Nuvama Institutional Equities has recently launched its coverage of Ajax Engineering, recommending a ‘Buy’ rating with a target price of Rs 800. This suggests a potential upside of 18% from its closing price of Rs 679 as of April 16. The firm has highlighted that Ajax Engineering has achieved a remarkable 20% compounded annual growth rate (CAGR) in revenue from FY15 to FY25, indicating strong growth prospects.
Ajax Engineering’s Market Leadership in SLCM
Ajax Engineering stands out as a leader in the self-loading concrete mixer (SLCM) sector, boasting a commanding 75% market share. This first-mover advantage positions the company significantly ahead of its competitors.
- Key Factors for Success:
- High resale value compared to global rivals like Schwing Stetter and Putzmeister.
- Superior product quality and reliability.
- Comprehensive after-sales service.
- Lower operational costs than traditional manual mixers due to reduced manpower needs.
Industry Growth Catalysts
The mechanized concrete equipment market is projected to grow at a CAGR of 12% over the next four years. This segment automates critical stages of the concrete construction process, enhancing efficiency and accuracy while minimizing labor costs compared to conventional techniques.
- Future Mechanization Trends:
- Mechanization share expected to increase from 16% in FY19 to 25% in FY24, potentially reaching 33% by FY29.
- Developed markets exhibit mechanization levels between 55% and 85%, indicating significant growth opportunities for Ajax.
Nuvama emphasizes that this trend towards mechanization is firmly established, predicting that mechanized concrete equipment volumes will grow at a CAGR of 12% from FY25 to FY29, outpacing concrete manufacturing’s 5% CAGR.
Ajax Engineering’s Financial Outlook
Despite a projected moderate growth rate of 9% in FY26 due to new emission regulations, Nuvama maintains a positive medium-term outlook for Ajax Engineering. The firm estimates that the company will generate an impressive average annual free cash flow of Rs 300 crore from FY25 to FY29.
- Projected Net Cash per Share:
- Expected to rise from Rs 68 in FY25 to Rs 103 in FY27 and Rs 151 by FY29.
Recent Stock Performance of Ajax Engineering
The stock price of Ajax Engineering has seen a robust increase of nearly 17% in just five trading sessions. Over the past month, investors have witnessed a 16% rise in wealth, while since its listing on February 17, 2025, the stock has gained 18%.
In summary, Ajax Engineering’s strong market position, the anticipated growth of mechanized concrete equipment, and its solid financial metrics make it a compelling investment opportunity.
