1 month ago
The initial public offering (IPO) of concrete equipment manufacturer Ajax Engineering has opened for subscription today and will be available for investors to bid till February 12.
The IPO is a complete offer-for-sale (OFS) of 2.01 crore shares, valued at ₹1,269 crore at the top of the price range, by its promoters and an investor shareholder.
As part of the OFS, Kedaara Capital will offload 74.37 lakh shares.
Since the public issue is completely an OFS, Ajax Engineering will not receive any proceeds from the IPO.
Ajax Engineering IPO price band
The company has fixed a price band in the range of ₹599-629, where investors can bid for 23 shares in one lot.
Ajax Engineering IPO GMP
Ahead of the issue opening, the company's shares were trading with a GMP of ₹52 in the unlisted market.
However, it is important to note that grey market premiums are just an indicator of how the company's shares are stacked up in the unlisted market and are subject to change rapidly.
Ajax Engineering IPO risk factors
- Revenue concentration risk: The company derived 77.4%/83.1%/85.1%/81.5% of its FY22/FY23/FY24/1HFY25 revenue, respectively from sale of Self-loading concrete mixers.
- Cyclicality risk: The concrete equipment industry in India is cyclical in nature and is primarily driven by government infrastructure investment.
- Raw material risk: Cost of raw materials stood at 71.8%/71.9%/73.3%/69.6% of FY22/FY23/FY24/1HFY25 revenue respectively.
- Manufacturing facility risk: All of the manufacturing facilities are located in Karnataka which exposes them to regional risks.
- Compliance risk
: The company has few instances of non-compliance with respect to certain regulatory filings for corporate actions taken by the company in the past.
Ajax Engineering IPO growth strategy
- Improve operational efficiencies.
- Increase presence in overseas markets through exports.
- Explore opportunities for inorganic growth.
Ajax Engineering IPO anchor investment
The company has already garnered over ₹379 crore from anchor investors on February 7.
The Kedaara Capital-backed company has allocated shares to SBI Mutual Fund (MF), Axis MF, HSBC MF, Edelweiss MF, ITI MF, Amundi Funds New Silk Road and Franklin Templeton Investment Funds, among others
The company has allotted 60.3 lakh shares to 23 funds at ₹629 apiece, which is also the upper end of the IPO price band. This aggregates the transaction size to ₹379.3 crore.
Other details
Considering the upper end of the price band, the company’s market capitalisation has been pegged at ₹7,200 crore.
Ajax Engineering is a leading concrete equipment manufacturer with a comprehensive range of related equipment, services and solutions across the concrete application value chain. The company operates four assembling and manufacturing facilities in Karnataka, each specializing in distinct product lines. Besides, an assembling and manufacturing facility at Adinarayanahosahalli, Karnataka is under construction and expected to become operational in August 2025.
Ajax Engineering has seen healthy financial performance in the past years, with the profit in fiscal 2024 growing sharply by 65.7% to ₹225.1 crore and revenue increasing by 51.3% to ₹1,741.4 crore, compared to previous financial year.
Profit in the six months period ended September 2024 soared to 21.8% to ₹101 crore and revenue grew by 12.4% to ₹770 crore compared to the corresponding period last fiscal.
ICICI Securities, Citigroup Global Markets India, JM Financial, Nuvama Wealth Management and SBI Capital Markets are the book running lead managers to the issue.
The allotment for the Ajax Engineering IPO is expected to be finalised on February 13, 2025. Ajax Engineering IPO will be list on BSE, NSE with a tentative listing date fixed as February 17.
