The brokerage firm, Nuvama Institutional Equities, initiated coverage on the recently listed Ajax Engineering with a ‘Buy’ call and a target price of Rs 800. This is an upside of 18% from the closing price of April 16, Rs 679. According to a research note by Nuvama, the company has delivered revenue at a compounded annual growth rate (CAGR) of 20% from FY15 to FY25.
Nuvama on Ajax Engineering: Dominant position in SLCM
The company has a first mover advantage in self-loading concrete mixers (SLCMs) with a lion’s market share. The company has an impressive 75% share in SLCM along with a healthy presence in non-SLCMS.
Ajax Engineering’s SLCMs command the highest resale value versus global peers—Schwing Stetter, Putzmeister, KYB-Conmat—due to a lot of factors such as first-mover advantage, better quality, reliability, service life of products, comprehensive product range, wide after-sales service, and many others. Not just that, these SLCMs have notably lower cost of ownership than manual mixers due to lower manpower requirements.
Nuvama on Ajax Engineering: Industry tailwinds
Also, the industry in which it operates, mechanised concreting equipment (CE), is expected to rise 12% CAGR over the next four years.
Mechanised CE is the use of specialised machinery to automate various stages of the concrete construction process. This included mixing, transporting, placing, and finishing. These types of equipment help to increase efficiency, improve accuracy, and reduce labour costs compared to traditional manual methods.
Also, the company is a good play on better cost economics per quality, and increasing mechanisation shall build up its growth edifice.
Nuvama estimates that the share of mechanisation rose from 16% in FY19 to 25% in FY24, and can further increase to 33% by FY29. For perspective on growth headroom, the mechanisation levels in developed markets are about 55–85%.
“We argue this mechanisation trend has taken root, and forecast mechanised CE volume shall expand at a CAGR of 12% over FY25–29 (versus concrete manufacturing’s 5% CAGR),” said Nuvama.
Nuvama thinks Ajax Engineering is a cash cow
However, the brokerage firm estimates that the company might see a moderate growth of 9% in FY26 due to a change in emission norms, but it reckons the medium-term uptrend remains solid.
Nuvama estimated that Ajax Engineering will generate, on average, an annual free cash flow of Rs 300 crore over FY25-FY29. Its net cash per equity share will surge from Rs 68 in FY25 to Rs 103 in FY27 and Rs 151 in FY29.
Ajax Engineering stock performance
The share price of Ajax Engineering has risen almost 17% in the past five trading sessions. The stock has raised investors’ wealth by 16% in the last one month and 18% since the day of listing, February 17, 2025.