Ajax Engineering’s Q3 FY25 Result: ₹3,500 Cr CAPEX, 25% Capacity Growth

Latest Financial Highlights – Q3 FY25

1. Revenue Growth:
   • Total Revenue: ₹5,482 Mn, up 37.3% YoY
   • 9MFY25 Revenue: ₹13,182 Mn, up 21.6% YoY​.
   • SLCM Revenue: ₹4,705 Mn, up 36.8% YoY
   • Non-SLCM Revenue: ₹436 Mn, up 71.5% YoY
2. Profitability Metrics:
   • EBITDA: ₹881 Mn, up 31.8% YoY, with an EBITDA Margin of 16.1% (-70 bps YoY)​.
   • PAT (Profit After Tax): ₹681 Mn, up 26.3% YoY, with a PAT Margin of 12.3% (-90 bps YoY).
3. Expense Analysis:
   • Raw Material Costs: ₹4,018 Mn in Q3 FY25 (Higher due to inflation).
   • Gross Margin: 26.7% (down -340 bps YoY) due to new emission norms and input cost increases.
   • Other Expenses: ₹313 Mn, reflecting growth investments​.

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Future Growth Plans & Expansions

• Expansion of Production Facilities:
  • New plant in Adinarayanahosahalli to start operations in H1 FY26​.
  • Increasing production efficiency with JIT (Just-In-Time) processes and Andon System for quality control.
• Product Innovation:
  • CEV-5 Emission Norm Compliant Products launching in FY26, improving fuel efficiency and cost-effectiveness​.
  • Expansion in 3D Concrete Printing, focusing on government and defense projects.
• Export Market Growth:
  • Exports share increased to 6% of revenue (vs 4% YoY).
  • Key focus areas: South Asia, Africa, and Southeast Asia​.

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Long-Term Financial Projections

• Short-Term (FY26-30):
  • Revenue CAGR: 15-18%, supported by mechanization trends and government infrastructure spending​.
  • PAT Margins expected to remain stable at 12-13% despite raw material cost fluctuations.
• Mid-Term (FY31-35):
  • Expansion in non-SLCM and export markets could increase overall growth rates.
  • Potential inorganic acquisitions in 3D printing and automation​.
• Long-Term (FY36-45):
  • Market leadership in self-loading concrete mixers (SLCM) maintained.
  • Automation and robotics could enhance profit margins beyond 15%.

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Bull Case vs. Bear Case

Bull Case (Upside Potential)

• Strong government capex (₹11.21 Lakh Cr in FY25) expected to drive demand​.
• Leadership in SLCM (75% market share) ensures pricing power.
• Expansion into CEV-5 compliant machinery and exports strengthens long-term prospects.

Bear Case (Risks & Challenges)

• CEV-5 cost pressure: Gross margins may be hit in FY26 before price adjustments​.
• Government project delays: If capex spending slows down, near-term growth could be impacted.
• Competitive threats: Entry of global players in mechanized concrete equipment.

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CAPEX & Growth Strategy

• CAPEX Investment for FY26-FY28: ₹3,500 Mn planned for capacity expansion and R&D​.
• Investment in automation to reduce costs and improve production efficiency.

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Valuation & Investment Decision

• P/E Ratio: Currently at 15.8x FY25E earnings, lower than industry peers (~18-20x).
• ROE: 24.5%, showing strong capital efficiency​.
• Dividend Yield: 1.2%, with room for increases in future years.

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Conclusion & Investment View

Recommendation: Accumulate (Long-Term Growth Play)

• Ajax Engineering is a market leader in the growing mechanized construction space.
• Short-term headwinds due to emission norms, but long-term structural growth is intact.
• Entry at current levels could offer 15-18% CAGR returns over the next 10-15 years.

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Disclaimer:

This report is for informational purposes only and does not constitute investment advice. Investors should conduct their own research or consult a financial advisor before making investment decisions.