Ajax Engineering IPO opens for subscription: Check reviews, GMP, allotment, listing date & more

The initial public offering (IPO) of Ajax Engineering kicks off for bidding today, that is, Monday, February 10. The company is selling its share in the range of Rs 599-629 apiece for which investors can apply for a minimum of 23 equity shares and its multiples thereafter. The issue shall close for bidding on Wednesday, February 12.

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 Rs 1,269.35 crore IPO of Ajax Engineering is entirely an offer-for-sale (OFS) of up to 2,01,80,446 shares. However, the company will not receive any proceeds from the issue. Before the bidding commenced, the grey market premium (GMP) of Ajax Engineering stood at Rs 50-55 apiece, suggesting a 8-10 per cent gains for the investors.

Ahead of its IPO, Ajax Engineering raised Rs 379.31 crore from 23 institutional investors via anchor book as it allocated 60,30,449 shares at Rs 629 apiece. Its anchor book included names like  SBI Mutual Fund, Amundi India, Axis Mutual Fund, IIFL Asset Management, Ashoka Whiteoak ICAV, Franklin Templeton Investment Funds, Fundpartner Solutions SA invested and others.

The design, engineering and development team of Ajax Engineering has 76 full-time employees, about 17.16 per cent of the total workforce, as of March 31, 2024 The company has four facilities in Karnataka, located at Obadenahalli, Gowribidanur, and Bashettihalli, each specializing in different products, especially the Obadenahalli facility.

Ajax Engineering has 51 dealerships across 23 states in India, providing 114 touchpoints, including 51 headquarters and 63 branches, 34 of which also serve as service centers, as of March 31, 2024. The company has established 25 dealers and distributors across South and Southeast Asia, the Middle East, and Africa.

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.

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. Here's a host of brokerage firms said about the IPO of Ajax Engineering:

Reliance Securities
Rating: Subscribe
Ajax Engineering has one of the first mover advantage with introduction of SLCM’s in India driven by high quality and reliability of products and has strong after sales service. It has strengthened its capabilities and increased market share of non- SLCM portfolio and increased its presence in overseas markets through exports exploring opportunities for inorganic growth, said Reliance Securities.

"With strong financials focusing on capital efficiency and healthy return ratios led by an experienced management team. It would continue to maintain its leadership in the large and growing SLCM market, concrete equipment and application completing the value chain delivering to a diversified customer base," it added with a 'subscribe' rating.

Choice Broking
Rating: Subscribe
Ajax is India's second-largest mechanized concreting equipment manufacturer by volume. AEL has a 20 per cent market share in India's mechanized concreting equipment segment It is a market leader in the self-loading concrete mixer (SLCM) segment, holding a 75 per cent share by volume in FY24, said Choice Broking.

"Ajax is demanding a P/E multiple of 29.6 times, based on its TTM EPS of Rs. 21.3 and EV/Sales of 3.9 times, this valuation appears discounted compared to the peer average. However, the peers selected by the company are not comparable directly. It has demonstrated sustained growth in both revenue and profitability," said Choice Broking with a 'subscribe' rating.

KR Choksey Finserv
Rating: Subscribe
Ajax Engineering (AEL) is positioned as a dominant player in the industry. It follows a seasonal revenue pattern, the company generates around 35 per cent of its revenue in the first half of the year and nearly 60 per cent in the second half, indicating a strong back-ended business cycle, said KR Choksey.

"AEL is reasonably priced compared to its industry peers, backed by solid financial performance with Revenue/PAT CAGR of 51 per cent/84 cent from FY22 to FY24. With its dominant market share, growth trajectory, and favorable industry outlook, the company presents a compelling investment opportunity. Hence, We assign 'subscribe' rating," it added.
 

Geojit Financial Services
Rating: Subscribe
Currently 25 per cent of the concrete produced is via mechanized concreting equipment and is expected to reach 41 per cent byFY29E, which will be beneficial for AJAX. The Ebitda and PAT margins are healthy at 16 per cent and 13 per cent, respectively in FY24 compared to its peers, said Geojit Financial Services. 
 

"Ajax Enginering is available at a P/E of 32 times (FY24), which appears to be reasonably priced compared to its peers. Given its dominant market share, bright growth prospects, strong dealer network, asset-light business model, nil debt and favourable industry outlook, we recommend to subscribe on a long-term basis," Geojit added.

StoxBox
Rating: Subscribe
On the financial front, the company has delivered strong performance, with revenue growing at a CAGR of 51 per cent from FY22 to FY24. Its Ebitda and PAT grew at an impressive CAGR of 74.5 per cent and 84.4 per cent, respectively, said StoxBox.

"The issue is priced at a P/E ratio of 32.1 times on FY24 earnings, lower than its industry peers. Given the company’s strong financial performance, favorable industry growth drivers, and attractive valuation, we recommend a 'subscribe' rating for this issue," StoxBox added.

Ventura Securities
Rating: Subscribe
Ajax's advanced technologies like 3D concrete printing and automation in SLCMs improve efficiency and concrete quality, reducing material wastage, said Ventura Securities. "With India’s infrastructure boom, including roads, metro systems, and urban development, demand for faster, reliable construction solutions is rising, it added, with a 'subscribe' rating on the issue.