Ajax Engineering

Ajax Engineering reported a modest 2% YoY revenue growth for the first nine months of FY26, reaching ₹1,345 crores. However, Q3 FY26 saw a revenue decline to ₹434 crores from ₹548 crores in Q3 FY25. EBITDA for 9M FY26 stood at ₹154 crores (down from ₹207 crores in 9M FY25), resulting in an EBITDA margin of 11.5%. Q3 FY26 EBITDA was ₹48 crores, with its margin contracting by 510 basis points to 11% YoY, primarily due to increased production costs and an unfavorable product mix.

The company faced several external challenges^🌐, including prolonged monsoon conditions, changes in emission norms, and a slower pace of project execution across key markets. These factors, coupled with cash flow constraints experienced by customers, particularly from state governments, impacted purchasing decisions and operational momentum. Ajax responded by focusing on resilience, introducing new CEV-5 machines, and expanding its dealer network to deepen market penetration.

Ajax launched its new CEV-5 machines in Q4 FY25, with a calibrated approach to evaluate real-time performance and gather customer feedback. The new 0.75 cubic meter UDAAN product is gaining customer interest in lower-end applications like brick making, precast walling, and CC roads in Gram Panchayats. The company anticipates selling 225 to 250 UDAAN units by the end of the current fiscal year, with testing underway for a pumping solution to expand its application.

The company maintains a calibrated pricing strategy, aiming to sustain market share while anticipating price adjustments from FY27 to aid profitability. Despite some pricing pressure from competitors, Ajax believes its market share (ranging 78-82% in recent months) indicates product preference. Management expects to cover a 'fair ground' on price increases by Q1 FY27, aiming to offset cost increases.

India's continued focus on infrastructure development, reflected in an 11% increase in budget allocation for government capital expenditure to ₹12.2 lakh crores for FY27, is expected to stimulate demand. Key end-use sectors like railways, roads, and real estate have received higher budgetary allocations. While some states (Gujarat, Rajasthan, Odisha, Uttar Pradesh, CG) are driving demand, others (Karnataka, Maharashtra, Telangana, MP) face cash flow challenges, which management expects to resolve, leading to renewed work order acceptance.

Ajax Engineering continues to maintain strong financial discipline and a robust cash position, with a cash balance of ₹810 crores, including investments in debt markets. The commissioning of its fifth manufacturing facility, initially targeted for H2 FY26, has been tactically delayed to Q1 FY27. This delay is attributed to strategic decisions for the non-SLCM portfolio rather than operational issues, ensuring the right calibration for future growth.