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On Friday, Citi analysts initiated coverage on Ajax Engineering (AJAXENGG:IN), assigning a Neutral rating to the stock with a price target of INR 745.00. Ajax Engineering, recognized as India’s leading self-loading concrete mixer (SLCM) manufacturer, commands a significant 75% market share and is noted for its robust supplier and dealer network.
The Citi analysts highlighted that Ajax Engineering is poised to capitalize on the strong demand for mechanized concrete. The company’s SLCMs not only carry a strong brand reputation but also boast the highest resale value in the market. Despite these strengths, the analysts pointed out concerns regarding increasing competition and market share loss. They also noted that the company’s margins had peaked in the fiscal year 2018.
Ajax Engineering’s revenue is expected to grow at a compound annual growth rate (CAGR) of 14% from the fiscal year 2024 to 2027, according to Citi’s estimates. This forecast is slightly lower than the consensus estimates for its competitors, with ACE and BEML (NSE:BEML) projected at 16% and 14% revenue CAGR, respectively.
The analysts’ valuation takes into account a price-to-earnings (PE) ratio of approximately 26 times the earnings for September 2026, which they believe limits the stock’s upside potential. This valuation is in line with BEML’s but below ACE’s PE ratio of 30.0 times. The Citi team has incorporated management’s strategy to mitigate the impact of CEV V emissions standards, which is expected to revert the company’s margins to fiscal year 2025 levels by 2027.
The price target set by Citi reflects a valuation based on a PE ratio of 26.5 times the earnings for September 2026, excluding other income and adding cash reserves. The analysts concluded that a scenario of higher-than-expected growth could potentially lead to a more positive outlook on Ajax Engineering’s stock.
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