Ajax Engineering FY26: A transition year, with Q4 profitability back on track

Ajax Engineering ended FY26 with steady revenue but lower full-year margins, as the company absorbed higher costs from the transition to CEV-V emission norms and navigated softer infrastructure execution in key states. Revenue from operations rose to INR 2,102.5 crore in FY26 from INR 2,073.9 crore in FY25, a 1.4% increase. However, EBITDA fell to INR 265.8 crore from INR 318.1 crore, and PAT declined to INR 225.1 crore from INR 260.1 crore.

The quarter told a more encouraging story. Q4 FY26 revenue was broadly flat at INR 757.7 crore, while profitability improved meaningfully. Gross margin increased to 25.8% in Q4 FY26 from 24.1% in Q4 FY25, and EBITDA margin rose to 15.1% from 14.7%. Management attributed the rebound to cost optimisation, operating leverage, and a price increase of around 2% implemented in January 2026.

The FY26 backdrop: capex delays and an emission reset

The investor presentation highlighted a difficult operating environment during FY26. Budgeted central capex was revised down, and utilisation till December 2025 was stated at 55%. The company also pointed to lower capex execution across key states and delayed government payments, which tightened contractors’ cash flows and slowed new orders.

Against this, Ajax argued it outperformed the broader construction equipment cycle, citing that industry volumes fell 11% while its SLCM volumes declined 4% in FY26. It also stated it regained market leadership in SLCMs, ending FY26 with a 73.5% market share by units sold as of March 2026.

A major internal milestone was the completion of the CEV-IV to CEV-V transition. Ajax stated its CEV-IV inventory was fully sold out, and CEV-V machines launched in Q4 FY25 were tested and stabilised, with strong customer acceptance. The transition increased production costs and was the key reason for the full-year margin compression.

Segment mix: SLCM remains the profit engine

Ajax’s revenue base continues to be dominated by SLCMs. FY26 revenue mix remained unchanged versus FY25 at 84% SLCM, 9% non-SLCM, and 7% spares and services. On an absolute basis, SLCM revenue in FY26 was INR 1,757.5 crore, non-SLCM revenue was INR 193.4 crore, and spares and services revenue was INR 151.7 crore.

Non-SLCM grew faster than the core franchise. Non-SLCM revenue rose 6.6% year-on-year and volumes increased to 612 units in FY26 from 568 units in FY25. Management said it continues to strengthen presence in pumps and batching plants and expects steady expansion over time, driven by installations, product reliability, and service support.

Spares and services revenue grew 8.7% year-on-year, despite lower machine running hours cited in the concall. Management linked the growth to expansion of the dealer and service network.

Financial summary (INR crore)

Cash discipline stands out, even in a weak year

The balance sheet remains a key pillar of the Ajax thesis. The company reported a debt-free position and a cash balance of INR 11,208 million (about INR 1,120.8 crore) as of March 2026. It also highlighted an asset-light model and low capex requirements relative to the scale of operations.

FY26 also marked a sharp improvement in cash conversion. Operating cash flow to EBITDA was reported at 141.9% in FY26, and net working capital cycle tightened to 21 days, the lowest in five years. The cash flow statement showed cash generated from operations rose to INR 455.2 crore in FY26 from INR 130.8 crore in FY25, supported by a working capital inflow.

In the concall, management said it is comfortable with dealer inventory at about four to five weeks in most markets and indicated a normalized working capital of around 30 days going forward, with 25 to 30 days as an aggressive range.

Pricing, market share, and the path back to mid-teens margins

Pricing was a recurring theme in both the presentation and the transcript. Management stated Ajax implemented an around 2% price hike in Q4 FY26, and that it was the only player to take any price increase. The CEO also stated competitors continue to sell at lower prices, and indicated a 4% to 8% gap, rising up to 10% in some cases.

Despite that, Ajax claimed it maintained share. Management described a temporary market share dip to about 70% in Q1 FY26, followed by a recovery as CEV-V products stabilised in the market. By FY26, the company reported 73.5% share, and the CEO said April market share was sustained at 76%.

On margins, management reiterated a longer-term objective to return to a 13% to 15% EBITDA margin range. It avoided offering near-term certainty, stating the trajectory depends on demand recovery, pricing, and commodity trends such as steel.

Growth levers: non-SLCM, exports, and selective cash deployment

Beyond SLCMs, Ajax continues to broaden its portfolio across the concrete value chain, including batching plants, transit mixers, boom pumps, slip-form pavers, and 3D concrete printing. The company also highlighted an upcoming facility at Adinarayanahosahalli, expected to be operational in H1 FY27.

Exports are a smaller but growing component. FY26 export mix increased to 5% from 4% in FY25, and the presentation highlighted 39% export revenue growth in FY26. In the concall, the CEO indicated an export growth expectation of about 20% to 25%, given global uncertainty.

A key investor question remains the use of the company’s large cash reserves. Management said it is evaluating opportunities and may act in the latter half of the year, while also setting governance and return thresholds for any inorganic move. It did not commit to a dividend or buyback action.

Takeaways from FY26

FY26 reinforced Ajax’s ability to protect leadership through a difficult cycle, even as profitability softened due to a structural cost reset from CEV-V compliance. The Q4 recovery in margins, combined with strong cash conversion and a debt-free balance sheet, provides management flexibility.

The next phase will likely be judged on three variables that management itself highlighted: sustaining market share while preserving pricing discipline, scaling the non-SLCM portfolio through installations and service support, and deploying excess cash without compromising governance or return expectations.