Proxy to Infrastructure Development of India

Riding the Concrete Wave: Ajax Engineering

About the Company

Founded in 1992, Ajax Engineering was championed by the Vijay and Jacob-John families, with roots in Bangalore. It began with a focus on self-loading concrete mixers, expanding over time into a full suite of concreting solutions

• The company is a leading Indian manufacturer of concrete equipment, offering a full range of products and services across the concrete application value chain

• Product portfolio includes:

  • Production: Self-loading concrete mixers (SLCMs), batching plants

  • Transport: Transit mixers

  • Placement: Boom pumps, concrete pumps, self-propelled boom pumps

  • Paving & Advanced Tech: Slip-form pavers, 3D concrete printers

• SLCMs are a core product — enabling on-site concrete production with features like self-loading arms and batch controllers for minimal spillage and accurate mixing.

  • In FY24, 14% of all concrete in India was produced using SLCMs, reflecting growing adoption.

  • It holds a dominant market share in SLCMs in India close to 75%

  • As of FY24, its SLCMs command the highest resale value among peers, due to:

    • First-mover advantage

    • High product quality and reliability

    • Strong after-sales service network

  • They have started selling smaller drum size SLCMs to cater to small medium sized constructions in residential and construction space. This would expand the market of SLCMs for Ajax

• The company also provides spare parts and after-sales support through its dealer network.

Applications of Ajax’s Products

• Used extensively in transportation infrastructure projects such as:

  • Roads and highways

  • Railways, including elevated tracks and underground tunnels

  • Flyovers and bridges

• Deployed in irrigation projects, including Canal construction & Dams and water reservoirs

• Integral to infrastructure development involving Airports, Power plants, Industrial factories

• Supports renewable energy installations by:

  • Building foundations for wind turbines

  • Constructing base structures for large-scale solar power applications

Layman Understanding of each of the product types

Now let us understand each product as a layman to understand the use-cases better -

🔧 1. Self-Loading Concrete Mixers (SLCMs)

👉 What they do: Mix concrete on-site automatically.
👉 How they help:

• Think of these like a mobile concrete factory on wheels.

• They scoop up raw materials (cement, sand, gravel, water), mix them inside, and pour ready concrete directly where it's needed.

• Useful on remote or small sites where it's hard to get ready-mix concrete trucks.

🏗️ 2. Batching Plants

👉 What they do: Prepare large batches of concrete in one place.
👉 How they help:

• Imagine a big machine that works like a kitchen mixer, measuring and combining all ingredients in exact proportions.

• Delivers high-quality, uniform concrete for large projects.

🚛 3. Transit Mixers

👉 What they do: Transport concrete from batching plant to the site.
👉 How they help:

• These are the rotating drum trucks you see on roads.

• They keep the concrete from hardening during transport, so it’s fresh when it arrives.

🚧 4. Concrete Pumps & Boom Pumps

👉 What they do: Push or spray concrete through pipes to hard-to-reach areas.
👉 How they help:

• Say you need concrete on the 10th floor or across a barrier — these pumps send concrete through pipes where trucks or mixers can’t reach.

• Boom pumps come with a robotic arm to place concrete precisely.

🛣️ 5. Slip-Form Pavers

👉 What they do: Lay down concrete roads quickly and evenly.
👉 How they help:

• It's like a machine that lays and shapes the road surface in one go.

• Much faster and more consistent than manual labor.

🖨️ 6. 3D Concrete Printers

👉 What they do: Print concrete structures layer by layer.
👉 How they help:

• Like a giant robotic printer, this machine builds small structures automatically using concrete.

• Saves time and labor, and reduces errors.

How Ajax is innovation and engineering led company

Ajax’s DRHP shares several instances of Ajax being first in India to make several products used in concrete machinery company. They also have training programme for internal workforce.

🔧 Product Innovation Highlights:

• SLCM with Load Cell: Ensures accurate batching; approved by Legal Metrology; widely used by PWD, Irrigation Dept, and BRO.

• Self-Propelled Boom Pump: Compact 4x4 design for tight urban sites; Ajax is the first Indian maker.

• Slip-Form Paver: First and only Indian company to fully develop this in-house, replacing imports in road and highway construction.

• 3D Concrete Printer: First Indian firm to commercialize in-house 3D concrete printing, supporting automation and sustainability.

🧪 R&D and Training – TASC:

• The Ajax School of Concrete (TASC) drives research in material science, especially for 3D printing applications and other concrete equipment manufacturing.

• This aspect of Ajax seems to be funnelling in skilled workforce in the company alongside R&D to drive innovation.

Customers of Ajax

• Ajax caters to a diverse customer base, including:

  • Individual contractors

  • Small and mid-sized contracting firms

  • Rental companies

  • Large construction firms

• 70% of equipment is sold for a government project and 30% for private use

• Equipment is sold through a dealer network with:

  • 51 dealers, presence across 23 Indian states

  • Reach into select overseas markets in Asia, Africa and Russia

Competitive Advantages of Ajax

• Pioneer Advantage & Product Refinement:

  • First-mover in the category and innovated on several products such as SLCMs, boom pumps, pavers and 3D printers.

  • They have years of experience of testing, validation, and engineering refinement, leading to higher reliability, productivity which reduces the total cost of ownership for the customer.

• Superior Performance:

  • Machines consistently deliver rated capacity (e.g., 4.5 delivers 4.5), unlike competitors, ensuring higher throughput and efficiency.

• Strong Service & Dealer Network:

  • 51 dealers and 114 touchpoints across 23 states ensure nationwide service access and spare part availability, boosting customer confidence.

  • Management claims that most repairs are conducted on-site, ensuring minimal downtime. Their 6-8-24 protocol—reach in 6 hours, diagnose in 8, and repair within 24—achieves 85%+ success across India.

• Financing Ecosystem:

  • Availability of both dealer (wholesale) and customer (retail) financing, making machines more accessible and affordable.

• High Resale Value:

  • Due to product quality and brand trust, Ajax machines command strong resale value, aiding lifecycle economics for contractors.

CEV4 to CEV-5 Transition Impacts on Ajax:

Now let us understand an important transition period, SLCM product is going through for Ajax. Government rules have mandated use of CEV-5 engines compared to CEV-4 family being used so far in SLCMs.

Here's a breakdown of how this change affects Ajax:

• Ajax must upgrade its equipment (e.g., SLCMs, boom pumps) to meet CEV-5 compliant engine requirements.

• CEV-5 compliant engines are more expensive than CEV-4 ones. This leads to increased equipment prices, which may impact price-sensitive customers such as small contractors and rental firms.

  • Ajax intends to pass some costs to customers while mitigating some impact by operational efficiencies maintaining EBITDA margins

• Ajax has to phase out CEV-4 inventory and manage supply chain changes, including sourcing from engine manufacturers offering CEV-5-compliant models.

• There may be temporary production or delivery disruptions during the transition.

This transition can have certain negative impact on financials in near term -

1. There may be some pre-buying of SLCMs happening by customers to buy cheaper CEV-4 SLCMs

2. In near term, Ajax may not be able to pass on all increased costs for CEV-5 SLCMs as also indicated by the management in the concalls.

Financials

• FY25 revenue growth was 19%

• EBITDA margins slightly suppressed due to CXO level hiring, CEV-5 transition costs, some other one-time expenses.

• SLCM sales grew 18% led by volume while non-SLCM sales growth was 17.5% mostly led by product mix

• ROCE of business is high at 30%+ while they negligible debt and 600+ Cr cash on balance sheet.

Let us know have a brief look at management quality

Management Quality

While it's still early to form a definitive judgment on the management's quality, certain comments and responses in the earnings calls suggest encouraging signs of capable leadership.

• Do not want to follow pricing led model but want to focus on product quality and great customer experience

And our stated business intent has been to make sure that we strengthen ourselves on product reliability, product performance, cost of ownership, availability of spare parts and on-site services. Thankfully, each of these propositions have been strong.

We don't want to necessarily follow a path which is more led by pricing, but as we have been consistently saying that we want to take a path which is based on more installations, greater customer confidence, and referral as a way to do this business

• Cautious on M&A and return ratios

See we have cash on the books. The fact is that the company continues to evaluate the rightful opportunities from an M&A standpoint. But having said that, we are equally clear what we will not do when it comes to acquisitions. I think one of the things that AJAX has done for the longest period of time has been fiscal prudence, and that will continue in its strategy for capital allocation. It has to meet a few norms, which of course include the guardrails of the return metrics that AJAX has been consistently delivering. The second facet that I want to call out is that we are not interested in sunset products, sunset industries, where the possibility of TAM growth is limited. Second is we are very clear about governance, ethics, and integrity, and accounting related matters in the companies that we would even like to look at. And the third, apart from all of this that I am stating is clearly that we are not interested in any turnaround business situations. So while we actively will continue to look at the right opportunities, it's also equally clear there are things that we would not like to do when it comes to calling out on M&A.

Now we have looked at competitive advantages of Ajax, looked at the financials, understood its products, also considered an ongoing transition in emission norms in the industry, its time to summarise this all in thesis and anti-thesis pointers.

Thesis

1. Industry Growth

• As per DRHP, India's mechanized concrete equipment market is expected to grow from ₹6100 Cr in FY24 to ₹17800 Cr by FY29.

• This growth would be driven by:

  • Rising cement consumption

  • Increased public and private investment in infrastructure, housing, irrigation, and renewable energy projects

• The SLCM segment is seeing strong demand, fueled by the need for faster, more efficient construction methods. There is growing demand of RMC (ready mix concrete).

• This is natural tailwind for Ajax to grow along with the industry

2. Government push on capex

• As Ajax’s products get used in projects which are funded by central/state governments, increased capex budget from governments can fuel growth for Ajax and is an important point to track over here

3. Ajax’s thrust on services, quality and reliability

• I think this is massive thesis pointer for Ajax as management claims to provide widest service network, on-time service quality, available spare parts all leading to higher re-sale value

4. Potential opportunity from exports

• Currently Ajax does only 75 Cr of exports business, but being a manufacturer in India with low cost base, they have an opportunity to sell to other countries and expand global market share.

5. Gaining traction in non-SLCM portfolio

• Ajax has seen grown boom pumps by 18% CAGR and concrete pumps by 50% CAGR in last 3 years. This is clearly an indication that Ajax's products are slowly starting to gain traction in non-SLCM side as well.

• Currently Ajax is smaller player in these products and has an opportunity to win market share by replicating its playbook of reliable, quality supplier of SLCMs.

Anti-Thesis

1. Competition & some margin pressures

• Ajax has 75% market share in SLCMs, this provides large pie for competitors to eat up by getting into price war. One of the competitors Schwing Stetter seems to have grown revenues by 3x in last years

• Management also hinted at some pricing pressures in the concall.

  I mean, see, on a deal-by-deal, there is always a pricing pressure. We do sell at a premium from our nearest competitor, and those pressures exist. But is that the per unit margin is showing a different curve than what was previously experienced? The answer is no. And hence, what we are trying to articulate is that it is dominant by the product mix versus any secular trend either on the cost of production per unit or the sale price per unit.

• Ongoing CEV-5 transition can also cause some margin fluctuations in short-term.

• Last 5 year financials also indicate that any operating leverage in the business may have been offset by the gross margins coming down.

2. Large dependence on government capex

• Growth is highly dependent on infrastructure spending—especially by government.

• Delays in public project execution (e.g., due to elections, funding issues, monsoon) can delay sales cycles and hurt volumes.

3. CEV-5 transition as short term risk

• Pre-buying of CEV-4 machines by end users can cause some slowdown for Ajax in near term

4. Low annuity element in the business

• Ajax’s products such as SLCMs last for 8-10 years. These are high value and low frequency items and not consumables which customer has to replace every year. This is important point over long run to track that how much company is able to diversify in newer product segments, categories and after-sales business

5. Over-guidance in DRHP?

• Ajax says in DRHP that concrete mechanised industry would grow at 24% CAGR until FY29 but management guides for 15%-18% CAGR growth in concalls, there is some disconnect here.

5. Promoter Holding expected to come down

• Currently promoter holding is 80% which would come down over the course of time and would create some selling pressure.

Summary

Ajax Engineering appears to be an execution-driven company benefiting from the strong tailwinds of increasing infrastructure investment in India. It stands out as a quality proxy for the country's infrastructure development. The business has been managed efficiently so far, delivering over 30% ROCE and maintaining a lean working capital cycle. With consistent growth in the mid to high teens, it has the potential to be a long-term compounder. At a valuation of around 30x PE, the stock seems reasonably priced. Some of the things to track here would be -

• Growth in non-SLCM portfolio and exports

• Capital Allocation: usage of cash as they have 600+ Cr on balance sheet

• Government capex

• Competitive pressures and margin trend