ACE Limited: Navigating H1 FY26 with Strategic Resilience and Future Growth in Sight

Action Construction Equipment Limited (ACE), a leading player in India's construction equipment sector, has reported a mixed, yet strategically resilient, performance for the second quarter and first half of the financial year 2026 (Q2 and H1 FY26). While the period saw some moderation in revenue, the company demonstrated robust margin expansion and laid critical groundwork for future growth, driven by favorable policy tailwinds and strategic partnerships.

For Q2 FY26, ACE reported a consolidated total income of Rs. 773.6 Crore, a marginal decline of 2.2% year-on-year. However, on a sequential basis, the company witnessed a healthy 10% growth from Q1 FY26, signaling a stabilizing market. Profit after tax (PAT) for the quarter stood at Rs. 90.1 Crore, a 5% decrease from the previous year. Looking at the first half, H1 FY26, total consolidated income reached Rs. 1,476.8 Crore, down 4.9% year-on-year. Despite this revenue moderation, ACE achieved significant margin expansion, with EBITDA margins growing by 180 basis points to 19.12% and PAT margins expanding by 119 basis points to 12.72%. This impressive margin performance was attributed to calibrated pricing strategies, a favorable product mix, deepening cost efficiencies, and softening commodity prices.

Segmental Performance and Strategic Focus

The company's core segment, Cranes, Material Handling, and Construction Equipment, continued to be the primary revenue driver, contributing Rs. 697.11 Crore, or approximately 93.68% of the total revenue in Q2 FY26. This segment's performance underscores ACE's market leadership, particularly as the world's largest Pick & Carry crane manufacturer with over 63% market share in mobile cranes and around 60% in tower cranes domestically.

In contrast, the Agriculture Equipment segment recorded Rs. 49.29 Crore, accounting for about 6.62% of the revenue. Management transparently acknowledged that this segment had not met its agenda in H1 FY26, primarily due to the timing of export orders executed in the prior year and challenges related to channel vintage and financial support for farmers. However, the company is optimistic about a strong recovery in H2 FY26, bolstered by a recent three-digit tractor export order and a strategic focus on deepening its domestic presence and expanding into new export territories.

Key Initiatives and Future Outlook

ACE is strategically positioned to capitalize on several significant opportunities. A major tailwind comes from the government's proposed anti-dumping duty on Chinese crane imports. With duties ranging from 26% to 52%, this measure is expected to create a level playing field, protect domestic manufacturers from unfair competition, and significantly boost ACE's market share in the heavy crane segment, where Chinese players currently hold a dominant position. This policy aligns perfectly with the 'Make in India' and 'AatmaNirbhar Bharat' initiatives, reinforcing indigenous manufacturing capabilities.

Another pivotal development is ACE's single largest order from the Ministry of Defence for 1,121 Rough Terrain Forklifts (Telehandlers), valued at Rs. 420 Crore. While execution has been delayed to Q4 FY26 or FY27 due to a pending No-Objection Certificate (NOC) related to emission norms, this order signifies ACE's robust R&D prowess and its crucial role in modernizing India's defense infrastructure.

To further strengthen its market position, ACE is pursuing a joint venture with Japan's Kato Works, a renowned five-decade-old company in the heavy lifting segment. This partnership will provide ACE with access to advanced Japanese technology, enabling it to offer premium products and enhance its leadership in the heavy crane market. The company is also in an expansion phase, acquiring additional land to augment its manufacturing capacity, aiming to achieve a production capacity capable of generating over Rs. 5,000 Crore in revenue.

Financial Summary

Strategic Clarity and Disciplined Execution

Management's commentary reflects a balanced and disciplined outlook. While acknowledging the soft start to FY26 due to industry transitions and monsoons, they view Q2 as a sign of recovery. The company anticipates flattish to single-digit revenue growth for FY26, with 55-60% of revenue typically generated in the second half. Long-term revenue guidance remains robust, targeting Rs. 4,000-4,400 Crore by FY27 and Rs. 6,000-6,200 Crore by FY29-FY30. The focus on cost efficiencies, product mix improvements, and operating leverage is expected to drive modest EBITDA margin expansion.

ACE's proactive approach to regulatory changes, such as smartly tackling price increases due to CEV-5 emission norms, and its strategic decision to put the Ghana project on hold due to geopolitical risks, highlight its prudent capital allocation and risk management. The company's strong balance sheet, characterized by a negative Net Debt to Equity ratio, further underscores its financial stability and capacity for sustained growth.

In conclusion, Action Construction Equipment Limited is navigating a dynamic market with strategic clarity and disciplined execution. The confluence of government support, technological partnerships, and internal efficiencies positions ACE favorably to leverage India's robust infrastructure and manufacturing growth story, ensuring sustained value creation for its stakeholders.