ACTION CONSTRUCTION EQUIPMENT LIMITED
Know the Company
Action Construction Equipment Ltd (ACEL), based in Haryana, is the leading manufacturer of Material Handling and Construction Equipment in India. The company operates in four business segments that include Cranes, Construction Equipment, Material Handling and Agri Equipment. ACEL’s widest range of products includes Hydraulic Mobile Cranes, Mobile Tower Cranes, Crawler Cranes, Truck Mounted Cranes, Material Handling Equipment such as Forklifts, Road Construction Equipment like Backhoe loaders, Compactors and Agriculture Equipment like Tractors, Harvesters, Rotavators etc. The company has eight manufacturing facilities in Faridabad, Haryana, including an R&D facility.
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ACEL’s equipment are an essential part of various construction and related industries including Roads, Power Projects, Ports & Shipyards, Dams, Metro Rail, Mining, Railways as well as various industries such as Steel, Engineering, Cement, Petroleum, Chemicals and Fertilizer Plants etc. Though the company has a presence in material handling and agricultural equipment, almost two-third of its revenue comes from the Cranes segment.
Strong Client Base
ACEL has a presence in almost all the major Construction, Infrastructure and Heavy Engineering projects across the country. The company’s client base spans over Central Govt, various state Govts as well as almost all the major construction and manufacturing business groups in India including L&T, TATA, Aditya Birla, BHEL, Coal India, Adani, GMR, IRB, SAIL, Indian Railways, Siemens, ABB, Torrent, etc.
Strengths
ACEL has been a part of almost all prestigious infrastructure projects in India, which gives a strong brand reputation and repeating business for the company. The company is the world’s largest manufacturer in ‘pick and carry’ cranes segment as well as leading crane manufacturer in India with a market share of around 63% (source- company AR).
ACEL ‘s products are top quality in the industry and the company holds ISO 9001 Certification. Its standards of design, development, manufacturing, testing, installation, and product support also meet the most stringent international norms. The company also provides product support through a nation-wide dealer and service offices network.
ACEL has received a pilot order from Indian Army for the company’s indigenously developed special mobile crane which forays the company into the defense sector too. These cranes are hydraulically powered and use telescopic boom sections as well as equipped with sophisticated safety devices which are the first-of-its-kind to be developed by an Indian company applying with advanced technology.
The company recently launched India’s first fully electric powered mobile crane, ACE F150-ev 4X4, with 15 tons lifting capacity. ACE F150-ev 4X4 has been specifically designed to suit both road travel and pick-n-carry use.
The Government of India has been setting up unprecedented investments in the infrastructure sector to become the manufacturing hub of the world. To meet this target, the government is focusing on the infrastructure development and support through various schemes such as the Smart city project, PM Awas Yojana, Green Power mission, PLI Scheme etc.
The Indian Construction Equipment industry has witnessed a steady growth in the last couple of years, supported by the government’s heightened focus and policy implementation for the infrastructure, mining and construction segments. Indian Construction Equipment Manufacturers Association has been lobbying for including this sector also under the Production Linked Incentives (PLI) scheme. If it happens, this sector may attract huge investment from domestic and foreign investment in the near term.
Financials
ACEL achieved its highest ever half-yearly (HY) revenue and net profit for the six months ended September 30, 2023. The company’s HY revenue was reported at Rs 1358 crore compared to Rs 1020 crore a year ago. At the same period, net profit reported at Rs 142 crore compared to Rs 75 crore. EPS for the HY stood at Rs 11.88 as against Rs 6.5 a year ago. For the TTM period ended September 2023, company’s revenue registered at Rs 2495 crore and operating profit was Rs 306 crore. OPM margin also was all time high of 12% and net profit stood at Rs 235 crore.
For the second quarter ended September,2023, the company reported revenue of Rs 673 crore compared to Rs 492 crore a year ago. Net income was Rs 74 crore compared to Rs 34 crore over the previous year.
Outlook
India’s construction industry stands as the third largest globally, after China and the US. Growth of the construction equipment sector is directly related to the infrastructure development as well as the private Capex. The Government of India has made unprecedented investments for the infrastructure development across the country in the last few years including expansion of National Highways, Rail network and port upgrades, construction of bridges, dams and power grids etc. Govt’s vision is to establish a world class infrastructure throughout the country and India to become a manufacturing hub of the world. Under the Union Budget 2023-24, capital outlay for the infrastructure sector increased by 33% to Rs 10 lakh crore. Apart from this, investments through the Govt’s National Infrastructure Pipeline (NIP), which includes road transport, railways, irrigation, water resources, airports also a key growth driver for the construction equipment industry. It is also expected that infrastructure spending by the government will continue to remain robust in the years to come.
India’s rising population and economic growth plays a major role for strong growth in urbanization. The demand for housing and accompanying infrastructures such as roads, water supplies, power transmission and sewage systems is expected to zoom in the forthcoming decade on increasing urbanization. This might cause strong demand for the construction equipment industry, going forward.
Government’s vision and its support through various schemes to make the country as a manufacturing hub of the world gives strong growth opportunity for the material handling equipment market . Organized retail and warehousing is another prominent sector which is pushing the demand for Material Handling Equipment.
The Agriculture Equipment Market including tractors and harvesters also showing substantial growth not only in India, but across the globe due to the rising demand for food in line with the increasing population and the wide acceptance of modern farming practices. Reduction in agricultural land due to urbanization and industrialization with rising population needed modern farming practices.
Risks
Growth of the construction and material handling industry is directly related to the growth of the economy, which is mostly interlinked with the Government policies and their spending. So, favorable political and geo-political situation is extremely important for a vibrant economy as well as the company’s promising outlook.
Sharp rise in raw material prices, especially base metals prices may adversely affect the profitability of the company.
Sector: Industrials
Market Price: Rs 840 as on today
FV: Rs 2/-
Stock Name: Action Construction Equipment Ltd
BSE Code: 532762, NSE Code: ACE
Market Cap.: Rs 10050 Cr
Book Value: Rs. 87.7
Segment: Construction Vehicles
Incorporation: 1995
Headquarters: Faridabad, Haryana
