Is the Ajax Engineering IPO a Good Investment Opportunity?

Ajax Engineering Limited, established in 1992, has grown into a leading manufacturer of concrete equipment in India. The company provides a comprehensive range of products, including self-loading concrete mixers (SLCMs), batching plants, transit mixers, boom pumps, concrete pumps, self-propelled boom pumps, slip-form pavers, and 3D concrete printers. These products are widely used in infrastructure projects such as transportation, irrigation, and construction.

The company operates four manufacturing facilities in Karnataka, each specializing in different product lines, with a fifth facility under construction in Adinarayanahosahalli, Karnataka, expected to be operational by March 2025. Ajax Engineering has a strong dealer network with 51 dealerships across 23 Indian states and has expanded its global reach with 25 dealers and distributors in South and Southeast Asia, the Middle East, and Africa.

Ajax Engineering IPO Details

Ajax Engineering Limited is set to launch its Initial Public Offering (IPO) on February 10, 2025. This IPO presents an opportunity for investors to participate in the company's growth.

• IPO Opening Date: February 10, 2025

• IPO Closing Date: February 12, 2025

• Price Band: ₹599 to ₹629 per equity share

• Lot Size: 23 shares per lot (minimum investment: ₹14,467)

• Issue Size: ₹1,269.35 crores (entirely through an Offer for Sale of 2.02 crore equity shares)

• Listing Date: February 17, 2025 (BSE & NSE)

Important Dates

• Basis of Allotment Finalization: February 13, 2025

• Initiation of Refunds: February 14, 2025

• Credit of Shares to Demat Accounts: February 14, 2025

• Commencement of Trading: February 17, 2025

Financial Performance

Ajax Engineering has demonstrated strong financial growth over recent years:

• FY 2023-24 Revenue: ₹1,741 crore

• Profit After Tax: ₹225 crore

• Revenue Growth (YoY): 48.4%

• Net Profit Growth (YoY): 65.67%

Industry Outlook

According to a report by Redseer, infrastructure development is projected to drive the demand for mechanized concrete equipment in India, with the industry expected to grow from ₹6,100 crore in FY2024 to ₹17,800 crore in FY2029. Given Ajax’s established market presence and product diversity, it is well-positioned to benefit from this trend.

How to Apply for Ajax Engineering IPO

Investors can apply for the IPO through various methods:

1. ASBA (Application Supported by Blocked Amount): Apply through your bank's net banking facility. The funds remain in your account until the allotment process is completed.

2. UPI (Unified Payments Interface): Apply via UPI through stockbrokers like Zerodha, Groww, and Shoonya.

3. Offline Application: Fill out a physical application form at your stockbroker's office.

To participate in the IPO, consider opening a Demat account with brokers like Zerodha, Shoonya, or Upstox:

• Apply for Ajax Engineering IPO via Zerodha

• Apply for Ajax Engineering IPO via Upstox

Strengths & Risks

Strengths:

• Market Leadership: Strong presence in the self-loading concrete mixer segment.

• Comprehensive Product Range: Diverse equipment portfolio covering the entire concrete value chain.

• Robust Distribution Network: Well-established dealer network across India and international markets.

• Financial Growth: Steady increase in revenue and profit margins over the past years.

Risks:

• Revenue Concentration: Heavy reliance on SLCMs, which account for a significant portion of revenue.

• Geographical Concentration: Manufacturing facilities concentrated in Karnataka pose regional risks.

• Raw Material Price Volatility: Fluctuations in material costs could impact profit margins.

Investment Verdict: Go or No-Go?

Given Ajax Engineering's strong financial performance, leading market position, and favorable industry trends, the IPO presents an attractive opportunity for investors. However, potential risks such as revenue concentration and raw material cost volatility should be considered. Investors with a long-term perspective on India's infrastructure growth may find this IPO a worthwhile investment.

Disclaimer: This article is for informational purposes only and should not be considered financial advice. Please consult with a certified financial advisor before making investment decisions.