Nuvama Institutional Equities initiates coverage on Ajax Engineering with a ‘BUY’ and a target price of INR 800, implying 15% upside from current levels. This is the first ever institutional coverage on the company since its listing in Feb 2025.
Dominant Player in Mechanised Concreting Equipment
Founded in 1992, Ajax Engineering is a leader in India’s mechanised concreting equipment (CE) space with a dominant 75% market share in Self-Loading Concrete Mixers (SLCMs). It is also one of the largest SLCM supplier globally giving it a unique edge in a growing industry.
Nuvama calls Ajax a “reinforced play on India’s CE boom”, expects the industry to grow at 12% CAGR from FY 2025 to FY 2029. For perspective, mechanisation in India has gone up from 16% in FY 2019 to 25% in FY 2024 and is expected to reach 33% by FY 2029 – still way behind developed markets which operate at 55-85% mechanisation.
Product Range and Differentiation
Ajax’s strength lies not just in SLCMs, but also in its diverse and expanding non-SLCM portfolio, which includes:
- Batching plants
- Transit mixers
- Boom pumps
- Slipform pavers
- 3D concrete printers
- Self-propelled boom pumps
Its SLCMs command the highest resale value versus global peers like Schwing Stetter, Putzmeister, and KYB-Conmat, owing to superior quality, lower cost of ownership, longer service life, and robust after-sales support.
Impressive Financial Metrics and Growth Outlook
According to Nuvama’s estimates, AJAX Engineering has delivered a 20% CAGR in topline over FY 2015–25, and despite a moderate 9% growth expected in FY 2026 due to changes in emission norms, the medium-term outlook remains highly positive:
- Revenue CAGR (FY25–29E): 13%
- EBITDA CAGR (FY25–27E): 11%
- PAT CAGR (FY25–27E): 14%
- EPS CAGR (FY25–29E): 14%
- Return on Invested Capital (RoIC): Expected to improve from 74% (FY23–25) to 86% (FY25–29)
Ajax operates with an asset-light model, reflected in an impressive gross asset turnover of 8x, which translates to high capital efficiency.
Strong Cash Generation & Balance Sheet Health
Nuvama expects average annual free cash flows (FCF) of INR 300 crore between FY 2025 and FY 2029. The company’s net cash will rise from INR 800 crore in FY 2025 to INR 1,700 crore by FY 2029 making the company financially stronger. The DCF based target price of INR 800 includes net cash of INR 84 per share, Ajax is valued at 30x FY27E core earnings.
Ajax Engineering Post-IPO Performance
Ajax Engineering launched its IPO on 10 February 2025, with a total issue size of INR 1,269.35 crore. It was a total offer for sale (OFS). The IPO received strong investor interest and was subscribed by 6.43 times. The IPO debuted with a discount of 5.93% from its allotment price. Post-listing the stock was stuck in the consolidation phase and trading between a range of INR 580 – 645 per share. Currently, it is trading around INR 701 per share, a 18% gain from its IPO allotment price.
Risks and Considerations
While the long-term story remains intact, Nuvama outlines a few key risks:
- FY26 growth moderation due to implementation of new emission norms
- Execution delays in infrastructure and real estate sectors
- Market share threats if new product lines underperform or if competitive intensity increases
Conclusion
Nuvama’s coverage makes a compelling case for Ajax Engineering as a high-conviction buy in India’s capital goods and infrastructure ecosystem. With a strong moat in SLCMs, a diversified product suite, and best-in-class capital efficiency, Ajax is strategically positioned to ride the ongoing wave of construction mechanisation in India.
With a target price of INR 800, Nuvama sees 15% upside from current levels – making Ajax Engineering a good pick for those looking to play India’s infrastructure and capital goods story.
Disclaimer: This content is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell.