Action construction equipment ltd

Latest Conf call transacript Link : https://www.bseindia.com/xml-data/corpfiling/AttachLive/8078b177-38ee-47c0-9433-cb4814cf3472.pdf

Brief Summary:

  • Capex (90-100 Cr) targetted to increase capacity underway, Q3-Q4 completion date. Cranes to target 12,000 units p.a., Construction Equipment target 3000 units p.a., forklifts target 3000 units p.a., Tower Cranes target 900 units p.a. from 400, crawler cranes target 300 units p.a. from 50 units. This all capex will help in achieving 4,000 Cr turnover p.a.
  • Growth of 20-25% expected on consolidated basis. Cranes 18-20%, Construction 45-50%, material handling 15-20%,
  • Current land only one more capex possible so looking for 50-60 acres land in UP/MP for next factory, might be closed in another 2-3 months.
  • 455 Cr cash, 35-40 Cr working capital debt.
  • Q1 FY24 performance: ACE reported strong and resilient performance, surpassing Q4 numbers and achieving the best ever quarterly performance in terms of revenues and profit. First time ever Q1 results surpassed previous Q4, and even during monsoon company is under delivering due to high demand.
  • Agri segment: Revenues grew by over 30% YoY with an EBITDA margin of 15%.
  • Crane segment: Retained dominant market leadership position with revenue of Rs. 441 crores, up 26% YoY.
  • Construction equipment segment: Achieved revenue growth of 78% YoY.
  • Material handling segment: Recorded revenue growth of 10% YoY.
  • Capacity expansion: ACE is focused on expanding capacities and aims to attain revenue of Rs. 4,000 crores at full utilization levels.
  • Consolidated growth guidance: Expects a growth of at least 20-25% on a consolidated basis for FY24.
  • Export opportunities: Actively pursuing export opportunities and expects export sales to contribute around 10% to revenue this year. Ghana project delayed further, mostly will strat in 2nd half.
  • Financials: Debt-free with sufficient liquidity for future growth.
  • Inorganic growth: Looking at inorganic growth opportunities within India and outside the country.
  • Margin focus: Aims to maintain double-digit margins and focused on cost control and reduction initiatives.
  • Demand outlook: Expects sustained demand supported by government focus on infrastructure and urban/rural development.
  • Long-term prospects: Optimistic about medium to long-term prospects and remains focused on delivering growth agenda.
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_Con-call Q2FY24.

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Can give some idea on the growth for this sector

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“Our estimate is that the Indian market will grow 2-3 times by 2030. Not only that, with the direction that the government has set when it comes to sustainable power solutions related to the electrification or use of alternative fuels, India will lead the way,” said Dimitrov Krishnan, head of Volvo CE India.

India is currently the world’s third-largest market for construction equipment, after the US and China.

Read more at:

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Insider buying in ACE

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not really insider in a sense. this is for the employee esop, where the company has given shares as a incentive to employees. The trust buys these shares to be distributed at a discounted price. The employee after exercising the ESOP, can sell the shares after any lock-in period that is applicable.

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Agree. And its good to see they are offering ESOPs. Brings healthy company environment.

Invested and tracking

As I understand ESOP is new stock issue and not purchasing fm market. And company takes loss of difference between current price or book value (not sure) as a cost.

Is this also another way of procuring under welfare trust from market and distributing as ESOP?

Question is to understand the process.

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ESOP need not be new stock issue, it depends on how the company wants to structure the scheme. In accounting terms either new shares or purchase of existing for ESOP trust, both have similar accounting costs, cash flow might be different. Advantage of purchase from market is, existing shareholding is not diluted, also acts like a limited time buyback, since the ESOP shares are taken out of market for sometime, thereby reducing liquidity and giving some minor price support…

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Thnx. Helped to clear concept.

However here in case of ACE they purchase under employee welfare trust and therefore as it is not ESOP trust my understanding…
Current purchase is not for ESOP purchase.

Is that right to concude?

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Fantastic Result - EPS doubled YoY

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Further tailwinds expected, given the infra sector is still a focus in the country.

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Company has purchased another land parcel of 82 acres for future capex, title deed to be done by March’24, all transaction to be completed by May’24.

Currently it had 100 acres land, which would have been sufficient for another 50% increase in topline, so it would have got saturated in another 1-2 yrs at current growth rate.

With this new 82 acre plot, it will help for 4-5 years minimum planning for capex.

Link - https://www.bseindia.com/xml-data/corpfiling/AttachLive/64503f4b-4573-41ec-97fc-d4e6883e24ce.pdf

FY24 Q3 Conf Call - dsnlcrm.com/recordings/109727/ACE-Q3FY24-070224@4.00PM.mp3

Other updates:

  • Small Acquisition in EU being pursued (less thasn 1K Cr)
  • A big Acquisition being pursued in India if it happens
  • 32% sales growth in current yr, 15+% EBIDTA for current FY,
  • Sales guidance of FY26 targetting 4400Cr and upto 5500Cr in FY27.
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New Product Launches and Timeframes:

  • Electric crane: Already launched
  • Aerial work platforms: Launching this quarter (Q4 FY24)
  • Telehandler: Launching this quarter (Q4 FY24)
  • Rough terrain cranes:
    • 45 and 75 ton models launched
    • 20-30 ton models expected in the future
    • 50-55 ton models expected in the future
  • Reach Stacker: Prototyping underway, expected launch in 1-1.5 years

FY24Q3 Conf Call transcript link - 8c3a4245-9b85-44e5-b6a5-22b429293f01.pdf (bseindia.com)

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Seems like the stock is all prepped for another run…
Valuations look comfortable too, given the expected/guided earnings growth and market sentiments.

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According to Manish Mathur, the CEO of Action Construction Equipment (ACE), a new plant for heavy machines is set to be commissioned. This development will significantly enhance their capacity, increasing it 3-4 times compared to the current scenario(A new plant for heavy machines will soon be commissioned which will increase our capacity 3-4 times. - Top Construction and Infrastructure Magazine).

Here are the key points from the article:

  1. Current Market Scenario:
  • ACE is the largest mobile crane manufacturer in India and holds the distinction of being the world’s largest manufacturer of pick-n-carry cranes.
  • The cranes market in India is witnessing robust growth, with a 25-30% YoY rate.
  • The economy’s momentum and the government’s focus on infrastructure and manufacturing are expected to sustain this growth at a 15-20% CAGR.
  • Infrastructure development and the demand for higher capacities and innovative construction equipment are driving the industry forward.
  1. Technology Trends:
  • Technology plays a pivotal role in providing economically and environmentally viable solutions.
  • ACE integrates Telematics into its equipment, allowing remote monitoring and supervision of functional parameters.
  • The company constantly adapts global technologies to Indian working conditions.
  1. Future Outlook:
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