Action Construction Equipment Limited — Q4 FY25 earnings call

Call held 27 May 2025

Management summary

Action Construction Equipment Limited delivered a robust performance for FY25, achieving its highest-ever sales and profits with a total income of INR 3,420 crores, marking a 14.47% YoY growth. EBITDA surged 25% to INR 599 crores, and PAT increased 23% to INR 404 crores, driven by significant margin expansion. The company secured a landmark INR 420 crore order from the Indian armed forces and declared a final dividend of INR 2 per share. While FY26 is anticipated to start subdued due to external factors and new emission norms, ACE targets 14-15% top-line growth and stable margins, focusing on strategic capital allocation and product modernization.

Highlights

  • FY25 Total Income: INR 3,420 crores, up 14.47% YoY.

  • FY25 EBITDA: INR 599 crores, up 25% YoY.

  • FY25 PAT: INR 404 crores, up 23% YoY.

  • FY25 EBITDA margin: 17.52%, expanded 148 bps YoY.

  • Q4 FY25 Total Income: INR 967.55 crores, up 12.98% YoY.

  • Q4 FY25 EBITDA margin: 17.7%.

  • Final dividend of INR 2 per share (100%) declared for FY25.

  • Secured single largest order of INR 420 crores for 1,121 rough terrain forklifts from Indian armed forces.

Concerns

  • Chinese dumping in crane segments

Key financials

2 periods

Q4 FY25

  • Total Income
    ₹967.55 Cr
    YoY +13% QoQ +7.2%
  • EBITDA
    ₹171.26 Cr
  • EBITDA Margin
    17.7%
  • PBT
    ₹160 Cr
  • PBT Margin
    16.6%
  • PAT
    ₹118 Cr
  • PAT Margin
    12.2%

FY25

  • Total Income
    ₹3,420 Cr
    YoY +14.5%
  • EBITDA
    ₹599 Cr
    YoY +25%
  • EBITDA Margin
    17.5%
    YoY +1.5%
  • PBT
    ₹543 Cr
    YoY +25%
  • PBT Margin
    15.9%
  • PAT
    ₹404 Cr
    YoY +23%

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

Share of FY25 Revenue
₹3,320 Cr Total
  • Cranes, Metal Handling, Construction Equipment ₹3,090 Cr 93.1%
  • Agri Division ₹230 Cr 6.9%

Order book

high confidence

Inflow this quarter

₹420 Cr

Execution

3-year timeline for INR 420 crore defense order

Composition

  • Indian Armed Forces (client type) ₹420 Cr

Pipeline

deal pipeline tcv

Immediate annual opportunity from Kato JV

The company secured its single largest order from the Indian armed forces for INR 420 crores, to be executed over a 3-year timeline. The Kato JV presents an immediate annual opportunity of INR 300-400 crores.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹300 Cr
    • Modernization and upgradation of existing facilities ₹100 Cr
    • New plant or capacity expansion for specific crane type ₹100 Cr
    • Payment for different lines under procurement ₹150 Cr
    • Payout for new land acquisitions ₹150 Cr
    In the current year, FY '26, we are going to be doing a capex of somewhere between INR300 crores to INR350 crores. Out of this, INR100 crores, we have earmarked for modernization and upgradation of our existing facilities... And another INR100 crores is whether to be spend within this year has been earmarked for we have started setting up a new plant or expanding our capacity in a particular type of a crane. So the total cost is about INR250 crores for that. And apart from that, an additional INR150 crores will be spent in the current year. On account of the payment for different lines, which are under the procurement process. ...There will be a INR150 crore payout for lands which we are acquiring for our future expansion plans...
  • Debt Debt disclosed
    We continue to be long-term debt free with sufficient availability of liquidity for future growth.
  • Dividend ₹2/share (final)
    The Board of Directors has recommended a final dividend of 100%, that is INR2 per share for the year ended 31st March 2025.
  • M&A Kato (Japanese player) Joint venture · Pending regulatory

    To expand into bigger crane segments (200-400 tons) not currently in ACE's range and leverage global sourcing hub potential.

    Expected to be functional by Q3 FY26, with an immediate annual opportunity of INR 300-400 crores. ACE's revenue contribution for FY26 is estimated at INR 100 crores plus/minus, contributing to the bottom line as a 50-50 JV.

    My question is on the JV with the Japanese player -- do you have any updates on that? How is it progressing? Do you expect something to come by third quarter of FY '26 that you're expecting initially? Or are there any kind of revised timeline? ... I think we are very much on target to make it functional by Q3 of this year. ... The opportunity size total is close to about INR1,000 crores ... And the immediate opportunity will be INR300 crores to INR400 crores on an annual basis. ... I'm talking about top line. I'm talking of the top line and because it is a 50-50 JV. So Luthra, if I'm not wrong, we will not be able to consolidate the top line only the bottom line, right? ... That's right. ... So from the first year itself, are we expecting it to be a similar kind of margin that we are doing currently? ... Yes, I think so.
  • Liquidity Liquidity disclosed The company is long-term debt-free with sufficient liquidity for future growth.
    We continue to be long-term debt free with sufficient availability of liquidity for future growth.

Guidance & targets

Revenue

  • Top line growth Revenue · FY26 · Medium confidence 14-15%
    For the full fiscal year, we are targeting top line growth of approximately 14% to 15%, while maintaining a stable margin profile.

    — Sorab Agarwal

  • Doubling of revenue Revenue · FY27 · High confidence Achieved

    Previously FY26 → Achieved

    But I think it appears that we might just fall a little short. It is the truth. So there's no denying the truth. But yes, definitely, if we look at FY '22 to FY '25, we have doubled ourselves from INR1,600 crores that we've done in excess of double. So I'm sure, if not the third year definitely somewhere in between the third and the fourth year we'll be able to do that.

    — Sorab Agarwal

  • Kato JV revenue Revenue · FY26 · Medium confidence INR 100 crores plus/minus
    I think for this year, the revenue should be to the tune of INR100 crores plus/minus.

    — Sorab Agarwal

Margin

  • Stable margin profile Margin · FY26 · Medium confidence 17-18%
    But as a guidance, I would say it's between 17% to 18%.

    — Sorab Agarwal

Revenue Composition

  • Defense contribution to revenue Revenue Composition · FY26 · Medium confidence ~4%
    Hopefully, defense alone within this year should be close to 4% or a little over 4% for us in FY '26.

    — Sorab Agarwal

  • Defense contribution to revenue Revenue Composition · FY27 · Medium confidence 5% or beyond
    And definitely, in FY '27, it will be 5% or beyond because this particular order that we have got about INR420 crores.

    — Sorab Agarwal

  • Exports + Defense contribution to revenue Revenue Composition · FY26 · Medium confidence 9-10%
    So both put together, contribution from defense and exports in the current year will be 9% to 10%.

    — Sorab Agarwal

  • Exports + Defense contribution to revenue Revenue Composition · Medium term · Medium confidence 10-15%
    And yes, our medium to medium-term target is to take it to between 10% to 15%.

    — Sorab Agarwal

Market Share

  • New Generation Cranes market share increase Market Share · FY26 · Medium confidence 3-4%
    But I'm sure within this year, we should be able to increase at least 3% 4% in the new generation trade, which are lemon green in color now.

    — Sorab Agarwal

Capex

  • Total Capex Capex · FY26 · High confidence INR 300-350 crores
    In the current year, FY '26, we are going to be doing a capex of somewhere between INR300 crores to INR350 crores.

    — Sorab Agarwal

What to watch in Q1 FY26

Anti-Dumping Duty (ADD) Implementation

Q2 FY26
Current Investigation ongoing, final order expected June/July, implementation by Q2 FY26
Target ADD implemented, impact on market share and revenue from truck/crawler cranes

Why it matters

Could significantly level the playing field against Chinese imports and open up a large market segment for ACE.

So hopefully, we should have a final order within June or later by July. And I think as per their own internally set targets and guidelines, June should be June is also the deadline for the department as well. So hopefully, we should see the judgment on this anti-dumping within June. But then we are definitely the finance ministry takes another 2, 3 months to put it in effect. So probably in quarter 2, it should be put in place.

Risks & concerns

  • Chinese dumping in crane segments

    high

    Historical issue leading to significant price competition and exit of domestic players; anti-dumping duty investigation is ongoing to address this.

    Management acknowledged

  • Subdued start to FY26 due to external factors

    medium

    Anticipated due to geopolitical issues, tariff-related conflicts, and price implications from CEV 5/BS V emission norms.

    Management acknowledged

  • External risks (trade barriers, supply chain, geopolitical tensions)

    medium

    These factors could impact growth trajectory despite India's domestic resilience.

    Management acknowledged

  • Slowdown in inquiries and orders in Q1 FY26

    medium

    A slight slowness has been observed in the last 20 days, potentially linked to recent external events and price adjustments.

    Management acknowledged

  • Rental segment's adjustment to price increases

    medium

    12-13% price hikes due to new emission norms are time-consuming for rental companies to pass on, impacting sales in the near term.

    Management acknowledged

  • Underperformance of Agricultural Equipment division

    medium

    The division consistently delivers low profits (3-4% margin) despite ongoing efforts, posing a challenge to overall profitability.

    Management acknowledged

Q&A highlights

7 direct
Guidance inconsistency regarding doubling target Direct
But I think it appears that we might just fall a little short. It is the truth. So there's no denying the truth. But yes, definitely, if we look at FY '22 to FY '25, we have doubled ourselves from INR1,600 crores that we've done in excess of double. So I'm sure, if not the third year definitely somewhere in between the third and the fourth year we'll be able to do that.

Analyst challenged management on a previously stated ambitious target, leading to a revised timeline for achieving the doubling of revenue.

Asked by Garvit Goyal

Impact of BS V emission norms on sales and pricing Direct
We are talking of the emission now, BS III, BS V, right? So I think it is a temporary phenomenon because what has happened, some prebuying has happened in quarter 3 and I would say, December and especially in quarter 4. And apart from that, let's say about 60% of our product pricing has increased by about 12% to 13%.

Revealed that significant price increases due to new norms are causing a temporary slowdown, especially for rental companies, impacting Q1 FY26 sales.

Asked by Garvit Goyal

Update on Anti-Dumping Duty (ADD) investigation against Chinese imports Direct
So hopefully, we should have a final order within June or later by July. And I think as per their own internally set targets and guidelines, June should be June is also the deadline for the department as well. So hopefully, we should see the judgment on this anti-dumping within June. But then we are definitely the finance ministry takes another 2, 3 months to put it in effect. So probably in quarter 2, it should be put in place.

Provided a clear timeline for the ADD resolution, which is critical for leveling the playing field against Chinese competitors in the truck and crawler crane segments.

Asked by Divy Agrawal

Slowdown in crane inquiries and orders in Q1 FY26 Direct
See on the contrary, the scenario was a little subdued like I mentioned. So there is really no pickup or improvement in inquiries or orders rather so far in this quarter there has been sluggishness in the inquiries as well as orders.

Management confirmed a recent slowdown in demand, attributing it to external events and the impact of price increases, providing a cautious near-term outlook.

Asked by Divy Agrawal

Impairment losses on financial assets in the P&L Direct
Yes. Actually, this pertains to the accounting standard, which requires for providing for expected credit losses. So we are a very stringent policies regarding making provisions for the, if any, of the receivables become more than 6 months old, so keeping in that into considerations, we have been very, very stringent and providing.

Clarified an accounting item, indicating stringent provisioning policies for receivables and mentioning a specific instance related to an old government export order.

Asked by Rahul Ranade

Turnaround of the Agricultural Equipment division Partial
See, obviously, they are delivering profits, but obviously not in tune with the company, they are just at 3%, 4% level. And we are working very hard in this direction. We have been doing that, but somehow the results have not been forthcoming. So we are at it as of now. That is the best I can tell you.

Management acknowledged the Agri division's persistent low profitability (3-4% margin) despite efforts, indicating an ongoing challenge.

Asked by Rashmika Rao

Status and revenue contribution of the Kato Joint Venture Direct
I think we are very much on target to make it functional by Q3 of this year. ... I think for this year, the revenue should be to the tune of INR100 crores plus/minus.

Provided an update on the JV's operational timeline and its expected revenue contribution for FY26, clarifying its impact on the company's financials.

Asked by Richa

Comparison of ACE's cranes with Chinese/German alternatives Direct
We are an Indian manufacturer trying to sell in India, these machines. And obviously, with respect to the European or American our pricing is much better. But unfortunately, the Chinese have been dumping last 5, 6 years, like madness.

Highlighted ACE's competitive advantage in pricing against European/American products, while also pointing out the significant challenge posed by Chinese dumping.

Asked by Divy Agrawal

3 min read 7 chapters

Detailed narrative

Robust FY25 Performance and Margin Expansion

Action Construction Equipment Limited achieved its highest-ever sales and profits in FY25, with standalone total income reaching INR 3,420 crores, representing a 14.47% YoY growth. EBITDA surged 25% to INR 599 crores, and PAT increased 23% to INR 404 crores. The company's EBITDA margin expanded by 148 basis points to 17.52% for the full year, driven by better realization, a favorable product mix, and efficient cost control. For Q4 FY25, total income was INR 967.55 crores, a 12.98% YoY increase, with an EBITDA margin of 17.7%.

Landmark Defense Order and Strategic Focus on Indigenous Manufacturing

The company secured its single largest order to date, valued at INR 420 crores, for 1,121 rough terrain forklifts and telehandlers from the Indian armed forces. This order is expected to contribute INR 80-90 crores in FY26, with the balance over a 3-year timeline. Management projects defense revenue to reach approximately 4% in FY26 and exceed 5% in FY27, aligning with the 'Atmanirbhar Bharat' initiative. Combined with exports, the defense and export contribution is targeted at 9-10% in FY26 and 10-15% in the medium term.

FY26 Outlook and Impact of New Emission Norms

ACE anticipates a subdued start to FY26 due to geopolitical issues, tariff-related conflicts, and the implementation of CEV 5/BS V emission norms. These new norms have led to significant price increases of 12-13% for 60% of the company's products, causing a temporary slowdown in inquiries and orders, particularly as rental companies adjust their pricing. Despite these challenges, the company targets a top-line growth of 14-15% for FY26 and aims to maintain a stable margin profile of 17-18%, with projections to be revisited by the end of Q2 FY26.

Capacity Expansion and Capital Expenditure Plans

The company has completed its planned capital expenditure, expanding crane capacity to 13,200 units, metal handling to 2,700 units, and construction equipment to 1,800 units, with a blended utilization of approximately 70%. For FY26, ACE plans a capex of INR 300-350 crores. This includes INR 100 crores for modernization and upgradation of existing facilities, and another INR 100 crores towards a new plant or capacity expansion for a specific crane type. An additional INR 150 crores is allocated for different lines under procurement, alongside a INR 150 crore payout for new land acquisitions.

Anti-Dumping Duty Investigation and Market Potential

The anti-dumping duty (ADD) investigation against Chinese imports of truck and crawler cranes is progressing, with a final order expected by June/July and implementation by the Finance Ministry in Q2 FY26. ACE estimates a potential duty of approximately 40%, which could significantly address the historical issue of Chinese dumping that has impacted the Indian crane industry. This market segment, with an addressable size of INR 1,500-1,600 crores, saw ACE contribute INR 60-70 crores in FY25, and the company has a capacity to produce 400 such cranes.

Kato Joint Venture and Electric Cranes Commercialization

The joint venture with a Japanese player (Kato) is on target to become functional by Q3 FY26, presenting an immediate annual opportunity of INR 300-400 crores. ACE expects to recognize approximately INR 100 crores in revenue from this 50-50 JV in FY26, contributing to the bottom line. Additionally, the company is awaiting regulatory approvals for the commercial sale of its electric cranes, expected within the next month, marking a step towards eco-friendly product offerings and market diversification.

Segmental Performance and Agricultural Division Challenges

The core Cranes, Metal Handling, and Construction segment recorded over INR 3,090 crores in FY25, growing 15.5% YoY, with profits increasing 25.36% to INR 564 crores and a margin of 18.26%. In contrast, the Agri division generated around INR 230 crores with a lower margin of 3.73%. Management acknowledged the Agri division's consistent underperformance despite ongoing efforts to improve profitability. The company maintains a diversified revenue base, with manufacturing/logistics contributing ~45%, construction/infrastructure ~35%, real estate 12-13%, and agriculture 7-8%.

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