HomeInfrastructureAjax Engineering IPO to Raise Rs 1,269.4 Crore Tapping into India's Growing...

Ajax Engineering IPO to Raise Rs 1,269.4 Crore Tapping into India’s Growing Infrastructure Sector

Ajax Engineering IPO to Raise Rs 1,269.4 Crore Tapping into India’s Growing Infrastructure Sector

Ajax Engineering, a key player in the Indian construction sector, is looking to raise up to Rs 1,269.4 crore through an offer for sale by its promoters and investor Kedaara Capital. The move comes at a time when the Indian government is making significant strides in infrastructure development, making Ajax’s future prospects highly promising. With the company’s strong presence in concrete equipment manufacturing, it is well-positioned to capitalise on the country’s infrastructure boom.

Founded in 1992, Ajax Engineering has established itself as a leader in the concrete application value chain, particularly in the self-loading concrete mixer (SLCM) market. With a 75% market share in this segment, the company stands at the forefront of the construction machinery industry. The company’s wide range of offerings includes SLCMs, bin batching plants, self-propelled boom pumps, 3D concrete printing machines, and slip-form pavers. It operates across 51 dealers in 23 states in India, with a growing customer base of over 19,000. The company’s addressable market is expanding rapidly, buoyed by the government’s continued focus on infrastructure projects. The recent surge in construction activity has enabled Ajax to increase its revenue, with a significant boost from its SLCM segment, which accounted for 85.1% of its revenue in FY24, up from 77.4% in FY22. This marks a major shift in the company’s performance, with its revenue more than doubling to Rs 1,741.4 crore in FY24, compared to Rs 763.3 crore in FY22.

Net profit also saw a substantial increase, rising from Rs 66.2 crore to Rs 225.1 crore over the same period. The company’s operating margin before depreciation and amortisation (EBITDA) grew from 11.9% to 15.8%, showcasing its improved efficiency. The strong performance of Ajax Engineering is underpinned by a solid return on capital employed (ROCE), which has doubled to approximately 33% in the past three years. However, like any company in the construction sector, Ajax’s performance is subject to seasonality. The monsoon season often leads to a slowdown in construction activities, impacting the company’s earnings during this period. Despite this, Ajax’s business model has remained resilient, with its asset-light approach reducing risks and enhancing profitability. The company sources materials from 546 suppliers, with localisation efforts ensuring that imports account for less than 10% of material costs.

For investors, Ajax Engineering’s IPO presents an intriguing opportunity, particularly for those looking to invest with a long-term horizon. The company’s growth prospects are closely tied to India’s infrastructure development, and the government’s thrust on urbanisation and construction is expected to further bolster demand for Ajax’s products. The company’s expansion into new markets and its diverse portfolio of concrete equipment will likely position it as a critical player in India’s infrastructure landscape for years to come. The IPO, which will see Kedaara Capital offload its 6.5% stake, represents a shift in ownership that will see the promoter group’s stake fall to 82% from 93.5%. Investors may find Ajax an attractive option given the company’s strong market position and solid financial track record. However, the link between its performance and the health of the construction sector means that any economic slowdown could impact its financials. Ajax Engineering’s IPO offers a solid investment opportunity for those seeking exposure to India’s booming infrastructure sector. With its leadership in the concrete equipment market and the government’s focus on construction, the company is well-poised for long-term growth.

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