Ajax Engineering IPO subscribed 28% on Day 1 amid flat GMP; should you apply?

Ajax Engineering IPO subscribed 28% on Day 1 amid flat GMP; should you apply?

Kedaara Capital-backed concrete equipment maker Ajax Engineering's initial public offering (IPO) was subscribed 28 percent on the first day of bidding. The Rs 1,269.35-crore issue will remain open for public subscription till 12th February.

The Bengaluru-based firm is a leading manufacturer of concrete equipment, offering a range of products, services, and solutions across the concrete application value chain. At the upper end of the price band, Ajax Engineering's market capitalisation is pegged at Rs 7,200 crore.

For FY24, the company reported a revenue from operations of Rs 1,741 crore and a profit after tax (PAT) of Rs 225 crore. The IPO comprises a fresh issue of shares, with promoters required to bring down their post-issue stake to 75 percent over the next three years to meet regulatory norms.

Brokerages remain largely positive on the IPO. Anand Rathi has recommended a 'Subscribe for Long Term' rating, citing Ajax’s leadership in self-loading concrete mixers (SLCMs), presence across the concrete application value chain, and stable financials. "Given these factors, we believe the issue is suitable for long-term investors," the brokerage said.

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Bajaj Broking echoed similar sentiments, highlighting Ajax Engineering’s strong dealer network, which spans across India as well as Nepal and Bhutan. The firm’s niche construction equipment offerings and strong financials were cited as key positives.

However, analysts flagged certain risks. The company’s business is seasonal in nature, and any dip in sales during certain quarters could impact its financial performance. Additionally, fluctuations in raw material prices and disruptions in their availability could weigh on profitability.

Ajax Engineering operates four manufacturing and assembly facilities in Karnataka, each focusing on different product lines. A fifth facility at Adinarayanahosahalli, Karnataka, is under construction and is expected to commence operations in August 2025.

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