The initial public offering (IPO) of Ajax Engineering managed to sail during the third and final day of the bidding process but the retail bidders remained cautious. The issue was overall subscribed only 28 per cent on day one and ended day two with nearly halfway mark.
Ajax Engineering is selling its shares in the price band of Rs 599-629 apiece. Investors can apply for a minimum of 23 shares and its multiples thereafter. It is looking to raise Rs 1,269.35 crore via IPO, which is entirely an offer-for-sale (OFS) of up to 2,01,80,446 equity shares by the promoters and existing shareholders of the company.
According to the data, the investors made bids for 1,58,39,709 equity shares, or 1.12 times, compared to the 1,41,49,997 equity shares offered for the subscription by 1.05 pm on Wednesday, February 12, 2025. The three-day bidding for the issue, which kicked off on Monday, February 10, concludes today.
The allocation for qualified institutional bidders (QIBs) was subscribed 1.54 times, while the portion reserved for non-institutional investors (NIIs) saw a subscription of 1.61 per cent. Portions allocated towards employees were booked 1.97 per cent. However, the quota set aside for retail investors saw bids for 66 per cent of their allocation.
Incorporated in July 1992, Bengaluru-based Ajax Engineering manufactures a wide range of concrete equipment and services across the value chain. As of March 31, 2024, the company has developed 110 concrete equipment variants for the value chain and sold over 27,800 units in India in the last ten years.
The grey market premium (GMP) of Ajax Engineering has seen a sharp correction on the back of dull bidding for the issue and dented market sentiments. Last heard, the company was commanding a premium of merely Rs 7 per share in the unofficial market, suggesting a flat listing for investor investors. The GMP stood around Rs 55 before the issue kicked off.
Brokerage firms are mostly positive on the issue but for a long-term perspective citing its strong financial, experienced management, positive cash flow and strong market share in the business. However, dependence on China and Japan for raw material and geopolitical concerns are the major issues for the company.
Ajax Engineering is set to list at a P/E of 30 times with a market cap of Rs 7,196.19 crore, whereas its peers are trading at P/E ratios of 32-50 times, said Marwadi Financial Services. "We assign 'subscribe' rating to this IPO as the company is market leader in a large and fast-growing SLCM market. Also, it is available at reasonable valuation as compared to its peer," it added.
Ajax Engineering has reserved 78,947 equity shares for its eligible employees, who will get a discount of Rs 59 per share in the IPO. The company has reserved 50 per cent of the shares for qualified institutional bidders (QIBs), while non institutional investors (NIIs) will have 15 per cent for the allocations. Retail investors shall get 35 per cent of the reservation in the issue.
For the six months ended on September 30, 2024, Ajax Engineering clocked net profit of Rs 101.02 crore with a revenue of Rs 769.99 crore. The company reported a net profit of Rs 225.15 crore with a total revenue of Rs 1,780.07 crore for the Financial year ended on March 31, 2024. The company shall command a total market capitalization close to Rs 7,200 crore.
Ajax Engineering is a leading manufacturer of Self-Loading Concrete Mixers (SLCMs) with 77 per cent of the market share in India as of September 2024. SLCM machines experienced healthy demand over the last two years given the increased public and private spending towards infrastructure, housing, and other projects, said GEPL Capital's IPO note.
"Over the next five years, the market for concreting equipment is poised for robust growth and is projected to expand at a CAGR of 22 per cent by volume given the increased consumption of concrete materials. We believe that the company is fairly valued compared to its industry peers and has good future growth prospects," it added with a 'subscribe' rating.
ICICI Securities, Citigroup Global Markets India, JM Financial, Nuvama Wealth Management and SBI Capital Markets are the book running lead managers of the Ajax Engineering IPO, while Link Intime India is the registrar for the issue. Shares of the company shall list on both BSE and NSE on Monday, February 17.