The initial public offering (IPO) of Ajax Engineering attracted a muted response from the investors during the second day of the bidding process from all the categories of the bidders. The issue, which kicked off on Monday, February 10, was overall subscribed only 28 per cent on day one.
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 52,47,427 equity shares, or 37 per cent, compared to the 1,41,49,997 equity shares offered for the subscription by 11.20 am on Tuesday, February 11, 2025. The three-day bidding for the issue shall conclude on Wednesday, February 12.
The allocation for retail investors was subscribed 42 per cent, while the portion reserved for non-institutional investors (NIIs) saw a subscription of 40 per cent. Portions allocated towards employees was booked 87 per cent. However, the quota set aside for qualified institutional bidders (QIBs) saw bid for 26 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 15-20 per share in the unofficial market, suggesting mild gains of 3-4 per cent for the 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 follows an asset-light model by sourcing materials from 546 suppliers. Its result focuses on localisation as a result of which imports constitute less 10 per cent of costs of materials. The company’s addressable market is growing faster given the government thrust on infrastructure, which augurs well for the company, said Anand Rathi Research.
Ajax offers niche construction equipment in its business and has robust financials. On valuation parse, based on FY24 it is seeking PE of 32 times and post issue market cap comes at Rs 7,196 crore with the issue is reasonably priced. Therefore, given the factors like, market leading in SLCM’s products, present across all the concrete application value chain and stable top and bottom lines, it added with a 'subscribe' rating.
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 the market leader in the self-loading concrete mixers segment holding approximately 77 per cent in 1HFY25 respectively in terms of units sold. It possesses a robust dealer network of 51 dealerships across India and has served over 19,000 customers as of 1HFY25, said Arihant Capital Markets.
"The company has delivered strong revenue, EBITDA and PAT CAGR of 51 per cent, 74.5 per cent and 84.4 per cent, respectively in the period between FY22-FY24 and is debt-free. The issue is valued at an EV/Ebitda multiple of 25.9 times based on FY24 Ebitda and P/E ratio of 31.93 times, based on an annualized FY24 EPS of Rs 19.7," it said with a 'neutral' 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.