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PremiumAjax Engineering IPO Day 3 Highlights: The initial public offering (IPO) of concrete equipment producer Ajax Engineering Ltd was subscribed 6.44 times by the third and final day of bidding on Wednesday.
The QIB portion was the most subscribed at 14.41 times. NII category followed suit, with 6.46 times bids. The retail investor portion was booked 1.92 times and the employee category 2.62 times.
The company's initial share sale, based in Bengaluru, is valued at ₹1,269 crore and will close on Wednesday. The price range has been set at ₹599 to ₹629 per share.
This IPO consists entirely of an offer-for-sale (OFS) encompassing 2.01 crore shares, amounting to ₹1,269 crore at the highest price point, which will be offered by its promoters and an investor shareholder.
Within this OFS, Kedaara Capital plans to sell 74.37 lakh shares. Ajax Engineering is a prominent manufacturer of concrete equipment, providing a wide array of equipment, services, and solutions throughout the concrete application value chain.
The company has four manufacturing and assembly plants in Karnataka, with each focusing on different product lines. In addition, a manufacturing and assembly facility is currently being built at Adinarayana Hosahalli, Karnataka, and is projected to be operational by August 2025.
Stay tuned for more updates
Ajax Engineering IPO Day 3 Live Updates: The three-day IPO of Ajax Engineering, which concluded today, was booked 6.44 times at the end of the three-day bidding process.
The QIB portion was the most subscribed at 14.41 times. NII category followed suit, with 6.46 times bids. The retail investor portion was booked 1.92 times and the employee category 2.62 times.
Ajax Engineering IPO Day 3 Live Updates: In India, concrete equipment, particularly self-loading concrete mixers (“SLCMs"), plays an essential role in supporting the growing demand for infrastructure and construction projects. Infrastructure development is projected to propel the demand for mechanized concrete equipment in India, growing the industry from ₹61 billion (US$731 million) in Financial Year 2024 to ₹178 billion (US$2,148 million) in the Financial Year 2029 (Source: Redseer Report).
The concrete equipment market in India, and in particular, the market for SLCMs, is experiencing significant growth due to several factors, including an increase in cement consumption and rising public and private capital expenditure towards infrastructure, irrigation, housing, and renewable power projects. This growth is leading to increased demand for construction materials and equipment (Source: Redseer Report).
Ajax Engineering IPO Day 3 Live Updates: The objects of the offer are to (i) achieve the benefits of listing the Equity Shares on the Stock Exchanges, and (ii) carry out an Offer for Sale of up to 20,180,446 equity shares with a face value of ₹1 each.
The company anticipates that the proposed listing of its Equity Shares will enhance its visibility and brand image, while also providing a public market for the shares in India. Notably, the company will not receive any proceeds from the offer.
Ajax Engineering IPO Day 3 Live Updates: Ajax Engineering Limited, with a significant presence in the Self-Loading Concrete Mixer (SLCM) segment, holds over 75% of the market share and is positioned as a dominant player in the industry.
The company follows a seasonal revenue pattern, generating around 35% of its revenue in the first half of the year and nearly 60% in the second half, indicating a strong back-ended business cycle.
AEL is reasonably priced compared to its industry peers, backed by solid financial performance with a Revenue/PAT CAGR of 51%/84% from FY22 to FY24.
With its dominant market share, growth trajectory, and favorable industry outlook, the company presents a compelling investment opportunity. Hence, we assign a “SUBSCRIBE" rating.
Ajax Engineering IPO Day 3 Live Updates: Aja Engineering IPO was subscribed 4.61 times as of the 3rd day of the bidding process so far. QIB quota was booked 11.57 times, NII portion 4.04 times and retail portion 0.91 times. Employee portion also sailed through, with 2.33 times bids so far.
Ajax Engineering IPO Day 3 Live Updates: AJAX enjoys a dominant position in the SLCMs market with a market share of ~77% in H1FY25. AJAX’s revenue from SLCMs grew at a ~58% CAGR over FY22-FY24 and is well-placed to benefit from the growth in the concrete equipment market.
AJAX’s Revenue/EBITDA/PAT grew at a CAGR of ~51%, 75%, and ~84%, respectively, over FY22-24, indicating strong financial growth.
The EBITDA and PAT margins are healthy at ~16% and 13%, respectively, in FY24 compared to its peers.
The return ratios are robust, with RoE at 25% and RoCE at 27% in FY24.
Ajax Engineering IPO Day 3 Live Updates: As of the date of this Red Herring Prospectus, the Board consists of eight Directors, including the Managing Director, two Executive Directors, and five Non-Executive Directors, four of whom are Independent Directors (one being a woman Independent Director).
Krishnaswamy Vijay: Whole-time Director and Executive Chairman of the Company.
Shubhabrata Saha: Managing Director and Chief Executive Officer of the Company.
Jacob Jiten John: Whole-time Director of the Company.
Parin Nalin Mehta: Non-Executive Director of the Company.
Rajan Wadhera: Independent Director of the Company.
Doddaballapur Prasanna Achutarao: Independent Director of the Company.
Jayashree Satagopan: Independent Director of the Company.
Raghavan Sadagopan: Independent Director of the Company.
Ajax Engineering IPO Day 3 Live Updates: Given its dominant market share, bright growth prospects, strong dealer network, asset-light business model, zero debt, and favorable industry outlook, we recommend subscribing for the long term.
Ajax Engineering IPO Day 3 Live Updates: The IPO of Ajax Engineering was booked 1.01 times on the 3rd day of the bidding process.
Here's how different quotas were subscribed:
QIB: 1.54x
NII: 1.10x
Retail: 0.65x
Employee: 1.93x
Ajax Engineering IPO Day 3 Live Updates: Ajax Engineering Limited has established itself as a market leader in the rapidly expanding self-loading concrete mixer (SLCM) segment, which accounted for 86.1% of its revenue in FY24. The company is strategically positioned to leverage the ongoing transition towards mechanized concrete equipment.
The company has exhibited robust revenue growth, with figures escalating from ₹763 crore in FY22 to ₹1,714 crore in FY24, driven by the escalating demand for construction equipment amidst India's infrastructure development surge.
Ajax is valued at a P/E ratio of 31.96x, in contrast to the industry average of 42.51x, signifying a relatively attractive valuation.
Given its strong growth prospects, moderate valuation, and alignment with India's infrastructure growth trajectory, we recommend SUBSCRIBING to this IPO for both listing gains and long-term investment opportunities, considering its robust fundamentals and market positioning.
Ajax Engineering IPO Day 3 Live Updates: Some key strengths of Ajax Engineering as per the RHP:
Market Leader in SLCM
Ajax Engineering leads the self-loading concrete mixer (SLCM) market with a 77% share in 1HFY25, having sold over 25,000 SLCMs in India. Their SLCMs are known for high resale value, reliability, and strong after-sales service. The company’s SLCM revenue grew at a 45.7% CAGR from FY22 to 1HFY25.
Diverse Concrete Equipment Portfolio
With 141 products, Ajax serves the full concrete value chain, including batching, transportation, and placement. Over the past decade, it sold 29,800 units to 19,900 customers, contributing to large infrastructure projects like highways, bridges, and metro stations.
Extensive Dealer Network
Ajax operates the largest dealer network in India, with 51 dealerships across 23 states and 25 global dealers in South Asia, the Middle East, and Africa.
Loyal Customer Base
Ajax serves a wide range of customers, from contractors to large construction firms, with over 19,000 customers by 1HFY25.
Efficient Manufacturing & Supplier Network
With four facilities in Karnataka and advanced manufacturing practices, Ajax is the second-largest concrete equipment manufacturer in India. Its Obadenahalli Facility is among the largest SLCM facilities globally.
Strong Engineering Capabilities
Ajax has 79 engineers dedicated to in-house design and development, including research on 3D printing applications for cost-effective construction.
Ajax Engineering IPO Day 3 Live Updates: As of September 30, 2024, it operates four assembling and manufacturing facilities at Obadenahalli, Gowribidanur and Basethahalli in the state of Karnataka, each specializing in distinct product lines. The Obadenahalli facility, with an area of 39,660.38 square meters (sqm), is among the largest SLCM facilities globally in terms of area as on March 31, 2024. Gowribidanur and Basethahalli with an area of 78920 sqm and 19340 sqm are into manufacturing of Batching plants/transit mixers and stationary/boom pumps respectively. It’s assembling and manufacturing facility at Adinarayanahosahalli (Karnataka) will have fungible capabilities to assemble a variety of concrete equipment, once it becomes operational in August 2025.
Ajax Engineering IPO Day 3 Live Updates: The IPO of Ajax Engineering was subscribed 55% so far on the third day of the book-building process. Here's how the different portions were booked:
QIB: 0.33x
NII: 0.76x
Retail investors: 0.58x
Employee: 1.60x
Total: 0.55x
Ajax Engineering IPO Day 3 Live Updates: Ajax Engineering Limited is the market leader in the self-loading concrete mixers segment, holding approximately 77% in 1HFY25 in terms of units sold. It possesses a robust dealer network of approximately 51 dealerships across India and has served over 19,000 customers as of 1HFY25. The company has delivered strong Revenue/EBITDA/PAT CAGRs of 51.0%/74.5%/84.4%, respectively, in the period between FY22-FY24 and is debt-free.
At the upper band of INR 629, the issue is valued at an EV/EBITDA multiple of 25.9x based on FY24 EBITDA and a P/E ratio of 31.93x, based on an annualized FY24 EPS of INR 19.7. We assign a “Neutral" rating for this issue.
Ajax Engineering IPO Day 3 Live Updates: Incorporated in 1992, Ajax Engineering Ltd. (Ajax) is a leading concrete equipment manufacturer offering a comprehensive range of concrete equipment, services, and solutions across the value chain. As of September 2024, the company has developed over 141 concrete equipment catering to the value chain. The company’s product portfolio includes Self-loading Concrete Mixers (SLCM), Batching Plants, Transit Mixers, Self-propelled Boom Pumps, Concrete Slip-form Pavers, Bin Batching Plants, and 3D Concrete Printers.
Ajax Engineering IPO Day 3 Live Updates: Ajax Engineering IPO opened for subscription on Day 3, thus making it the last day to apply for the IPO.
Ajax Engineering IPO Day 3 Live Updates: Ajax Engineering Limited, since its inception 32 years ago, has developed a comprehensive range of concrete equipment product portfolios across the concrete application value chain. The company follows an asset-light model by sourcing materials from 546 suppliers. This results in a focus on localisation, with imports constituting less than 10% of the cost of materials.
The company’s addressable market is growing faster, given the government’s thrust on infrastructure, which augurs well for the company. On the other hand, the promoter group needs to offload shares over 3 years to reduce the stake to 75% or lower (currently 82% post-issue). However, the company offers niche construction equipment in its business and has robust financials.
On a valuation basis, based on FY24, it is seeking a PE of 32 times, and the post-issue market cap comes to ₹71,961 Mn, with the issue being reasonably priced. Therefore, given factors like being a market leader in SLCM’s products, being present across the entire concrete application value chain, and having stable top and bottom lines, we recommend the issue be considered as a “SUBSCRIBE for LONG TERM."
Ajax Engineering IPO GMP today or Ajax IPO GMP is +7. This indicates Ajax Engineering share price was trading at a premium of ₹7 in the grey market, according to investorgain.com.
Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of Ajax Engineering share price was indicated at ₹636 apiece, which is 1.11% higher than the IPO price of ₹629 .
Based on the grey market activities over the last nine sessions, the present GMP ( ₹7) indicates a tendency to decrease. The minimum GMP recorded is 0.00, whereas the maximum GMP reached is ₹58.00, as per the experts at investorgain.com.
'Grey market premium' indicates investors' readiness to pay more than the issue price.
Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.
