Ajax Engineering Limited — Q3 FY25 earnings call

Call held 10 Mar 2025

Management summary

Ajax Engineering reported strong Q3 and 9M FY25 results, with healthy revenue and profit growth driven by robust demand. Despite a temporary slowdown in H1 due to elections and monsoons, and anticipated margin pressure from CEV-5 transition, the company remains confident in its long-term growth trajectory, supported by infrastructure development and increasing mechanization. Management is focused on product quality, service, and strategic market expansion.

Highlights

  • Total Revenue for 9M FY25 grew 21.6% YoY to INR 1,318 crores.

  • EBITDA for 9M FY25 grew 24.6% YoY to INR 207 crores, with margin improving 40 bps to 15.7%.

  • PAT for 9M FY25 grew 23.6% YoY to INR 169 crores, with margin improving 20 bps to 12.5%.

  • Q3 FY25 Total Revenue grew 37% YoY to INR 548 crores.

  • Non-SLCM revenue in Q3 FY25 grew 71.5% YoY to INR 44 crores.

Concerns

  • EBITDA margin for Q3 FY25 dipped 70 bps YoY to 16.1%.

  • PAT margin for Q3 FY25 declined 90 bps YoY to 12.3%.

  • Capex slowdown in H1 FY25 due to elections and prolonged monsoon.

  • Anticipated pressure on gross margins in FY26 due to CEV-5 emission norm implementation, as not all cost increase will be passed to customers.

Key financials

2 periods

Q3 FY25

  • Total Revenue
    ₹548 Cr
    YoY +37%
  • EBITDA
    ₹88 Cr
    YoY +31.8%
  • EBITDA Margin
    16.1%
  • PAT
    ₹68 Cr
    YoY +26.3%
  • PAT Margin
    12.3%

9M

  • FY25 Total Revenue
    ₹1,318 Cr
    YoY +21.6%
  • FY25 EBITDA
    ₹207 Cr
    YoY +24.6%
  • FY25 EBITDA Margin
    15.7%
  • FY25 PAT
    ₹169 Cr
    YoY +23.6%
  • FY25 PAT Margin
    12.5%

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

Share of 9M FY25 Revenue
₹1,318 Cr Total
  • SLCM ₹1,098 Cr 83.3%
  • Non-SLCM ₹122 Cr 9.3%
  • Spares and Service ₹98 Cr 7.4%

Capital allocation

low confidence
  • Liquidity Liquidity disclosed Management stated the company does not need cash at this point, implying sufficient liquidity.
    The company, obviously, at this point in time does not need cash and hence you would have otherwise raised an IPO.

Guidance & targets

Profitability

  • Operating EBITDA Margin Profitability · FY26 · Medium confidence mid-teens range
    However, we expect to cushion that through some price hikes and operational efficiencies and hence we expect our operating EBITDA to remain stable in the mid-teens range.

    — Shubhabrata Saha

Market Growth

  • Indian mechanized concrete equipment market size Market Growth · FY29 · High confidence INR 17,800 crores

    From INR 6,100 crores (FY24) today

    The Indian mechanized concrete equipment market is expected to grow from INR 6,100 crores in FY24 to INR 17,800 crores by FY29, nearly three times the size in the next five years.

    — Shubhabrata Saha

Market Share

  • Share of mechanized mixing in concrete consumption Market Share · FY29 · High confidence about 41%

    From about 25% (FY24) today

    The share of mechanized mixing in the overall concrete consumption in India is expected to increase from about 25% in FY24 to about 41% by FY29.

    — Shubhabrata Saha

Revenue Growth

  • Total Revenue Growth Revenue Growth · FY25 · Medium confidence mid-teen plus
    We expect that AJAX will grow in the range of, let's say, mid-teen plus in FY25 and also, let's say, as a look ahead. But that's our view at the current time.

    — Tuhin Basu

  • Long-term CAGR Revenue Growth · Long-term · Medium confidence 15% to 18%
    So, we expect that the growth would be in that range between 15% to 18% depending on which year we talk about.

    — Tuhin Basu

What to watch in Q4 FY25

CEV-5 variants rollout and market acceptance

Next quarter/H1 FY26
Current First CEV-5 variant (4,500) just started selling.
Target Rollout of more CEV-5 variants and their sales performance.

Why it matters

Successful rollout and market acceptance of new CEV-5 compliant machines are crucial for future sales and maintaining market leadership during the regulatory transition.

Only one variant has been sold. So I think this is an early start as far as the entire range is concerned.

Risks & concerns

  • Capex slowdown due to general elections and state elections.

    medium

    Government capex slowed down in H1 FY25 due to election processes and prolonged monsoon, impacting business momentum.

    Management acknowledged

  • Gross margin pressure from CEV-5 emission norm transition.

    medium

    New emission norms (CEV-5) will increase costs, and the entire cost increase is not expected to be passed on to customers, leading to some gross margin pressure in FY26.

    Management acknowledged

  • Product mix impacting gross margins on a quarter-on-quarter basis.

    low

    The 300-basis point reduction in Q3 FY25 gross margin was predominantly driven by changes in product mix, rather than secular cost or pricing trends.

    Management acknowledged

Q&A highlights

7 direct
Growth outlook for FY26 and new products in SLCM and non-SLCM segments. Direct
I think the first piece is around SLCM. I think we are currently undergoing a transition from 4 to 5, and I think that itself is a new product to look at... As far as the non-SLCM portfolio is concerned, I think we are a small player, 7% to 8% of our revenue there. I would want to believe that there will be greater focus as we strengthen our B2B as our channel also starts perking up on the potential demand in this area...

Provides insight into future growth drivers, including new CEV-5 variants and strategic focus on non-SLCM segments and B2B channels.

Asked by Raghunandan N.

Growth drivers for exports, including regions and products. Direct
So I think we have 25 international dealers and over 45 countries that our products have been exported over time. But I think the core geographies of South Asia, Southeast Asia, Africa continue to be strong. Pavers have been sold to Africa, in Gabon and also in Russia. So I think a fair bit of contribution in value terms, obviously, because each paver costs a lot of money. It's anywhere in the range of INR 8 crores to INR 12 crores.

Highlights the company's international presence, key export markets, and the significant value contribution from high-value products like pavers.

Asked by Raghunandan N.

Strategy for gaining market share in non-SLCM categories (transit mixer, batching plant). Direct
Our strategy very clearly is not to use pricing as a tool to win market share... It is the quality of our products, the reliability of the performance of our products, the service uptime availability and the availability of spare parts wherever and whenever it is required will be the driver of our success. Second, I think the channel is very important. So we have both the channels available to us, our established dealer channel, and we decided to start a separate B2B channel...

Clarifies management's approach to market share expansion in non-core segments, emphasizing product quality and channel strategy over price competition.

Asked by Nidhi Shah

Impact on gross margins for Q3 FY25 and the reason for the decline. Direct
The 300-basis points reduction which you see is predominantly driven by the product mix for us on a quarter-on-quarter basis. But the nine-month, as I previously mentioned, is kind of flat-lined with a marginal improvement.

Explains that the Q3 margin dip was due to product mix, not a secular trend in costs or pricing pressure, providing clarity on profitability drivers.

Asked by Sabil

Inventory build-up of CEV-4 emission norm compliant machines and its liquidation plan. Direct
Even as at December, we had a sizable amount of inventory in our books, which you can obviously, you know, let's say it's not probably visible in the P&L, in the LODR, but we have 1000 plus machines in December and also in our books, which would get liquidated over time, till the time we're allowed to sell the CEV-4 machines... as of December, it has already reduced by about to about less than 70.

Addresses concerns about inventory levels and the strategy for managing the transition from CEV-4 to CEV-5, indicating inventory reduction has already begun.

Asked by Sabil

Cost increase due to the transition to CEV-5 emission norms, specifically for engines. Direct
So, I mean, I will, let's say, take a broader brush at it. See, we have launched one variant and that's where the experience is more nuanced in terms of what's the cost increase. And there we have experienced a cost increase of, let's say, low single digits and as we roll out variants on a certain series of, let's say, our Argo which is the SLCM machine, we expect that about a large part of the SKUs will be more in the low single digits in terms of the experience cost increase... I mean, it depends on the variant, but I think more in the range of 10% to 15% overall.

Provides specific figures for the anticipated cost increase due to CEV-5, which is crucial for understanding future margin impacts.

Asked by Bhavin Vithlani

Impact of government capex slowdown on revenue and the ability to maintain historical CAGR. Direct
Yes first thing first, I think the government has already given its intention in the budget when the government budget announced very recently, where INR 11.21 lakh crores commitment has been provided, which is a 10% growth over the last year's base of INR 11.11 lakh crores... So, we expect that the growth would be in that range between 15% to 18% depending on which year we talk about.

Reassures on government commitment to infrastructure spending and clarifies long-term growth expectations, differentiating from temporary H1 slowdown.

Asked by Ridhima Goyal

Diversification of revenue from SLCM dependence and potential M&A in 3D printing. Partial
So, I think first things first, the size of the industry last year was reported at about INR 6,100 crores, of which the self-loading concrete mixer segment was reported at about INR 2,100 crores. That's the single largest segment... from a revenue dependence standpoint, 7% to 8% of our revenues actually come from the non-SLCM business, where we do see very strong headroom for growth... If and when we think there is a need to look at suitable technologies that will propel us, we will, as an organization, continue to examine and look at the landscape.

Addresses the strategy for reducing SLCM dependence by highlighting growth potential in non-SLCM segments and a cautious, strategic approach to M&A in new technologies like 3D printing.

Asked by Shaurya Yadav

3 min read 7 chapters

Detailed narrative

Company Overview and Market Leadership

AJAX Engineering, established in 1992, is a leading manufacturer of concrete equipment in India. The company holds a dominant market position in Self-Loading Concrete Mixers (SLCMs), being the pioneer in India and commanding approximately 75% retail market share. Its comprehensive product portfolio covers the entire concrete application value chain, from production to placement, supported by extensive after-sales services.

Product Portfolio, Innovation, and Diversification

SLCMs constitute about 85% of AJAX's total revenue. The non-SLCM portfolio, including batching plants, transit mixers, boom pumps, and slip form pavers, contributes 7-8% of revenue. AJAX emphasizes design and innovation, with 15% of its permanent employees dedicated to R&D. Key innovations include load cell technology in SLCMs, patented self-propelled boom pumps, and the commercialization of 3D concrete printers in 2023, showcasing its commitment to advanced concrete machinery.

Manufacturing, Distribution, and Customer Reach

The company operates three assembly and manufacturing facilities in Karnataka, utilizing lean and technology-led processes. AJAX boasts India's largest dealer network among concrete equipment manufacturers, with 51 dealers across 23 states and 114 touch points. Globally, it has 25 dealers/distributors across 45+ countries, including South Asia, Southeast Asia, Middle East, Africa, and Russia, ensuring wide customer accessibility.

Industry Outlook and Mechanization Trends

The Indian mechanized concrete equipment market is projected for significant growth, from INR 6,100 crores in FY24 to INR 17,800 crores by FY29. This expansion is driven by increasing mechanization in concrete mixing, with its share expected to rise from 25% in FY24 to 41% by FY29. Infrastructure and real estate development are key drivers, leading to steady demand for concrete and construction equipment.

Q3 and 9M FY25 Financial Performance

For the nine months ended December 31, 2024, AJAX reported total revenue of INR 1,318 crores, a 21.6% YoY increase. EBITDA grew 24.6% YoY to INR 207 crores, with the margin expanding 40 bps to 15.7%. PAT increased 23.6% YoY to INR 169 crores, achieving a margin of 12.5%. In Q3 FY25, total revenue was INR 548 crores, up 37% YoY, while EBITDA grew 31.8% YoY to INR 88 crores, though the EBITDA margin dipped 70 bps to 16.1%.

CEV-5 Emission Norm Transition and Inventory Management

The industry is undergoing a transition to CEV-5 emission norms, effective July 1, 2025. AJAX built up inventory of CEV-4 compliant machines, totaling over INR 300 crores in finished goods by December 2024 (over 1000 machines), to cater to customer needs until the transition. This inventory is expected to be liquidated by early Q1 FY26. Management anticipates some gross margin pressure in FY26 due to CEV-5 cost increases but aims to maintain operating EBITDA in the mid-teens range through price hikes and operational efficiencies.

Government Capex and Long-Term Growth Outlook

Government capex experienced a slowdown in H1 FY25 due to elections and monsoons, but an uptick was observed in Q3. Management expects business momentum to regain pace from H2 FY26, driven by new government settlements at the state level. The long-term growth outlook remains positive, with an expected CAGR of 15-18%, supported by the country's significant infrastructure development needs and the increasing shift towards mechanized equipment.

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