Ajax Engineering IPO: Ajax Engineering, a concrete equipment manufacturer backed by Kedaara Capital, will launch its initial public offering (IPO) for public subscription from February 10 to 12. Additionally, the bidding process for anchor investors will take place for one day on February 7, as announced by the company.

The Bengaluru-based firm has set a price band of ₹599 to ₹629 per share for its IPO, which is valued at ₹1,269 crore. The IPO consists entirely of an offer-for-sale (OFS) of 2.01 crore shares by its promoters and an investor stakeholder, amounting to ₹1,269 crore at the highest price point.

As part of the OFS, Kedaara Capital plans to sell 74.37 lakh shares. Since this public offering is entirely an OFS, Ajax Engineering will not receive any funds from the IPO.

At the upper end of the price range, the company’s market capitalisation is estimated to be ₹7,200 crore. The book running lead managers for the issue include ICICI Securities, Citigroup Global Markets India, JM Financial, Nuvama Wealth Management, and SBI Capital Markets.

Here are 10 key things from the Red Herring Prospectus (RHP) that investors might want to know before subscribing to the issue.

Ajax Engineering IPO Promoters

The company’s promoters include Krishnaswamy Vijay, Jacob Jiten John, Kalyani Vijay, Madhuri Vijay, Prashanth Vijay, Rachel Rekha Hansen, Savitha Christeena Alexander, Sean Alexander, Green Haven Trust, Ohana Trust, Jacob Hansen Family Trust, and The Johns Loaves Trust. The promoters collectively own 100,537,600 equity shares, which account for 87.88% of the company’s total issued, subscribed, and paid-up equity share capital.

Ajax Engineering IPO Peers

The company’s listed peers are Action Construction Equipment Ltd (with a P/E of 46.13), BEML (with a P/E of 54.24), and Escorts Kubota Ltd (with a P/E of 35.73).

Ajax Engineering business

The organisation stands out as a top manufacturer of concrete equipment, offering an extensive array of products, services, and solutions throughout the concrete application value chain, according to the Redseer Report. By September 30, 2024, the company has created more than 141 different variants of concrete equipment that address the needs of the concrete application value chain, and in the past decade, they have sold upwards of 29,800 concrete equipment units in India.

Ajax Engineering Industry

The Indian market for concreting equipment is notably fragmented and informal, reflecting the diverse types of equipment and the different scales of projects carried out across the nation. Concreting equipment includes both manual and mechanised means for producing and distributing concrete, which is essential for the construction industry. As of FY 2024, approximately 25% of the concrete utilised in India is processed through mechanised concreting equipment (excluding manual mixers), an increase from around 16% in FY 2019.

Ajax Engineering Facilities

As of September 30, 2024, Ajax Engineering Limited operates four locations in Karnataka, situated in Obadenahalli, Gowribidanur, and Bashettihalli, with each site focusing on distinct products, particularly the facility in Obadenahalli.

Ajax Engineering Customers

As of September 30, 2024, the company has sold concrete equipment and spare parts, and has built relationships with over 19,000 customers, up from more than 15,700 customers as of March 31, 2024, over 12,100 customers as of March 31, 2023, and more than 11,100 customers as of March 31, 2022.

Their substantial yet focused customer base allows them to establish a robust and reliable business model, while also offering considerable opportunities for further sales growth. In the Financial Years 2024, 2023, and 2022, no individual end-customer accounted for more than 5.00% of their revenue from operations.

Ajax Engineering Group Company

The company has recognised Surin Automotive Private Limited as one of its Group Companies, as per the RHP.

Ajax Engineering IPO Key Risks
Some of the key risks are as follows;

• All of the company’s assembly and manufacturing operations are situated in Karnataka, which could expose them to regional risks that might negatively impact their business, operational results, financial status, and cash flows.
• The company has experienced rapid growth, and they may struggle to maintain their historical growth rates moving forward. Any failure to effectively manage their growth or to execute their growth strategy promptly, or within budgetary constraints, could adversely affect their business, operational results, financial status, and cash flows.

Ajax Engineering Financials

Ajax Engineering announced its revenue from operations for FY24 at ₹1,741 crore, with a profit after tax (PAT) amounting to ₹225 crore.

Lock-in of equity shares allotted to anchor investors

A lock-in period of 90 days will apply to 50% of the equity shares allocated to the anchor investors starting from the date of allotment, while the remaining 50% of the equity shares allotted to the anchor investors will have a lock-in period of 30 days beginning from the date of allotment.

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