Ajax Engineering Limited — Q2 FY26 earnings call

Call held 14 Nov 2025

Management summary

Ajax Engineering reported strong Q2 and H1 FY26 revenue growth, driven by robust SLCM performance and successful CEV5 machine adoption. Despite external headwinds like extended monsoon and industry-wide cash flow delays, the company maintained a strong balance sheet and high ROIC. However, profitability was impacted by increased production costs for new CEV5 machines and aggressive pricing on a large Q2 contract, leading to a decline in EBITDA margins for both the quarter and half-year. Management anticipates an H2 demand upswing and plans for price adjustments to improve margins.

Highlights

  • Q2 FY26 Revenue grew 48% YoY to INR 445 crores, driven by strong SLCM performance.

  • H1 FY26 Revenue grew 18% YoY to INR 911 crores, reflecting robust overall growth.

  • SLCM volume and revenue grew 51% and 55% YoY respectively in Q2, supported by a large government contract.

  • Return on Invested Capital (ROIC) remained strong, upwards of 40% for H1 FY26.

  • Market share improved to 71% YTD, with recent months (last 2-3) closer to 80%.

Concerns

  • Q2 FY26 EBITDA margin declined 280 bps to 10.2% due to increased CEV5 production costs and aggressive pricing on a large contract.

  • H1 FY26 EBITDA declined 11% YoY to INR 107 crores, with margin contracting 380 bps to 11.7%.

  • FY26 EBITDA margin is expected to decline 150-200 bps compared to FY25.

  • Slowdown in infrastructure project execution, cash flow delays for customers, and deferment of incremental demand were observed.

  • Dealer inventory increased to 'month, month plus' compared to the typical 2-3 weeks.

Key financials

2 periods

Q2

  • Revenue
    ₹445 Cr
    YoY +48%
  • EBITDA
    ₹45 Cr
    YoY +16%
  • EBITDA Margin
    10.2%
    YoY -2.8%
  • PAT
    ₹39 Cr

H1

  • Revenue
    ₹911 Cr
    YoY +18%
  • EBITDA
    ₹107 Cr
    YoY -11%
  • EBITDA Margin
    11.7%
    YoY -3.8%

What they filed

Q1 FY27: revenue up 1.7%, net profit up 5.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue301 548 756 467 445 +48%434 −21%758 +0%475 +2%
EBITDA39 88 111 61 45 +15%44 −50%115 +4%59 −3%
Net profit34 68 91 53 39 +15%38 −44%95 +4%56 +6%
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

SegmentRevenue GrowthVolume Growth
SLCM (Q2)55%51%
Non-SLCM (Q2)12%8%
Spares and Services (Q2)26%—
SLCM (H1)21%20%
Non-SLCM (H1)16%18%
Spares and Services (H1)16%—

Order book

low confidence
Management noted a slowdown in infrastructure project execution and deferment of incremental demand due to external challenges.

Source: Inferred

Capital allocation

high confidence
  • Capex ₹10 Cr
    • Hosahalli (fourth plant) ₹10 Cr
    We expect another INR10 crores to 15 crores for the full year, for Hosahalli, which is the fourth plant.
  • Liquidity Cash ₹35 Cr Cash balance in investments was INR 710 crores, with liquid cash balance at INR 35-37 crores.
    Cash balance in investments, we have about INR 710 crores and our liquid cash balance was about INR 35 crores, INR 37 crores.

Guidance & targets

Profitability

  • FY26 EBITDA Margin Decline Profitability · FY26 · High confidence 150-200 bps
    on a full-year basis for FY '26, we see an EBITDA margin decline of around 150 to 200 basis points compared to FY '25.

    — Shubhabrata Saha

  • H2 EBITDA Margin Profitability · H2 FY26 · High confidence 14.5-15%
    For us to get to in the range of 13%, or thereabout on the EBITDA, we will have to do close to about 14.5% to 15% for the rest of the year.

    — Tuhin Basu

Demand

  • H2 Demand Momentum Demand · H2 FY26 · Medium confidence usual improvement
    With the monsoon season now behind us, we anticipate the usual improvement in demand momentum during the second half of the year.

    — Shubhabrata Saha

Pricing

  • Price Increase Pricing · Q3 FY26 · High confidence 4 percentage points
    Yes, we'll have to take about four percentage points price increase, and which we have maintained in the last conversation also that we will test this in Q3 onward. Not done till Q2 is all I can say.

    — Shubhabrata Saha

Product

  • Smaller SLCM Distribution Product · H2 FY26 · Medium confidence initial distribution
    we are preparing ground to make sure that we start initial distribution of some of these in the second half of the year.

    — Shubhabrata Saha

Volume

  • FY26 SLCM Volume Growth Volume · FY26 · Medium confidence early double-digit growth
    we are expecting an early double-digit growth, not, let's say, a long-term average of CAGR for this year on the volume.

    — Tuhin Basu

Revenue

  • FY26 Top Line Growth Revenue · FY26 · Medium confidence early double-digits
    we expect that it will be early double-digits on the top line versus the historical averages.

    — Tuhin Basu

Capacity

  • Hosahalli Plant Closure Capacity · H2 FY26 · High confidence H2 closure
    we are still targeting H2 closure.

    — Tuhin Basu

What to watch in Q3 FY26

H2 EBITDA Margin Improvement

Next quarter (Q3 FY26)
Current 10.2% (Q2), 11.7% (H1)
Target 14.5-15% for H2

Why it matters

Key to achieving full-year margin guidance and overall profitability.

For us to get to in the range of 13%, or thereabout on the EBITDA, we will have to do close to about 14.5% to 15% for the rest of the year.

Risks & concerns

  • Margin Pressure from CEV5 Costs & Pricing

    high

    Increased production costs for new CEV5 machines combined with a decision not to take price hikes in Q1/Q2 and aggressive pricing on a large Q2 contract led to significant margin compression. Management plans price adjustments in Q3.

    Management acknowledged

  • Slowdown in Infrastructure Execution & Cash Flow Delays

    medium

    External challenges, extended monsoon, and state government priorities (social sector spending) have led to cash flow delays for contractors and deferment of demand. Management expects H2 improvement.

    Management acknowledged

  • Competitor's Unsustainable Pricing Practices

    medium

    Competitors liquidated CEV4 inventory with aggressive pricing, impacting market dynamics and potentially AJAX's market share in Q1. Management chose not to follow these practices.

    Management acknowledged

  • Increased Dealer Inventory

    low

    Dealer inventory days increased to 'month, month plus' from typical 2-3 weeks. Management believes it's not directly correlated to retail offtake and doesn't impact sales.

    Management downplayed

  • Retail Liquidity Challenges

    low

    Management noted 'liquidity challenges which we are seeing on the retail' but believes it's 'transient and that should get better'.

    Management acknowledged

Q&A highlights

6 direct, 2 evasive
Profitability of large Q2 contract Direct
This was a very marquee project and given the size of the contract and such a large order volume, there was competitive pricing and AJAX felt that it's in its best interest that it contributes to the nation building and also forms a grip on these large orders. This was done at, let's say, far more aggressive pricing.

Management confirmed aggressive pricing on a large Q2 order, directly impacting the quarter's margin performance.

Asked by Raghunandhan

H2 margin outlook and price increases Direct
H1 EBITDA margin is 11.7%, not 10.2%... For us to get to in the range of 13%, or thereabout on the EBITDA, we will have to do close to about 14.5% to 15% for the rest of the year.

Management provided specific H2 EBITDA margin targets (14.5-15%) required to meet full-year guidance, indicating expected margin recovery.

Asked by Pritesh

Q2 volume growth discrepancy with industry slowdown Direct
I'm talking about SLCM specifically, and 2,300 machines were sold. I mentioned that about 100 or 110 odd machines came from one single order, which obviously added about five percentage points to the growth... demand of Q2 this year is a normal Q2 rather than election impacted Q2.

Management explained the strong Q2 volume growth was partly due to a large single order and a favorable comparison to an election-impacted Q2 last year, clarifying industry trends.

Asked by Pritesh

Timing of price hike implementation Evasive
I mean, we said that we are trying. We have, let's say, started to have the conversations in Q3. I would not like to pre-empt what we are doing in Q3 before Q3 is completed.

Management was hesitant to confirm the exact timing or certainty of price hikes in Q3, leaving some ambiguity for investors.

Asked by Mahesh Patil

Competitor's unsustainable pricing practices Direct
They showed lot more CEV-4 and they were running against time. And the kind of pricing strategy they, and commercial strategy adopted to get these machines liquidated were not only, let's say, substandard from margin corridors or commercial acumen.

Management highlighted that competitors engaged in aggressive, margin-dilutive pricing to clear older CEV4 inventory, which impacted market dynamics and AJAX's Q1 market share.

Asked by Raashi

Reasons for lower government capex Direct
I think you are more intelligent than I can be on this subject. I think there are multiple things that the government has had to contend with. I mean, public memory becomes very short. Only about a few months ago, we were reeling under a four-day war, but wars are very expensive as much.

Management provided insights into macro factors (geopolitical events, state election promises) contributing to lower government capex and associated cash flow issues for contractors.

Asked by Suraj Malu

Receivables buildup and normalization Direct
That has started to normalize, and the cash flows have started to come in also. We feel that this will get normalized as the year progresses, so, no concerns in terms of the health of the receivables per se, sitting in the balance sheet. It's the timing. And we'll sort it out soon.

Management acknowledged a buildup in receivables due to retail offtake delays but reassured that it is a temporary timing issue and is already normalizing.

Asked by Nishant Rungta

FY27 margin outlook Evasive
We'll not comment on FY '27 at this point in time.

Management explicitly declined to provide any forward-looking commentary on FY27 margins, indicating uncertainty or a preference to focus on near-term.

Asked by Deeya Jain

3 min read 7 chapters

Detailed narrative

Q2 and H1 FY26 Performance Overview

Ajax Engineering reported robust financial results for Q2 and H1 FY26. Q2 revenue grew by 48% year-on-year to INR 445 crores, while H1 revenue reached INR 911 crores, an 18% year-on-year increase. This growth was significantly propelled by the SLCM segment, which saw a 51% year-on-year volume growth and 55% year-on-year revenue growth in Q2, partly due to a large government contract for over 110 machines. The non-SLCM segment also contributed positively with 8% volume growth and 12% revenue growth in Q2, alongside a 26% increase in spares and services revenue.

Profitability Challenges and Margin Compression

Despite strong top-line growth, profitability faced headwinds in Q2 and H1 FY26. The Q2 EBITDA margin declined by 280 basis points to 10.2%, and the H1 EBITDA margin contracted by 380 basis points to 11.7%, with H1 EBITDA declining 11% year-on-year to INR 107 crores. This margin pressure was primarily attributed to the increased cost of production for the new CEV5 machines and the company's decision not to implement price hikes in Q1 and Q2. Additionally, aggressive pricing on a large government contract in Q2 further impacted margins.

CEV5 Transition and Market Share Dynamics

Ajax successfully navigated the transition to new emission norms, selling out all CEV4 inventory by June 2025 and launching CEV5 machines in Q4 FY25. The CEV5 product portfolio accounted for 90% of Q1 FY26 volumes, indicating strong market acceptance. The company's market share improved to 71% on a year-to-date basis, with recent months seeing it inch closer to 80%. Management noted that some competitors engaged in 'substandard' and 'aggressive' pricing strategies to liquidate older CEV4 inventory, which impacted market dynamics in Q1.

H2 Outlook and Strategic Adjustments

Management anticipates a traditional demand upswing in H2 FY26, following the extended monsoon season. They expect government impetus on infrastructure projects and improved cash flows for contractors to drive demand. To mitigate margin pressure, the company plans to implement a price increase of approximately 4 percentage points starting in Q3. This, combined with operating leverage, is expected to improve H2 EBITDA margins to 14.5-15%, aiming for a full-year EBITDA margin decline of 150-200 basis points compared to FY25.

Capital Position and Working Capital Management

Ajax Engineering maintains a robust financial position, with a return on invested capital (ROIC) exceeding 40% for H1 FY26 and a strong balance sheet. The company reported a cash balance in investments of INR 710 crores and a liquid cash balance of INR 35-37 crores. While a temporary buildup in receivables was observed towards the end of September due to retail offtake delays, management stated that this situation is normalizing, and cash flows are improving, indicating no long-term concerns regarding the health of receivables.

Capex and Product Portfolio Expansion

The company's capital expenditure includes approximately INR 35 crores in Capital Work-in-Progress (CWIP) for its fourth plant in Hosahalli, with an additional INR 10-15 crores planned for FY26, targeting H2 closure. Ajax is also expanding its product portfolio, with plans for initial distribution of smaller SLCM products in 4-6 key markets during H2. The focus remains on strengthening leadership in the SLCM segment while building capabilities in non-SLCM areas like boom pumps, concrete pumps, and batching plants.

External Headwinds and State-wise Performance

The company acknowledged external challenges such as a slowdown in infrastructure project execution, cash flow delays for customers, and the impact of extended monsoons. Management also noted that lower government capex was influenced by geopolitical events and state governments prioritizing social sector spending, which impacted demand in states like Maharashtra and Karnataka. Conversely, states like Bihar, Uttar Pradesh, northern markets, and Gujarat demonstrated strong performance, partly due to solar-led applications and election-related impetus.

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