Action Construction Equipment Limited — Q4 FY26 earnings call

Call held 21 May 2026

Management summary

Action Construction Equipment reported a resilient Q4 and FY26, with expanded margins and a debt-free balance sheet despite geopolitical headwinds and raw material volatility. The company achieved a 5.4% PAT growth for FY26 and saw sequential revenue growth in Q4. A significant 50-50 JV with KATO Works Company, Japan, was finalized to strengthen its heavy crane segment and export capabilities, while also navigating challenges from non-implemented antidumping duties and rising input costs.

Highlights

  • FY26 EBITDA margin expanded 81 bps to 18.33% from 17.52% last year.

  • FY26 PAT increased 5.4% to INR 425 crores from INR 404 crores.

  • Q4 FY26 Total Income grew 15% sequentially to INR 1,021 crores.

  • Debt-free with sufficient liquidity and INR 700-750 crores in liquid non-current investments.

  • Finalized 50-50 JV with KATO Works Company, Japan, for heavy crane businesses, targeting INR 300 crores revenue in 3-4 years.

Concerns

  • Antidumping duties on Chinese imports (25-52%) ordered by DGTR were not notified by the Finance Ministry, impacting fair competition.

  • Evolving geopolitical environment (West Asia crisis) led to supply chain disruptions, hyperinflation, and input cost volatility.

  • Other income was subdued in Q4 due to market volatility, though partially recovered in April.

Key financials

2 periods

Q4 FY26

  • Total Income
    ₹1,021 Cr
    YoY +5.6% QoQ +15%
  • EBITDA
    ₹163.7 Cr
  • PAT
    ₹108 Cr

FY26

  • Total Income
    ₹3,395 Cr
  • EBITDA Margin
    18.3%
    YoY +0.81%
  • PAT
    ₹425 Cr
    YoY +5.4%

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

  • Cranes, Metal Handling & Construction Equipment
    ₹2,946 Cr Income (FY26)18.6% Margin (FY26)₹548 Cr Profit (FY26)
  • Agri Division
    ₹251 Cr Revenue (FY26)9% Growth (FY26)1% Margins (FY26)

Order book

medium confidence

Composition

Mix 2 client types
  • Defense (FY26 contribution) 3%
  • Defense (FY27 target contribution) 5%

Share of order book by client type· partial disclosure (8% of the book)

Cancellations & deferrals

  • deferred: Exports worth INR 40-50 crores stuck due to Middle East war.
Demand conditions remained stable, with momentum returning in Q4 FY26, and a positive long-term outlook for the construction equipment industry.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹200 Cr
    • Completion of land parcel for future expansion ₹130 Cr
    • New plant for defense machines and new products ₹40 Cr
    • Maintenance capex ₹20 Cr
    So in the current year, I think we will be spending close to around approximately INR130 crores, INR135 crores to complete the land parcel, which we have already contracted for about 1, 1.5 years back. So that will happen for our land for future expansion. Apart from that, we are setting up a new plant within our existing complex, especially for the defense machines, defense equipment and also for some new products, which we envisage that we should bring in, in the next 1 or 2 years. So that will be around INR40 crores to INR50 crores. So let's say and some maintenance capex, INR20 crores, INR25 crores put to it. So I think including land, our capex for this year should all be put together should be close to INR200 crores.
  • Debt Debt disclosed
    We continue to be debt-free with sufficient availability of liquidity for the future.
  • 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 2026.
  • M&A KATO Works Company, Japan Joint venture · Signed

    Bringing together ACE's strong manufacturing and distribution capabilities with KATO'S globally recognized leadership in heavy crane technology. The JV will serve as a dedicated platform for truck cranes, crawler cranes and rough crane businesses, strengthening our presence in the heavy crane segment. This partnership positions ACE to accelerate technology upgradation, deepen localization, expand -- export opportunities and participate meaningfully in India's growing infrastructure and industrial capex cycle.

    Expected revenue of upwards of INR300 crores from this joint venture in the next three to four years (without antidumping duties), potentially INR700-800 crores if duties are implemented. ACE will also export material components to KATO Japan.

    Further, we are pleased to announce the finalization of a 50-50 joint venture between Action Construction Equipment Limited and KATO Works Company, Japan, bringing together ACE's strong manufacturing and distribution capabilities with KATO'S globally recognized leadership in heavy crane technology. The JV will serve as a dedicated platform for truck cranes, crawler cranes and rough crane businesses, strengthening our presence in the heavy crane segment. This partnership positions ACE to accelerate technology upgradation, deepen localization, expand -- export opportunities and participate meaningfully in India's growing infrastructure and industrial capex cycle. There are I would like to put it in two scenarios. Currently, when -- with the antidumping duties have not been implemented. So in the current scenario, I think in the next three to four years, we should be looking at a revenue of upwards of INR300 crores from this joint venture. It could be slightly more, it could be slightly less. But yes, it's antidumping duties and even in yesterday's newspaper, the main headlines in economic times was we should immediately curb nonessential imports. So these machines are nonessential imports because if these machines can be made in India, why should India be importing them. So if the government wakes up and the Finance Ministry puts antidumping duties. In that scenario, we could have looked at even upwards of INR700 crores, INR800 crores. But yes, currently, I would say it is close to INR300 crores. And another aspect of this JV, which I would like to bring forth is that as one of the side agreements, ACE will also be exporting a lot of material components and whatever required by KATO Japan because they don't only make cranes, they also make some other construction equipment like excavators, etc. So they would like to outsource these components and things and materials and commodities from India, wherein ACE directly or exclusively would be exporting this to KATO, Japan. So that will also add to that will be an additional revenue stream going forward.
  • Liquidity Liquidity disclosed The company has INR 700-750 crores in non-current investments (liquid bonds) from surplus cash.
    So basically, noncurrent the audit -- the definition of noncurrent starts, anything maturing after one year is considered as a noncurrent. So we as rightly said, we have been investing in surplus in the some bonds, etc., which the maturity lies after one year, but most of my investment will be having a tenure of between 1 to 2 -- 2 to 3 years only. So that has been classified as noncurrent only. But these are basically also classified as noncurrent. But because most of them are secured and listed and bonds, etc., the reality it can be sold in the market and can be converted into cash in a very short notice if required for any other use by the company. About INR700 crores of INR750 crores.

Guidance & targets

Revenue

  • Total Revenue Revenue · FY29 or FY30 · Medium confidence INR 6,000-6,200 crores
    Yes. INR6,000 crores to INR6,200 crores by FY '29 and worst case by FY '30, if I'm not wrong, that should have been our guidance.

    — Sorab Agarwal

  • JV Revenue Revenue · next 3-4 years · Medium confidence upwards of INR300 crores
    So in the current scenario, I think in the next three to four years, we should be looking at a revenue of upwards of INR300 crores from this joint venture.

    — Sorab Agarwal

  • JV Revenue (with antidumping duties) Revenue · next 3-4 years · Low confidence upwards of INR700-800 crores
    In that scenario, we could have looked at even upwards of INR700 crores, INR800 crores.

    — Sorab Agarwal

  • Defense Contribution Revenue · this year (FY27) · High confidence 5-6% (INR 200-220 crores)

    From 3% today

    See, last year, there was a contribution of close to around 3% from the port defense business in our overall revenue share. And this year, we feel that it will go up to anything between 5%, 6%, maybe slightly more, but yes, 5%, 6%. So that should be upwards of INR200 crores, INR200 crores, INR220 crores, whatever it is within this year.

    — Sorab Agarwal

  • Export Contribution Revenue · this year (FY27) · High confidence 6-7%
    So within this year itself, hopefully, we should be doing close to about 5% to 6% revenue contribution from defense and about 6%, 7% from export. So that will take us anywhere between 11% to 13% plus

    — Sorab Agarwal

Margin

  • EBITDA Margin (ex-other income) Margin · ongoing · High confidence 15-16%
    See, we are hopeful that we should be able to sustain our margin profile, EBITDA without other income in the range of around 15% to 16%.

    — Sorab Agarwal

Price Increase

  • Price Increase (June 1st) Price Increase · June 1st onwards · High confidence 5%
    And from 1st of June onwards, we are again pushing in a price increase of another 5%.

    — Sorab Agarwal

  • Total Price Increase (eventual) Price Increase · eventually · Medium confidence 12%
    So we will have to go to at least 12% price increase eventually. It could be slightly more than that.

    — Sorab Agarwal

ROCE

  • ROCE ROCE · ongoing · High confidence above 30-33%

    From 32% today

    And it is not our endeavor, our intention to so that the ROCE goes below 30%, 33%.

    — Sorab Agarwal

Capex

  • New Tower Crane Factory Capex Capex · future (need-based) · Medium confidence INR 400 crores
    And we also intend to make a new tower crane factory where we envisage a capex of upwards of INR400 crores.

    — Sorab Agarwal

What to watch in Q1 FY27

Annual Guidance Release

Mid-end of Q2 FY27
Current Refrained from giving annual guidance
Target Specific annual guidance (revenue, profit, etc.)

Why it matters

Provides clarity on management's outlook for the full fiscal year and key performance indicators.

But to put a number to it at this juncture would not be prudent. So that's why we would like to wait middle end of quarter 2 to put a number to it.

Risks & concerns

  • Geopolitical Environment & Commodity Prices

    high

    Escalation of West Asia crisis led to sharp rise in crude/commodity prices, supply disruptions, and continued rupee depreciation, impacting overall cost environment.

    Management acknowledged

  • Raw Material Price Volatility

    high

    Steel, a major input, remains volatile and at elevated levels, necessitating significant price increases (11-14% overall cost increase).

    Management acknowledged

  • Antidumping Duty Non-Implementation

    medium

    DGTR's antidumping duty order (25-52%) on Chinese manufacturers was not notified by the Finance Ministry, allowing Chinese imports to continue at potentially subsidized prices.

    Management acknowledged

  • Market Appetite for Price Increases

    medium

    Implementing multiple price increases (totaling 9-10% eventually) to offset cost inflation, which could test market acceptance and demand.

    Management acknowledged

Q&A highlights

7 direct
Antidumping duties on Chinese imports and local manufacturing Direct
So ideally within December, it should have been notified. So even we really do not know what is going to be the future fate of that antidumping order, wherein 25% to 52% duties were put on Chinese manufacturers. But unfortunately, that order has not been implemented by the Finance Ministry. ... one or two of the manufacturers out of the three main manufacturers or importers into India, Chinese company, they have started to -- because of the fear of antidumping duties coming in, they have started to at least assemble these machines in India, some of the models and also trying to design some of the components, which is definitely leading to a cost increase for them, which I understand very clearly because luckily, I had a discussion with one of them three, four months back. So their costs are going to go upside by 8% to 10%, which will make us more competitive

Clarifies the non-implementation of antidumping duties and its indirect positive impact on ACE due to rising Chinese competitor costs.

Asked by Mudit Bhandari

Non-current investments and liquidity Direct
So basically, noncurrent the audit -- the definition of noncurrent starts, anything maturing after one year is considered as a noncurrent. So we as rightly said, we have been investing in surplus in the some bonds, etc., which the maturity lies after one year, but most of my investment will be having a tenure of between 1 to 2 -- 2 to 3 years only. ... About INR700 crores of INR750 crores.

Explains the nature of significant non-current investments as liquid bonds, providing insight into the company's treasury management.

Asked by Vedanta Bhadani

Pricing strategy and raw material inflation Direct
101%. We've already increased our prices. I'll talk of the calendar year in January, we took a 1%, 1.5% general inflation price increase. And only on 1st of May, we've again increased our prices by close to about 4%, maybe a little more. And from 1st of June onwards, we are again pushing in a price increase of another 5%. This will bring the total to 9% to 10%. But I think looking at the overall cost increase, it could be anywhere between the range of 11% to 14%

Details the aggressive pricing actions taken and planned to counter significant raw material cost inflation, indicating potential impact on sales volumes and margins.

Asked by Nidhi Shah

KATO JV revenue and margin potential Direct
Currently, when -- with the antidumping duties have not been implemented. So in the current scenario, I think in the next three to four years, we should be looking at a revenue of upwards of INR300 crores from this joint venture. It could be slightly more, it could be slightly less. But yes, it's antidumping duties and even in yesterday's newspaper, the main headlines in economic times was we should immediately curb nonessential imports. ... And another aspect of this JV, which I would like to bring forth is that as one of the side agreements, ACE will also be exporting a lot of material components and whatever required by KATO Japan because they don't only make cranes, they also make some other construction equipment like excavators, etc.

Provides specific revenue targets for the new JV and highlights an additional revenue stream from exporting components to KATO Japan.

Asked by Richa

ROCE maintenance with planned capex Direct
Yes, yes, definitely. That is one of also the main reasons why we will be doing it. So that is why we are trying to time it so that we don't invest money before the actual demand arises. So we will be timing it to perfection. And in any case, our investment to turnover ratio is close to about 8 to 10x. You can very well calculate that if we invest INR400 crores, so we are looking at, at least 8x revenue from there or at least the capacity. So that we will totally take care of ROCE and ROE before doing any capital expenditure.

Reassures investors about the company's commitment to maintaining ROCE despite capex plans, emphasizing strategic timing and investment efficiency.

Asked by Tushar Raghatate

Defense segment growth and order execution Direct
Yes, we have got the required approvals from there. And if everything goes well regarding that big order of rough terrain forklifts, actually a telehandler. So we should be starting execution in the next quarter. ... this year, we feel that it will go up to anything between 5%, 6%, maybe slightly more, but yes, 5%, 6%. So that should be upwards of INR200 crores, INR200 crores, INR220 crores, whatever it is within this year.

Confirms approvals for defense orders and outlines the timeline for execution, projecting significant revenue contribution from this segment.

Asked by Akash Metawala

Other expenses despite volume decline Direct
Yes, yes. Basically, if you look at the other expenses, most of the other expenses are not variable. They are out of fixed nature. So that has got no core direct relation with the revenue. That is the main reason for it.

Clarifies the nature of other expenses, explaining why they did not decline proportionally with volumes, which is important for understanding cost structure.

Asked by Jenil Barad

Market share increase in hyperinflationary environment Partial
See the question that you just asked is a discussion we have been having internally. Yes, in the current scenario of hyperinflation we'll have to increase our pricing and all. I really do not know how easy it would be to increase market share. It is going to be very difficult rather because first of all, we have to hang on to the customers and make sure that we are able to we get orders at a better pricing to compensate for the inflation effect. But in saying this, yes, because of a lot of good things and features we have added in our cranes in the last six, eight months, there should be some impact, and we should be able to increase our market share to some extent. But in the current scenario, very difficult to put a number to it again.

Highlights the challenge of gaining market share amidst hyperinflation, indicating a focus on customer retention and pricing over aggressive market share expansion.

Asked by Rajat G

4 min read 8 chapters

Detailed narrative

FY26 Financial Performance & Margin Expansion

Action Construction Equipment reported a resilient FY26 with total income of INR 3,395 crores, maintaining a flattish trend compared to the previous year. Despite this, the company achieved significant margin expansion, with EBITDA margin growing 81 basis points to 18.33% from 17.52% in FY25. PAT margin also increased 73 basis points to 12.53% from 11.8% in FY25, leading to a 5.4% growth in PAT to INR 425 crores from INR 404 crores in FY25, demonstrating strong operational discipline.

Q4 FY26 Growth & Segment Performance

The fourth quarter of FY26 saw strong sequential growth, with total income rising 15% to INR 1,021 crores, and a 5.58% year-on-year increase. The core cranes, metal handling, and construction equipment segment recorded an income of over INR 2,946 crores for FY26 with an 18.6% margin and a profit of INR 548 crores. The agri division also showed robust performance, growing 9% to achieve a revenue of around INR 251 crores for FY26, with margins at 1%.

Strategic Joint Venture with KATO Works Company

ACE finalized a 50-50 joint venture with Japan's KATO Works Company, targeting the heavy crane segment, including truck cranes, crawler cranes, and rough cranes. This partnership aims to leverage ACE's manufacturing capabilities with KATO's globally recognized technology for accelerated upgradation, localization, and export opportunities. Management projects INR 300 crores in revenue from this JV in 3-4 years under current conditions, with potential to reach INR 700-800 crores if antidumping duties are implemented. Additionally, ACE will export material components to KATO Japan for other construction equipment, creating an additional revenue stream.

Capital Expenditure & Capacity Expansion

The company successfully completed its planned capital expenditure for FY26, totaling approximately INR 200 crores. This includes INR 130-135 crores for the completion of a new land parcel for future expansion and INR 40-50 crores for a new plant within the existing complex, dedicated to defense machines and new products. An additional INR 20-25 crores was allocated for maintenance capex. ACE is also considering a significant INR 400 crores capex for a new, highly autonomous tower crane factory, which would take 12-18 months to set up, with the decision being need-based and dependent on market momentum.

Pricing Strategy Amidst Raw Material Inflation

Facing substantial raw material cost inflation, particularly steel (65% of total cost, up 20-22% since January), ACE has implemented multiple price increases. These include a 1-1.5% increase in January, approximately 4% on May 1st, and another 5% planned from June 1st, bringing the total to 9-10%. Management anticipates an eventual need for at least a 12% price increase to offset the 11-14% overall cost inflation. The company aims to sustain EBITDA margins in the 15-16% range through calibrated pricing actions, noting that competitors are also increasing their prices.

Geopolitical Headwinds & Antidumping Duty Challenges

The company acknowledged ongoing turbulence from the West Asia crisis, which has led to supply chain disruptions, demand-side hyperinflation, and input cost volatility. A significant concern is the non-implementation of the DGTR's antidumping duty order (25-52%) on Chinese imports by the Finance Ministry, which would otherwise significantly improve the competitive landscape. Despite this, Chinese competitors are seeing their costs rise by 8-10% due to local assembly efforts, making ACE more competitive in the domestic market.

Defense and Export Growth Drivers

ACE is strategically focusing on defense and exports as key growth drivers for future revenue. The defense segment, with INR 575 crores in pending orders, is expected to contribute 5-6% (INR 200-220 crores) to total revenue this year, a notable increase from ~3% last year. Exports are also projected to contribute 6-7% of revenue, bringing the combined share of defense and exports to 11-13% of total revenue. Execution for rough terrain forklifts for defense is expected to commence next quarter.

ROCE and Liquidity Management

The company maintains a debt-free status with sufficient liquidity, including INR 700-750 crores in liquid non-current investments (bonds with 1-3 year tenures). While ROCE has seen a slight dip from 40% to 32% over the last two years due to invested but idle cash, management is committed to utilizing capital productively to increase ROCE. They aim to maintain ROCE above 30-33% by strategically timing investments to demand and ensuring an 8-10x investment-to-turnover ratio for new capacities.

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