Action Construction Equipment Ltd. (ACE) – FY25 & Q4 FY25 Highlights Financial & Performance Summary: - FY25 Revenue: ₹3,420 crore (+14.5% YoY), surpassing industry growth. - EBITDA: ₹599 crore (+25%), margin improved to 17.52% from 16.04% in FY24. - Net Profit: ₹404 crore (+23%), with PAT margins rising to 11.8%. - Q4 Revenue: ₹967.6 crore (+13% QoQ, +15% YoY); EBITDA: ₹171.3 crore (margin 17.7%); net profit impacted by seasonality. Key Business & Market Developments: - Segment Growth: Cranes, Material Handling, & Construction Equipment revenue up 15.5%; led by robust volume and value growth. - Market Share & Leadership: Dominant in hydra cranes (>75%) and new-generation cranes (51%). Industry volume around 15,000 units, with a focus on expanding market share. - Defense & International Orders: Signed a historic INR 420 crore order for Indian armed forces’ rough terrain forklifts; execution begins in Q3 FY26. - Global Expansion: Entry into Africa with a multimillion-dollar infrastructure project; Middle East and Australia markets steady. Capacity & Capex: - Current Capacity: Cranes 13,200 units, Material Handling 2,700 units, utilization ~70%. - FY26 Capex: ₹300–350 crore, mainly on process upgrades (₹100 crore), new plants/expansion (₹100 crore), land acquisition (~₹150 crore). - Long-term Capacity: Sufficient for around ₹5,100 crore revenue, with focus on process efficiency over volume growth. Margins & Cost Structure: - FY25 Margins: EBITDA up 148bps to 17.52%, driven by price hikes and cost control. Q4 margins affected by inventory/expenses. - Cost Reduction & Tariffs: Implemented cost strategies including a new motor plant to absorb US tariffs (~10%), with sensitivity threshold up to ~16% tariffs. - US Business: Transition from loss to profit; confident of margins at 10-16%, despite tariff volatility. Industry & Regulatory Environment: - Tariffs & Anti-Dumping Duty: Final hearing for ADD (for truck/crawler cranes) in June/July; potential 40% impact estimated. Euro tariff impacts cautiously monitored. - Emission Norms: Price hikes of 12-13% for 60% of products, to be absorbed starting Q2 FY26. - Export & Defense: Targeting 10–15% revenue from exports and defense over medium term. Defense order execution spreads till FY28. Market & Demand Outlook: - Near-Term Challenges: Demand softness in Q1 FY26 due to price hikes, pre-buying, and global macro headwinds; H2 expected to recover faster. - Industry Trends: Strong government capex in infrastructure, ongoing efforts to penetrate export markets, and opportunities in anti-dumping mitigations. - Product & Technology: Focus on new product launches (e.g., stabilizers, dryers, compressed air solutions), JV with Kato for high-value markets, and continued process efficiencies. Management Outlook & Risks: - Confidence: Targets to double FY23 revenues by FY26 now shifted to FY27; positive on long-term market share and margin growth. - Risks: Continued demand slowdowns, tariff uncertainties, execution delays, and impact from importer competition (notably Chinese dumping). - Strategy: Focus on process enhancement, cost control, expanding high-margin product lines, and leveraging ongoing capex. Overall Summary: ACE achieved record revenues and profits in FY25, with margin expansion driven by pricing and efficiency initiatives. While near-term demand remains subdued due to macro factors and regulatory adjustments, the company remains confident in medium-term growth, buoyed by sectoral tailwinds, defense opportunities, and international markets. The company’s balanced end-market exposure, ongoing modernization, and strategic focus on high-value products position it well for sustained long-term growth despite short-term headwinds.