Ajax Engineering, a prominent manufacturer of concrete equipment, has opened its initial public offering (IPO) for subscription from February 10 through February 12, 2025. The IPO, which is entirely an offer for sale, includes 2.02 crore shares, raising approximately ₹1,269.35 crore at the specified price range of ₹599 to ₹629 per share.
This strategic move allows existing shareholders to sell their stakes, as the company will not receive any funds from the sale. The allotment of shares will be finalized on February 13, with trading expected to commence on February 17 on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
Founded in 1992, Ajax Engineering specializes in manufacturing self-loading concrete mixers (SLCMs), holding approximately 77% of the market share in this segment as of the six-month period ending September 30, 2024. The company has strategy-rich manufacturing capabilities, with four state-of-the-art facilities located throughout Karnataka, each focusing on distinct product lines.
Market analysts are closely monitoring the IPO's subscription status, which, as of February 10, had already attracted significant interest. Reports indicate the subscription was 0.02 times, with retail investors accounting for 0.03 times and non-institutional investors showing 0.02 times engagement. Qualified institutional buyers (QIB) had yet to place bids, showcasing the cautious enthusiasm across investor categories.
Although it is still early, the grey market has identified Ajax Engineering shares trading at a premium of ₹49 per share, projecting an initial listing price of around ₹678. This value indicates roughly 7.79% upside over the upper price band of ₹629, hinting at possible investor optimism.
Despite this promising outlook, investors must be wary of the inherent risks outlined by the company during the prospectus filing. Notably, over 85% of Ajax Engineering's revenue is derived from SLCMs, and any downturn in sales or demand within this sector could significantly adversely affect the company's profitability and financial health. Seasonal fluctuations could also lead to revenue instability, thereby compelling vigilance among current and potential investors.
The IPO’s overall price band, investor confidence backing, and strategic shareholder offloading are pivotal aspects of the offering, particularly with Kedaara Capital leading the charge as one of the notable stakeholders. The financing firm has previously shown success with investments across various sectors including prominent retail and finance companies.
Further addressing investment logistics, the IPO allows for minimum subscriptions of 23 shares, enabling retail investors to enter the market with investments starting around ₹14,467. The lead managers, which include industry giants like ICICI Securities, Citigroup Global Markets, and SBI Capital Markets, are poised to handle the IPO operations efficiently.
Overall, Ajax Engineering arises as not only one of India's leading players within the SLCM market but also as one with strong financials, reporting notable growth metrics such as 65.7% increase in net profit and 51.3% uptick in revenue year-over-year as of FY2024.
With forecasts indicating steady growth bolstered by experienced management and strong product demand, experts have recommended keeping the Ajax Engineering IPO on investors’ radars. The combination of these dynamics invites the potential for solid returns, provided the company can navigate the risks effectively.
Investors' appetite for new listings is optimistic, and as Ajax Engineering begins trading, many will be watching closely to see how its entry affects the broader market's momentum and its position within the competitive construction equipment segment.
The forthcoming days will reveal more about the level of investor engagement and overall market sentiment surrounding Ajax Engineering’s IPO, shaping the future of this renowned company.