Action Construction Equipment Limited — Q2 FY26 earnings call

Call held 7 Nov 2025

Management summary

Action Construction Equipment Limited reported a flat Q2 FY26 total income YoY but strong profit growth, with EBITDA up 6.72% and PAT up 131 bps in margin. H1 FY26 saw a 4% YoY decline in income but a 10% growth in EBITDA and 12.7% in PAT, driven by margin expansion. The company anticipates a recovery in demand, supported by policy continuity and infrastructure development, and expects flattish to single-digit revenue growth for FY26. Strategic initiatives include land acquisition for expansion, increasing dividend rates, and leveraging anti-dumping duties on heavy cranes to gain market share.

Highlights

  • Q2 FY26 Total Income remained flat YoY at ₹782.18 crores, but grew 11.27% QoQ.

  • Q2 FY26 EBITDA increased by 6.72% YoY to ₹151.75 crores, with margin expanding 137 bps to 19.40%.

  • Q2 FY26 PAT grew to ₹103.87 crores, with margin expanding 131 bps to 13.28%.

  • H1 FY26 Total Income was ₹1,485 crores, down 4% YoY, but EBITDA grew 10% YoY to ₹294.30 crores.

  • H1 FY26 PAT grew 12.7% YoY to ₹200.70 crores, with EBITDA and PAT margins expanding 240 bps and 151 bps respectively.

  • Cranes, material handling, and construction equipment segment revenue was ₹694 crores, flat YoY, contributing 94% of total revenue.

  • Backhoe loader sales in Q2 FY26 were 168 units, with a market share target of 5-6% in the medium term.

  • Anti-dumping duties on Chinese heavy cranes (26-52%) are expected to be implemented by December 2025, providing a significant boost.

Concerns

  • Chinese Dumping in Heavy Cranes Segment

Key financials

2 periods

Q2

  • Total Income
    ₹782.18 Cr
    YoY 0% QoQ +11.3%
  • EBITDA
    ₹151.75 Cr
    YoY +6.7%
  • EBITDA Margin
    19.4%
  • PBT
    ₹137.49 Cr
  • PBT Margin
    17.6%
  • PAT
    ₹103.87 Cr
  • PAT Margin
    13.3%
  • Sales Units
    2,348 units
    YoY -18%

H1

  • Total Income
    ₹1,485 Cr
    YoY -4%
  • EBITDA
    ₹294.3 Cr
    YoY +10%
  • EBITDA Margin
    19.8%
  • PBT
    ₹264.13 Cr
    YoY +11.1%
  • PBT Margin
    17.8%
  • PAT
    ₹200.7 Cr
    YoY +12.7%
  • PAT Margin
    13.5%

What they filed

Q1 FY27: revenue up 20.6%, net profit up 21.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue757 875 961 652 744 −2%855 −2%1,029 +7%786 +21%
EBITDA109 135 164 93 109 +0%130 −4%172 +5%118 +27%
Net profit95 112 119 98 90 −5%116 +4%111 −7%119 +21%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentRevenueShare of Total Revenue
Cranes, Material Handling, Construction Equipment₹694 Cr94%
Agri Segment₹47.13 Cr7%
Backhoe Loader Sales——

Order book

medium confidence

Inflow this quarter

₹420 Cr

Composition

Mix 2 segments
  • Cranes, Material Handling, Construction Equipment 94%
  • Agri segment 7%

Share of order book by segment

Cancellations & deferrals

  • deferred: Rough terrain forklift order of Rs. 420 crores delayed to Q4 FY26 due to pending NOC for emission norms.
Management noted early indicators of recovery and increased order booking, particularly in key states, despite some project delays.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹200 Cr
    • Land acquisition for expansion ₹200 Cr
    we are going for an expansion mode and we have acquired two pieces of parcel of land last year and one big chunk of land of nearly 86 acres of land will be acquired probably in this year, which will require about nearly Rs. 200 crores of money to acquire the land.
  • M&A Japanese partner Joint venture · Announced

    To gain access to Japanese technology and strengthen heavy crane business, especially after anti-dumping duties.

    Expected to boost heavy crane business and provide multiple advantages, becoming effective once anti-dumping duty notification comes into play.

    we are going for a JV with a joint venture with a Japanese partner which will be also become effective only once this notification comes into play. So, with that JV, with the permission of JV with a Japanese partner, we will be having multiple advantages which will definitely give boost to the heavy crane business which is crawler crane, truck mounted crane and the rough terrain cranes.

Guidance & targets

Revenue

  • Revenue Growth Revenue · FY26 · Medium confidence flattish to single-digit
    As demand recovers through the year, we are anticipating achieving flattish to single-digit revenue growth in FY'26 supported by sustained operating performance.

    — Vyom Agarwal, President

  • Export Revenue Share Revenue · Medium to long term · Medium confidence 8% to 9%

    From 4% to 5% today

    medium to long term target is to at least reach 8% to 9% of the Company revenue would come from here and the balance the 7% to 8% from the defense only.

    — Rajan Luthra, CFO

  • Defense Revenue Share Revenue · Medium to long term · Medium confidence 7% to 8%

    — Rajan Luthra, CFO

  • Total Income Revenue · FY27 · High confidence ₹4,000 crores to ₹4,400 crores
    Our medium to long term guidance remains intact, which we had projected that probably by the end of FY'27, we would be around Rs. 4,000 crores to Rs. 4,400 crores and from FY'29 to FY'30, we should be somewhere at around Rs. 6,000 crores to Rs. 6,200 crores.

    — Vyom Agarwal, President

  • Total Income Revenue · FY29-FY30 · High confidence ₹6,000 crores to ₹6,200 crores

    — Vyom Agarwal, President

Margin

  • EBITDA Margins Margin · FY26 · Medium confidence modest expansion
    We also expect a modest expansion in EBITDA margins versus last year, driven by cost efficiencies, product mix improvements and operating leverage as volumes scale.

    — Vyom Agarwal, President

  • Margin Profile Margin · Near-term · Low confidence small uptick
    As of now, the current margin profile that we have posted in H1, I think there can be a small uptick from here.

    — Vyom Agarwal, President

Market Share

  • Backhoe Loader Segment Market Share Market Share · Medium term · Medium confidence 5% to 6%

    From 2.5% today

    So, currently our market share stands close to 2.5% odd which we would like to stabilize and increase gradually towards 5% to 6%. And then finally, we would like to take it to double digits from there on.

    — Vyom Agarwal, President

  • Heavy Crane Segment Market Share Market Share · 3-4 years · Medium confidence 50%

    From 3% to 4% today

    Majority has been dominated by Chinese players. Nearly 97%-98% has been dominated by Chinese players. We are selling 3%-4%. And going forward, what we feel that in the medium to long term, I think the 50% of the market should come to us in the coming 3-4 years' time.

    — Rajan Luthra, CFO

Capacity

  • Production Capacity Revenue Potential Capacity · High confidence ₹5,000 crore plus
    because now we are sitting at a production capacity which can give us a revenue of almost Rs. 5,000 crore plus.

    — Rajan Luthra, CFO

What to watch in Q3 FY26

Rough Terrain Forklift Defense Order Execution

Q4 FY26
Current Delayed to Q4 FY26 due to pending NOC
Target Commencement of execution

Why it matters

This is a significant order (₹420 crores) whose execution will materially impact revenue recognition.

It should have been there in Q3, but unfortunately, I think it will get pushed over to Q4.

Risks & concerns

  • Chinese Dumping in Heavy Cranes Segment

    high

    Chinese players selling heavy cranes below cost, dominating 97-98% of the market, but anti-dumping duties are expected to mitigate this.

    Management acknowledged

  • Soft Construction Equipment Industry

    medium

    Industry impacted by new emission norms and temporary moderation in infrastructure development due to extended monsoons.

    Management acknowledged

  • Aggressive Pricing from Overseas Players

    medium

    Historically, aggressive pricing and supply from overseas players created market distortions and discouraged local manufacturing investments.

    Management acknowledged

  • Geo-political Issues delaying Ghana Project

    medium

    Ghana project on back burner due to geo issues, company unwilling to proceed without advance payments/LCs.

    Management acknowledged

  • Regulatory Delays for Defense Order Execution

    medium

    Rough terrain forklift order delayed to Q4 FY26 due to pending NOC from Ministry of Defense regarding emission norms.

    Management acknowledged

Q&A highlights

8 direct
FY26 Growth Outlook given tough comparables Direct
As I have already mentioned in my address, the demand outlook has started to improve and this year has exactly panned out as anticipated by us. So, we anticipated a modest beginning to the year, which happened with a modest decline in Q1, which was followed by a stabilizing performance in Q2. And we would like to view Q2 as the first sign of recovery, wherein the rate of decline has clearly moderated.

Clarifies management's confidence in recovery and reiterates FY26 growth expectations despite a soft H1 and high base.

Asked by Rashmika Rao

Backhoe Loader Segment Performance and Market Share Targets Direct
So, currently our market share stands close to 2.5% odd which we would like to stabilize and increase gradually towards 5% to 6%. And then finally, we would like to take it to double digits from there on.

Provides specific current sales units (168) and clear market share growth targets for a key product segment.

Asked by Suraj Malu

Capital Allocation Strategy (Capex, Dividend, Buyback) Direct
we are going for an expansion mode and we have acquired two pieces of parcel of land last year and one big chunk of land of nearly 86 acres of land will be acquired probably in this year, which will require about nearly Rs. 200 crores of money to acquire the land. But that will, and going forward as discussed in the previous concall also, the revenue from the present facility, it touches around 4,400 plus and will start expanding into the parcel of land what we do. So, going forward is a dividend, we are already paying a dividend and going forward also we can expect increase in dividend rate and balance is still, and third activity what we are going forward, going on is the improving in the robotics and mechanization and quality improvement projects for keeping the Company way ahead for the technological improvements and for the export market.

Outlines specific capex plans (₹200 crores for land), commitment to increasing dividends, and strategic investments in technology and exports.

Asked by Yash

Ghana Project and Defense Order Execution Delays Direct
Ghana project has been kept on a back burner because of certain geo issues which are going on between the governments at the macro level. We are all in readiness for execution of that project. But given the territory, I think we would not like to move ahead without having advance payments or confirmed LCs in our hands. So, we are just waiting for that and the situation has been at a similar level for the last, I believe, 18 - 24 odd months. So, we continue to wait and we do not want to risk our financial assets without having confirmed payments in our hands. ... As far as the rough terrain forklift order goes, which I got in Q4 last year, which is the single biggest order in the history of the Company around Rs. 420 odd crores. Now, that order, when the machine was tested and the order was placed, again, there is an emission norm change between the testing and the ordering and finally, the execution of the order. So, we are waiting for a small NOC which has to come from the Ministry of Defense that we can supply them a particular emission or rather BS-IV emission norms forklift. As soon as we get that NOC, the execution from our end will begin. It should have been there in Q3, but unfortunately, I think it will get pushed over to Q4.

Reveals delays in key projects (Ghana, defense forklift order) due to external factors (geo-issues, regulatory NOC), impacting near-term revenue recognition.

Asked by Deepak Ajmera

Price Increase due to Emission Norms Direct
Below 50 horsepower engines, they have migrated from a BS-III era to CEV 5. There the price increase has been on a higher side, let us say northwards of 12%. Depending upon models, it can be 12%, it can be 13%-14% also depending upon models and the specifications of the machine. However, when you talk about migration from CEV 4 to CEV 5, there the price difference has been a little less. So, on a blended basis, you can say that it would be close to 8-9% price differential which has been come on account of change of the technology.

Provides specific quantification of price increases (12-14% for some, 8-9% blended) due to emission norm transitions, explaining margin sustenance.

Asked by Deepak Ajmera

Inventory Increase in Cash Flow Statement Direct
No, not really. Actually, these are September end numbers. And if we see this time, the festive season was slightly early. So, we had taken a decision that we will be keeping some inventories before the festive season. So, there was certain inventory into the system, which I'm sure will normalize by the end of this quarter.

Explains the reason for the significant inventory build-up as a strategic move for the festive season, with an expectation of normalization.

Asked by Nihal Shah

Impact of Anti-Dumping Duties on Heavy Cranes Direct
So, basically the anti-dumping notification has already come in. Government has already notified, but still to be implemented. As per that notification, one of the Chinese players, Zoomlion, will be having 26% and balance, all the Chinese companies will have around 52% anti-dumping duty. So, that is the as of now and this notification has to be notified by Ministry of Finance, implemented and which normally takes about 90 days for implementation, which should probably happen in the last week of around between 15th to 30th of December, if they go for a last date or even earlier if possible.

Details the specific anti-dumping duty percentages (26% and 52%) and the expected timeline for implementation (Dec 2025), highlighting its significant positive impact on ACE's heavy crane business.

Asked by Suraj Malu

Long-term Revenue Guidance Direct
Our medium to long term guidance remains intact, which we had projected that probably by the end of FY'27, we would be around Rs. 4,000 crores to Rs. 4,400 crores and from FY'29 to FY'30, we should be somewhere at around Rs. 6,000 crores to Rs. 6,200 crores.

Reaffirms ambitious long-term revenue targets for FY27 and FY29-FY30, indicating strong confidence in future growth trajectory.

Asked by Deepak Ajmera

3 min read 7 chapters

Detailed narrative

Q2 & H1 FY26 Performance Overview

Action Construction Equipment Limited reported a flat total income of ₹782.18 crores in Q2 FY26 compared to the previous year, though it saw an 11.27% sequential increase. EBITDA grew 6.72% YoY to ₹151.75 crores, with margins expanding by 137 basis points to 19.40%. PAT increased to ₹103.87 crores, with a 131 basis point margin expansion to 13.28%. For the first half of FY26, total income was ₹1,485 crores, a 4% YoY decline, but EBITDA grew 10% to ₹294.30 crores and PAT grew 12.7% to ₹200.70 crores, demonstrating sustained profit growth despite headwinds.

Market Outlook and Demand Environment

The company acknowledged a soft start to FY26 due to new emission norms and temporary moderation in infrastructure development from extended monsoons. However, Q2 showed a stabilizing performance, indicating that the most challenging phase is now behind them. Management expects recovery driven by a resilient domestic macro environment, strong policy continuity, government emphasis on infrastructure, and softening interest rates. They anticipate flattish to single-digit revenue growth for FY26 and modest EBITDA margin expansion.

Segmental Performance and Market Share

The cranes, material handling, and construction equipment segment contributed 94% of total revenue, generating ₹694 crores, which was flat YoY. Sales units in this segment declined by 18% YoY to 2,348 units. The Agri segment contributed 7% of revenue, totaling ₹47.13 crores. In the backhoe loader segment, Q2 sales were 168 units, and the company aims to increase its market share from the current 2.5% to 5-6% and eventually to double digits.

Policy Support and Anti-Dumping Duties

Government policies promoting fair trade and manufacturing self-reliance are seen as highly positive. A significant structural tailwind is the recommendation to impose anti-dumping duties on certain crawler and truck cranes from China. These duties, ranging from 26% to 52%, are expected to be implemented by December 2025, which will protect domestic players from aggressive pricing and enable ACE to significantly increase its market share in the heavy crane segment from the current 3-4% to 50% in 3-4 years.

Capital Allocation and Expansion Plans

ACE is pursuing an expansion strategy, planning to acquire approximately 86 acres of land this year for about ₹200 crores to support future growth. The company's current production capacity can support revenues of over ₹5,000 crores. Management also indicated a commitment to increasing dividend rates and investing in robotics, mechanization, and quality improvement projects to enhance technological capabilities and competitiveness in export markets.

Emission Norms and Pricing Impact

The transition to new emission norms significantly impacted pricing. For engines below 50 horsepower migrating from BS-III to CEV 5, price increases were 12-14%. For CEV 4 to CEV 5 migration, the price difference was less. On a blended basis, the price differential due to technology changes was approximately 8-9%. The real impact of these price increases was felt in Q2, as previous quarters saw players clearing old inventory, contributing to sustained margin profiles.

Export and Defense Business Update

Export revenue currently accounts for 4-5% of total revenue, with a medium to long-term target of 8-9%. Defense revenue is targeted at 7-8%. A significant rough terrain forklift order worth ₹420 crores for defense is delayed to Q4 FY26 due to a pending NOC regarding emission norms. The Ghana project remains on hold due to geo-political issues, with ACE awaiting advance payments or confirmed Letters of Credit before proceeding.

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