Action Construction Equipment Ltd

Engineering - Industrial Equipments

Little Masters

Rs. 382.45
February 17, 2023

Stock Info

Engineering - Industrial Equipments
Face Value (Rs)
Equity Capital (Rs cr)
Mkt Cap (Rs cr)
52w H/L (Rs)
393.30 - 175.00
Avg Daily Vol (BSE+NSE)

Shareholding Pattern

(as on 31-Dec)
Public & Others
Source: Ace equity, StockAxis Research

Price performance

Return (%)
Source: Ace equity, StockAxis Research

Indexed Stock Performance

Action Construction Equipment Ltd Sensex
Action Construction Equipment Ltd
Source: Ace equity, StockAxis Research

Established Market Leader In Cranes & Forklift Segment

Company Profile

Action Construction Equipment Ltd. (ACE), was incorporated in 1995. The company is engaged in the business of manufacturing and marketing construction equipment, agricultural equipment, and material handling (forklifts). The company is an established market leader in mobile and fixed tower crane segments. It holds a diverse product portfolio across various segments such as

  1. Cranes: Hydraulic mobile cranes, mobile tower cranes. A new product ‘Electric Mobile Crane’ is launched recently under this segment.


  1. Material handling: Forklifts


  1. Road construction equipment: Backhoe loaders, compactors


  1. Agricultural equipment tractors, harvesters, etc.


ACE also offers Crawler Cranes, Truck Mounted Cranes, Lorry Loaders, Backhoe Loaders/Loaders, Vibratory Rollers, Motor Graders, Forklifts, Tractors & Harvesters, and other Construction Equipment. It serves multiple yet significant industries through its vast product portfolio like the agricultural industry, real estate, manufacturing, logistics, and infrastructure.

The company has a manufacturing facility in Haryana.

Investment Rationale

Market leader in the Cranes segment and among the top three players in the Forklift segment in India

The company caters to 63% market share in ‘Mobile and Tower cranes. The company is rigorously engaged in innovating and adding more products to this segment. Recently during the quarter that ended in December 2022, Electric Mobile Crane was launched under this segment. Under its Forklift segment, the company competes closely with Godrej & Boyce Mfg. Co. Ltd. and Kion Group AG. and is known among the top three players in this segment in India.

Marquee client base

The company has an astounding client base of renowned market leaders from various industries. Its clientele is formed of Aditya Birla group, ACC, Dabur, Novartis, HP, BHEL, Coal India, RITES, Indian Oil, BEML, etc.

Well Diversified Product Portfolio

ACE has a well-established product portfolio under four major segments namely~ Cranes, Material Handling, Road Construction Equipment, and Agricultural equipment. Under these, it holds market leadership and a position among the top three as mentioned above. Now, ACE is focusing on planning to expand products of new-age technology which are electric products. These products are~ electric stackers, fork-over manual stackers, semi-electric stackers, heavy-duty electric pallet trucks, etc. Its continuous innovation and brand-building will lead to its growth in the future.

Margin stability with strong operational efficiency over the years

The company has maintained its EBITDA margins in line with 8-10% for the past five years. On the operational front, the company has maintained its manufacturing and other costs, though raw material costs are fluctuating and they are not under companies control. It has given an increased rate of profit margin year on year for the past five years with its profit margin between 4-6.5%. Overall the company has witnessed growth in sales on account of increased volumes and high-demand traction in end-consumer industries.

Financial Analysis

The company has had a Revenue & PAT CAGR of 16.76% & 49.6%  respectively for the past five years. For the year ended FY22, the Revenue & PAT of the company stood at Rs,1645 crores and Rs 105 crores respectively with EBITDA of Rs 151 crores and an EBITDA margin of 9.2%. The five-year average EV/EBITDA, ROCE, and ROE of the company are at 13.72x, 16%, and 13% respectively.

Q3 FY23 Analysis

During the quarter that ended 31st December 2022, the revenue of the company stood at Rs 556, an increase of 27% & 13% on a YoY & QoQ basis respectively. EBITDA for the quarter stood at Rs 62 crores, an increase of 59% & 38% on a YoY & QoQ basis respectively. EBITDA margin increased by 200 bps to 11% both on a quarterly and yearly basis. PAT for the quarter stood at Rs 47 crores an increase of 74% & 38% on a YoY & QoQ basis respectively.

Risk & Concerns

High Working capital requirements

Since the company deals in the manufacturing of heavy machinery required in capital-intensive industries which are subject to technological advancements require hefty working capital for managing smooth operations in the business.

Cyclicality in the end-user industry

ACE is exposed to cyclicality in the end-user industry, which is the infrastructure industry. This industry is subject to government capex support followed by heavy demand in the domestic market. Any slowdown in the economy will impact its profitability.

Intensive competition

The company is subject to strict competition from foreign and domestic players, which have high-end technological support at their end. Companies like JCB, Escorts, Volvo, etc are some of the renowned players and peer competitors of the company.

Outlook & Valuation

Action Construction Equipment is a leader in the Cranes segment and is among the top three players in the Forklift segment. ACE is a beneficiary of the strong demand of equipment from the Infrastructure, Industrials, and real-estate segments on the back of investment by the Government and Industrial companies. The company is rigorously focusing on innovation and expansion of its product base strategically. New product launches and capacity expansion will support profitability going forward. At a CMP of Rs 374, the stock is trading at 17x its FY25E earnings.  We recommend a 'BUY' rating for the stock.

Consolidated Financial Statements