Ajax Engineering Limited — Q4 FY25 earnings call

Call held 28 May 2025

Management summary

Ajax Engineering delivered a resilient performance in FY25 with 19% top-line growth and stable gross margins, despite a challenging external environment. The company successfully launched CEV-5 machines and is expanding its non-SLCM portfolio through a hybrid B2B and dealer model. While H1 FY26 is expected to be softer due to macro factors and emission norm transition, management remains confident in long-term growth and operational efficiencies.

Highlights

  • FY25 revenue grew 19% YoY to ₹2,074 crores, driven by volume growth.

  • FY25 EBITDA margin at 15.3%, with gross margin expanding 40 bps to 27.1% (from 26.7% in FY24).

  • SLCM volumes grew 19% to 5,506 machines in FY25, maintaining a 75.1% market share.

  • Non-SLCM segments, particularly concrete pumps (57% CAGR FY22-25) and boom pumps (18% CAGR FY22-25), demonstrated strong growth.

  • Company remains debt-free with a robust cash and liquid investments position of ₹690 crores.

Concerns

  • Short-term business impact expected in H1 FY26 due to sluggish infrastructure project execution, early monsoon, and CEV-5 transition.

  • Q4 FY25 EBITDA margin was impacted by ₹60 million in one-time expenses for legal, professional fees, branding, and B2B team hiring.

  • Full price pass-through for increased material costs from CEV-5 transition is expected to be challenging in the short to medium term, potentially impacting FY26 gross margins.

Key financials

2 periods

Q4 FY25

  • Revenue
    ₹756 Cr
    YoY +15%
  • EBITDA
    ₹111 Cr
    YoY +1.5%
  • EBITDA Margin
    14.7%
  • PAT
    ₹91 Cr

FY25

  • Revenue
    ₹2,074 Cr
    YoY +19%
  • EBITDA
    ₹318 Cr
    YoY +15.5%
  • EBITDA Margin
    15.3%
  • PAT
    ₹260 Cr
    YoY +15.5%
  • Gross Margin
    27.1%
  • Net Working Capital Days
    30 days
  • DSO
    22 days

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 Revenue (FY25)
₹2,148 Cr Total
  • SLCM ₹1,753 Cr 81.6%
  • Non-SLCM ₹181 Cr 8.4%
  • Spares and Services ₹140 Cr 6.5%
  • Exports ₹74 Cr 3.4%

Order book

low confidence

Composition

Mix 2 products
  • SLCM (Solar Applications) 700 machines 63.6%
  • CEV-5 Machines (Q4 FY25 Sales) 400 numbers 36.4%

Share of order book by product, derived from disclosed amounts

Management discussed sales volumes and market share for SLCMs, and sales of new CEV-5 machines, rather than a traditional order book value.

Source: Inferred

Capital allocation

high confidence
  • Capex Capex disclosed
    • New manufacturing facility at Adinarayanahosahalli for pumps, lower-end SLCM, spare parts, and potentially pavers, 3D printing, transit mixers.
    Speaking on our ongoing capex, we have a new facility coming up at Adinarayanahosahalli, very close to our SLCM plant, which we expect to commission towards the end of the second quarter of FY '26. Revenue from the same will start coming in from H2 FY '26.
  • Debt Gross ₹0 Cr · Net cash ₹690 Cr
    Moving on to the balance sheet front, we continue to remain debt-free. Our cash position, including liquid investments, remains strong at around Rs. 690 crores.
  • Liquidity Cash ₹690 Cr Cash position includes liquid investments, supporting growth ambitions.
    Our cash position, including liquid investments, remains strong at around Rs. 690 crores. Our working capital is back to normalized levels and in line with our internal targets.

Guidance & targets

Revenue

  • Revenue from new facility Revenue · H2 FY26 · High confidence Start coming in from H2 FY '26
    Revenue from the same will start coming in from H2 FY '26.

    — Shubhabrata Saha

Business Outlook

  • Business momentum Business Outlook · H1 FY26, H2 FY26 · High confidence Softer in next couple of quarters, pickup in H2 FY '26
    Given the current landscape, we are expecting business in the next couple of quarters to be on the softer side, with momentum likely to pick up pace in the second half of FY '26.

    — Shubhabrata Saha

Infrastructure Projects

  • Large infrastructure projects pickup Infrastructure Projects · H2 FY26 · High confidence Likely towards the second half of this year
    Looking beyond the slightly muted immediate timeframe, we remain fully confident in the longer-term growth trajectory of our business. India's substantial infrastructure development needs, coupled with the shift towards mechanized construction and concreting equipment, will continue to drive steady demand, which positions Ajax well for sustained growth. Our long-term outlook on both, growth and profitability, remains firmly in place.

    — Shubhabrata Saha

Other Expenses

  • Other expenses growth Other Expenses · Future · Medium confidence Move more in tangent with revenue
    We expect it to move more in tangent with the revenue to the extent of the variable costs.

    — Tuhin Basu

Pricing

  • CEV-5 pricing increase Pricing · Q2 FY26 onwards · High confidence Trickle in from Q2 onwards
    So it will happen most probably from Q2 onwards that the pricing increase from all the market participants should trickle in.

    — Tuhin Basu

Profitability

  • Gross margin impact Profitability · FY26 · High confidence There will be an impact on the gross margin
    As far as FY '26 is concerned, I think we have been consistent that we would [inaudible] move completely at one go. There will be an impact on the gross margin.

    — Tuhin Basu

Working Capital

  • Working capital days Working Capital · FY26 · High confidence No operational increase, no upward trajectory
    We don't envisage an increase Vaibhav above operationally at all. ... We do not foresee any flex there on an upward trajectory.

    — Tuhin Basu

Service Performance

  • Service response time (6-8-24) Service Performance · Ongoing · High confidence Maintain 85% consistency
    And we see that across the country, despite the diversity and challenges that India has, we have been able to do it upwards of 85% consistently across the 3 dimensions, which is reaching, diagnosing and repairing, and getting it up to speed.

    — Shubhabrata Saha

What to watch in Q1 FY26

H1 FY26 Business Performance

Next quarter (Q1 FY26 results) and Q2 FY26
Current Expected to be 'softer side' due to macro factors
Target Observe actual revenue/volume growth in Q1/Q2 FY26

Why it matters

Management explicitly guided for a softer H1 FY26, so verifying this trend is crucial for assessing short-term operational resilience.

Given the current landscape, we are expecting business in the next couple of quarters to be on the softer side, with momentum likely to pick up pace in the second half of FY '26.

Risks & concerns

  • Short-term business impact from macro factors

    medium

    Sluggish infrastructure project execution, early monsoon, and CEV-5 transition are expected to make H1 FY26 softer.

    Management acknowledged

  • EBITDA margin pressure from one-time expenses and CEV-5 transition costs

    medium

    Q4 FY25 EBITDA was impacted by ₹60 million in one-time costs; FY26 gross margins may be impacted by CEV-5 costs, with full pass-through challenging.

    Management acknowledged

  • Competition intensity during CEV-5 transition

    medium

    High competition in Q4 FY25 due to CEV-4 inventory liquidation impacted pricing power, making full price increases difficult in the short term.

    Management acknowledged

  • Increase in working capital days and DSO

    low

    Net working capital days increased from 24 (FY24) to 30 (FY25) and DSO from 17 to 22+ days, primarily due to timing of sales, but no secular increase is envisaged.

    Management acknowledged

Q&A highlights

6 direct
SLCM volume and market share for FY25 Direct
Yes. So 5,575 is the number for SLCMs, and we have been able to grow our market share marginally. ... No, no, sorry. It's 5,506, 75% is the market share, Mohit. ... 5,506 is the volume. And 75.1% is the market share, and this is retail market share, which is on government e-VAAHAN data site.

Clarified the exact SLCM volume and market share for the core business segment, providing key competitive data.

Asked by Mohit

Quantification of one-time expenses impacting Q4 EBITDA Direct
In the one-offs, there is about Rs. 50 million, which have been incurred for legal and professional expenses. There have been one-time branding expenses. ... So, to your point that do we anticipate a 30% other expenses growth, the answer is no. We expect it to move more in tangent with the revenue to the extent of the variable costs. ... Yes, that's what I said, that it would be about Rs. 60 million.

Provided a specific figure for one-time costs that impacted Q4 EBITDA, helping to understand the underlying operational profitability.

Asked by Mohit

Price increases due to CEV-5 transition and potential margin impact Partial
So it will happen most probably from Q2 onwards that the pricing increase from all the market participants should trickle in. We will observe this phase and see what is the level of pricing elasticity from a margin and a price realization we are able to extract. ... And that we are hoping that we will be able to compensate through the operational efficiencies.

Highlighted the challenge of passing on increased CEV-5 costs and indicated potential margin pressure in the short term, with reliance on operational efficiencies.

Asked by Mayank Bhandar

Strategy and criteria for future M&A activities Direct
I think one of the things that AJAX has done for the longest period of time has been fiscal prudence, and that will continue in its strategy for capital allocation. It has to meet a few norms, which of course include the guardrails of the return metrics that AJAX has been consistently delivering. ... not interested in sunset products, sunset industries... governance, ethics, and integrity... not interested in any turnaround business situations.

Outlined clear strategic guardrails and financial prudence principles guiding the company's approach to potential M&A opportunities.

Asked by Mayank Bhandar

Products to be manufactured at the new Adinarayanahosahalli facility and timeline Direct
So the new facility, see, Yes, Yes. In the new facility, I think pumps will, of course, be a product which will have an immediate, let's say, traction there. ... We feel that the product that we are speaking about in the lower end of, below the, let's say, the SLCM category, can be produced at Bashettihalli, and hopefully that will get scaled up. ... might also look at the opportunity of transit mixers to be produced in this location at Hosahalli.

Provided details on the product focus for the new manufacturing facility, indicating strategic expansion into non-SLCM and lower-end SLCM segments.

Asked by Vaibhav Shah

Hybrid channel strategy for non-SLCM products using B2B and existing dealers Direct
I think we have a very powerful hybrid channel, which addresses the needs of hinterland requirements of non-SLCM, and the B2B channel to address the requirements of the buying quantum in the top 8 markets of the country where the larger decision-makers for the larger EPC and RMC companies are sitting.

Explained the nuanced go-to-market strategy for the non-SLCM portfolio, combining dealer reach with targeted B2B engagement for different customer segments.

Asked by Shubham Biswal

Competitive strategy against larger players in non-SLCM segments Direct
The non-SLCM business strategy is about making sure that we put more installations on the ground, one by one by one, by ensuring product reliability, service availability of spare parts, and the right selling to the customer. We do not and never will wish to follow a slippery slope of pricing alone as our strategy to win customer base.

Clarified the company's competitive approach in segments with established players, emphasizing value, reliability, and service over aggressive pricing.

Asked by Shubham Biswal

2 min read 6 chapters

Detailed narrative

Resilient FY25 Performance Amidst Headwinds

Ajax Engineering delivered a strong FY25, achieving a 19% year-on-year top-line growth to ₹2,074 crores. This growth was primarily driven by volume, with SLCM volumes increasing by 19% to 5,506 machines, enabling the company to maintain a dominant 75.1% market share. Gross margins expanded by 40 basis points to 27.1%, and Profit After Tax (PAT) grew by 15.5% to ₹260 crores, showcasing operational resilience despite a challenging external environment.

Strategic Expansion in Non-SLCM Segments

The company is actively scaling its non-SLCM segment, which also recorded an 18% revenue growth in FY25. Products like concrete pumps and boom pumps demonstrated impressive CAGRs of 57% and 18% respectively between FY22 and FY25. A new manufacturing facility at Adinarayanahosahalli is slated for commissioning by the end of Q2 FY26, focusing on pumps, lower-end SLCMs, spare parts, and potentially pavers and transit mixers, with revenue generation expected from H2 FY26.

CEV-5 Transition and Pricing Challenges

The industry's transition to CEV-5 emission norms, effective July 1, 2025, has led to increased material costs. Ajax successfully launched its CEV-5 machines in Q4 FY25, which contributed nearly one-third of its Q4 sales. However, management anticipates a phased approach to price increases starting from Q2 FY26, acknowledging that fully passing on the increased costs will be challenging in the short to medium term due to high market competition, potentially impacting FY26 gross margins.

Market Outlook and Short-Term Softness

Management noted a sluggish pace in on-ground infrastructure project execution and a mid-single-digit volume growth for cement players, indicating a softer market. Consequently, H1 FY26 is expected to be softer due to these macro factors, the early monsoon, and the emission norm transition. Momentum is anticipated to pick up in H2 FY26, aligning with the company's historical trend of generating approximately 65% of its annual revenue in the second half of the fiscal year.

Hybrid Go-to-Market and Service Excellence

Ajax is augmenting its go-to-market strategy by establishing a B2B channel for non-SLCM products, complementing its existing dealer network. This hybrid model aims to address both hinterland requirements and large buying quantum from EPC and RMC companies in top 8 markets. The company maintains a strong service commitment with an internal 6-8-24 hour response practice, achieving over 85% consistency in reaching, diagnosing, and repairing machines on-site.

Financial Health and Capital Allocation Strategy

The company maintains a strong financial position, remaining debt-free with a robust cash and liquid investments balance of ₹690 crores. While net working capital days increased from 24 in FY24 to 30 in FY25, and DSO from 17 to 22+ days, management attributes this to sales timing and expects no secular increase. The M&A strategy is disciplined, focusing on high-growth segments, strong governance, and avoiding turnaround situations, ensuring fiscal prudence in capital allocation.

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