside India.

The Issue and Object of the Issue

The issue comprises only an Offer for Sale (OFS) up to 20180446 equity shares by its Promoter [12743646 shares] & investor selling shareholder i.e. Kedaara Capital [7436800 shares]. Post issue the share holding of Kedaara Capital will be nil.

As it is just an OFS, the company will not get any proceeds and the objects of the offer largely to achieve the benefits of listing the Equity Shares on the Stock Exchanges and carry out OFS.

Strengths

Leading concrete equipment manufacturer with a comprehensive range of concrete equipment, services and solutions across the concrete application value chain and enjoy market leadership in domestic SLCM market with a share of 75% in FY24.

Engineering-focused concrete equipment company with strong in-house design and development capabilities

Diversified customer base (of over 19000 customers as of Sep 2024) with longstanding relationships in the concrete equipment market.

The concrete equipment market in India, and in particular, the market for SLCMs, is experiencing significant growth on account of several factors, including an increase in cement consumption and an increase in public and private capital expenditure towards infrastructure, irrigation, housing and renewable power projects, leading to increased demand for construction materials and equipment.

Weakness

The leases for two of its assembling and manufacturing facilities (Gowribidanur & Bashettihalli) have expired. While it has made applications to KIADB to obtain ownership of these land parcels, there can be no assurance that it will be successful.

Business of the company is seasonal in nature and the demand is also depends on level of infrastructure/housing investment and construction in the country.

All its assembling and manufacturing facilities are located in the state of Karnataka.

The Statutory Auditors’ audit reports and annexures to auditors‘ reports which discloses matters specified in the Companies (Auditor’s Report) Order, 2020 for the past three Financial Years have included certain modifications. If similar modifications are included in the Statutory Auditors’ reports for its financial statements in the future, the trading price of its equity shares could be adversely affected.

One of the members of its Promoter Group (i.e. David Hansen, a brother of the husband of Rekha Hansen, a Promoter) has not consented to the inclusion of, nor has he provided, information or any confirmations or undertakings pertaining to himself or the entities in which he holds/may hold interest, which are required to be disclosed in relation to the Promoter Group.

There have been few instances of non-compliances, including with respect to certain regulatory filings for corporate actions taken by the company in the past.

Valuation

Consolidated re-stated revenue stood higher by 51% to Rs 1741.40 crore in FY 2024. But with the OPM expanding by a strong 100 bps to 15.8%, OP jumped up by 61% to Rs 275.55 crore. Eventually, Pat after MI stood higher by 66% to Rs 225.15 crore.

For the half year ended Sep 2024, the sales were up 12% to RS 769.99 crore. With OPM expand by 100 bps to 15.5%, the OP was up 20% to Rs 119.24 crore and the net profit after MI was up 22% to Rs 101.02 crore.

For the TTM period ended Sep 2024, the sales was up Rs 1826.53 crore and the net profit after MI was Rs 243.23 crore.

At the upper price band, the PE works out to 29.5 times of its EPS for TTM period end Sep 2024. And the P/BV works out to 7.2 times and EV/Sales works out to 4.1 times.

Though not apple to apple comparable peers, companies that have significant construction equipment business such as Action Construction Equipment, BEML and Escorts Koboto quote at a PE of 41.1 times, 45.7 times and 30.7 times respectively of their EPS for TTM period ended Sep 2024.