Ajax Engineering Limited — Q4 FY26 earnings call

Call held 19 May 2026

Management summary

Ajax Engineering reported a resilient Q4 and FY26, navigating industry headwinds like slower government capex and payment delays. While full-year EBITDA margins compressed to 12.6% from 15.3% due to CEV5 transition costs and lower volumes, Q4 saw margin recovery to 15.1% driven by price hikes and cost optimization. The company demonstrated strong cash flow generation, reducing working capital to a five-year low of 21 days, and recovered market share to 73.5% for FY26.

Highlights

  • FY26 Total Revenue of ₹2,103 crores, up 1.4% YoY from ₹2,074 crores in FY25, demonstrating resilience amidst challenges.

  • Q4 FY26 EBITDA Margin improved by 40 bps YoY to 15.1% (from 14.7% in Q4 FY25), driven by price hikes, cost reduction, and favorable product mix.

  • Net Working Capital reduced to 21 days, the lowest in the last five years, due to effective inventory liquidation.

  • Market share recovered to 73.5% in FY26 (from a Q1 dip to ~70%) and further to 76% in April, despite taking a 2% price increase in Q4 while competitors did not.

  • Strong cash balance of ₹1,121 crores as of March 2026, with management expecting to generate an additional ₹200-300 crores annually.

Concerns

  • FY26 EBITDA declined to ₹266 crores from ₹318 crores in FY25, and EBITDA Margin compressed to 12.6% from 15.3% in FY25, primarily due to higher production costs from CEV5 transition and lower volumes.

  • Government capex utilization was only 55% of the revised ₹10.96 lakh crores till December 2025, leading to slower project execution and payment delays in key states.

  • Uncertainty in the global macroeconomic environment, including geopolitical factors, steel prices, potential El Niño impact on rainfall, and rising interest costs, poses headwinds for FY27 growth.

Key financials

3 periods

Headline

  • Net Working Capital Days
    21 days
  • Cash Balance
    ₹1,121 Cr

Q4 FY26

  • Revenue
    ₹758 Cr
    YoY +0.26%
  • Gross Margins
    25.8%
    YoY +7%
  • EBITDA
    ₹115 Cr
    YoY +4%
  • EBITDA Margin
    15.1%
    YoY +2.7%

FY26

  • Revenue
    ₹2,103 Cr
    YoY +1.4%
  • EBITDA
    ₹266 Cr
    YoY -16.4%
  • EBITDA Margin
    12.6%
    YoY -17.6%

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

  • SLCM
    ₹1,758 Cr FY26 Revenue-4% FY26 Volume Degrowth
  • Non-SLCM
    7% FY26 Revenue Growth
  • Spares and Service
    9% FY26 Revenue Growth
  • Udaan
    202 units FY26 Volumes

Capital allocation

high confidence
  • Liquidity Cash ₹1,121 Cr Company expects to generate an additional ₹200-300 crores each year, reaching ₹1,500 crores cash balance in the next couple of years.
    Our cash position continues to be extremely strong with a cash balance of INR1,121 crores, as of March 2026.

Guidance & targets

Revenue

  • Overall Revenue Growth Revenue · FY27 · Medium confidence mid and early double-digit growth
    I would anticipate at this point in time a mid and early double-digit growth would be a good number to look at and as we progress forward, I think we would be in a better position to see how things progress.

    — Shubhabrata Saha

Profitability

  • EBITDA Margin Profitability · Medium-term · Medium confidence 13% to 15% range
    our longer-term outlook of trying to get back to the 13% to 15% range is something that we will continue to drive and focus.

    — Shubhabrata Saha

Export Revenue

  • Export Revenue Growth Export Revenue · FY27 · Medium confidence 20% to 25%
    I think a growth of about 20% to 25% should be a good number to look at given how the world order is.

    — Shubhabrata Saha

Working Capital

  • Net Working Capital Days Working Capital · FY27 · High confidence 25 days to 30 days
    I would say that, you know, anywhere in the range of about 25 days to 30 days of working capital is a good number, an aggressive number to look at. I think a good 30-day number is a good number for the year.

    — Shubhabrata Saha

Volume

  • Udaan Volumes Volume · FY27 · Medium confidence two times to three times FY26 volumes
    If we can manage to do two times to three times that number, I think I'd be delighted given the current demand conditions in the country.

    — Shubhabrata Saha

Liquidity

  • Cash Balance Liquidity · Next couple of years · High confidence ₹1,500 crores
    We'll be generating another, you know, INR200 crores - INR300 crores each, you know, for the next couple of years. So we'll be at INR1,500 crores of cash.

    — Prolin Nandu

What to watch in Q1 FY27

Overall Revenue Growth

Next quarter (Q1 FY27) and H2 FY27
Current 1.4% YoY for FY26
Target Mid and early double-digit growth

Why it matters

To see if macro conditions improve and government spending translates into higher revenue growth as anticipated by management.

I would anticipate at this point in time a mid and early double-digit growth would be a good number to look at and as we progress forward, I think we would be in a better position to see how things progress.

Risks & concerns

  • Government Capex Execution & Payments

    high

    Central capex for FY26 was budgeted at ₹11.21 lakh crores, revised down to ₹10.96 lakh crores, with only 55% utilization till Dec 25. Delays in government payments in key states (Maharashtra, Karnataka, UP) affected customer cash flows and ability to place new orders.

    Management acknowledged

  • Macroeconomic & Geopolitical Uncertainty

    high

    Geopolitical factors, steel prices, potential El Niño year (rainfall), and interest cost increases create headwinds, making the FY27 outlook uncertain.

    Management acknowledged

  • Competition Underpricing

    medium

    Analyst raised concern about competitors underpricing. Management stated competitors continue to sell at low prices, widening the price gap (5-6%), but AJAX maintains market share due to product quality and brand strength.

    Analyst downplayed

Q&A highlights

6 direct
FY27 Growth Outlook and State-wise Demand Partial
I would anticipate at this point in time a mid and early double-digit growth would be a good number to look at and as we progress forward, I think we would be in a better position to see how things progress.

Analyst pushed for specific FY27 growth numbers, but management gave a cautious 'mid and early double-digit' due to macro uncertainties, highlighting key state-level challenges and opportunities.

Asked by Raghunandan NL

Export Growth and Paver Opportunities Direct
I think a growth of about 20% to 25% should be a good number to look at given how the world order is.

Management provided a specific growth range for exports, acknowledging global uncertainties, and highlighted pavers as a new growth opportunity with a recent sale to Saudi Arabia.

Asked by Raghunandan NL

Working Capital Management Direct
I would say that, you know, anywhere in the range of about 25 days to 30 days of working capital is a good number, an aggressive number to look at. I think a good 30-day number is a good number for the year.

Management confirmed aggressive working capital reduction to 21 days and provided a target range for future, indicating strong operational efficiency.

Asked by Vaibhav Shah

Sustaining Margins and Price Hikes Direct
our longer-term outlook of trying to get back to the 13% to 15% range is something that we will continue to drive and focus.

Analyst questioned margin outlook given commodity inflation. Management reiterated commitment to 13-15% long-term margin, but acknowledged near-term challenges and the need for demand to perk up.

Asked by Vaibhav Shah

Inorganic Growth Strategy and Cash Utilization Direct
We are very clear that we and I keep repeating this ad nauseam, we are not interested in turnaround business situations... growth, there is no alternative to growth and if growth comes from potential opportunities through M&A, we'll certainly.

Analyst probed on the company's large cash balance and M&A strategy. Management outlined clear criteria for M&A (no turnarounds, ethical, non-sunset sectors, return metrics) and confirmed M&A as a growth avenue.

Asked by Prolin Nandu

Competition and Price Hikes Direct
I must tell you this that, you know, even during the transition and post the transition, the gap between us and them has increased quite substantially. And with our 2% price increase, it goes up even further, right? So they were any which ways selling at a very low price, they continue to sell at low price, and I don't see when they will want to take a price increase.

Analyst questioned if competition might underprice, hurting market share. Management asserted their premium pricing strategy and stated competitors have not taken price hikes, widening the price gap but not impacting their market share.

Asked by Rishi Chopra

Trade-in Programs for Old Machines Direct
We actively encourage. So we've got a list of folks. So I'll just explain to you that there is something called a hunter-harvester principle that we have in our business.

Management confirmed active encouragement of trade-in programs, highlighting their 'hunter-harvester' model and the high resale value of AJAX machines as a future growth driver.

Asked by Lakshminarayanan

3 min read 6 chapters

Detailed narrative

FY26 Performance Overview and Industry Headwinds

Ajax Engineering reported a modest revenue growth of 1.4% to ₹2,103 crores in FY26, up from ₹2,074 crores in FY25. This was achieved despite significant industry headwinds, including slower government capital expenditure utilization (only 55% of the revised ₹10.96 lakh crores till December 2025) and payment delays in key states like Maharashtra, Karnataka, and Uttar Pradesh. The transition to CEV5 emission norms also increased production costs, leading to an FY26 EBITDA margin of 12.6%, a decline from 15.3% in FY25.

Q4 FY26 Turnaround and Margin Improvement

Q4 FY26 saw a strong turnaround, with revenue remaining flat at ₹758 crores (vs ₹756 crores in Q4 FY25) despite a 7% decline in SLCM volumes. Gross margins improved by 170 bps YoY to 25.8% (from 24.1% in Q4 FY25), and EBITDA grew 4% YoY to ₹115 crores, resulting in an EBITDA margin of 15.1% (up 40 bps YoY from 14.7% in Q4 FY25). This improvement was attributed to a 2% price increase taken in Q4, effective cost reduction initiatives, and a favorable product mix.

Market Share Recovery and Product Strategy

After a dip in market share to around 70% in Q1 FY26 due to competitor practices, Ajax Engineering successfully recovered its market share to 73.5% for the full year FY26, and further to 76% in April. This recovery was driven by the company's premium product quality, strong brand, and effective navigation of the CEV5 transition, being among the first to deploy CEV5 products. The company's SLCM volume degrowth was limited to 4%, significantly outperforming the estimated industry decline of 11%.

Operational Efficiency and Cash Flow Generation

The company demonstrated strong operational resilience, with EBITDA to operating cash flow standing at a robust 142% in FY26. Net working capital was reduced to 21 days, marking the lowest level in the past five years, primarily due to inventory liquidation. This focus on efficiency and disciplined execution contributed to a strong cash balance of ₹1,121 crores as of March 2026, with management expecting to generate an additional ₹200-300 crores annually, potentially reaching ₹1,500 crores in the next couple of years.

Growth Drivers and Regional Outlook

Management identified India's infrastructure sector, including highways, logistics corridors, and rural development, as key growth drivers. Specific states like Gujarat (due to solar, industrial units, Commonwealth Games) and Uttar Pradesh (pre-election spending) are expected to drive demand. While Maharashtra, Karnataka, and MP faced payment delays, a turnaround is anticipated in Maharashtra in H2 FY27. The company aims for mid and early double-digit overall growth in FY27, with export revenue targeted to grow 20-25%.

Inorganic Growth and Capital Allocation Strategy

With a strong cash balance, Ajax Engineering is exploring inorganic growth opportunities, adhering to strict criteria: avoiding turnaround businesses, aligning with ethical practices, shunning sunset sectors, and ensuring strong return metrics. While the concreting equipment segment has limited scope for external M&A, the company is open to M&A in other areas that offer quick traction and align with its core competencies in design, engineering, supply chain, and assembly. The company also actively encourages trade-in programs for older machines, leveraging their high resale value as a growth driver.

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