Ladies and gentlemen, good day and welcome to the Action Construction Equipment Limited Q1 FY 2026 Earnings Conference Call hosted by Avindesh Parks. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ravi Swaminathan from Avindesh Parks. Thank you, and over to you.
Good afternoon, everyone. On behalf of Avindesh Parks, we are pleased to invite you to the Q1 FY 2026 earnings conference call of Action Construction Equipment Limited. I would like to welcome the management and thank them for the opportunity. We have with us today Mr. Sorab Agarwal , Executive Director, Mr. Rajan Luthra, the CFO, and Mr. Vyom Agarwal, the President from Action Construction Equipment management. I shall now hand over the conference to Mr. Sorab Agarwal, Executive Director of Action Construction Equipment. Thank you and over to you, sir.
Yeah, thank you, Ravi. Yeah, good evening and welcome, everyone, to this earnings conference call for discussing the results for quarter ended June 2025. Along with me in today's earnings conference call, we have our CFO, Mr. Rajan Luthra, and our President, Mr. Vyom Agarwal. The company's financial statements and the earnings presentation summarizing the performance of quarter one FY 2026 has been circulated and uploaded on the stock exchanges, and I will take you through some of the key highlights of our performance in the quarter gone by. As anticipated in our previous quarterly commentary, the current financial year began on a subdued note. This was primarily driven by the implementation of CEV Stage V/BS V emission norms and enhanced safety certification requirements, which have aligned our industry with global benchmarks. These regulatory changes have led to a consequential price increase of 7% to 12% across majority categories of products.
Additionally, the Indo-Pak border tensions and prevailing global uncertainties have further weakened customer sentiment towards capital investments. The situation was compounded by pre-buying of equipment in quarter three and quarter four of the previous fiscal year, along with the early onset of monsoon, all of which contributed to a muted demand in the quarter under review. Amidst a challenging operating environment, as stated above, the company delivered resilient performance during the quarter, and we were able to achieve targeted margin profile. We continue to focus on improving product superiority by fortifying our balance sheet and distribution strength to reinforce our competitive position. In the last few years, we have delivered high growth across our business segments, and our operating metrics are best in the industry now.
Now, to brief you on financial performance of quarter one FY 2026 on a standalone basis, our total income stood at INR 703 crore, which is lower by 7.63% as compared to the same quarter last year. Despite the challenges, our margin profile expanded by almost 300 basis points, and the EBITDA for the quarter increased by more than 13.6% to INR 142.55 crore, as against INR 125.5 crore. The EBITDA for the quarter stood at 20.28%. The PBT grew by 13.66% to INR 126.64 crore, and the PAT grew by 15.67% to INR 96.83 crore, as compared to INR 83.71 crore for last year's corresponding quarter. The PVT and PAC margins now stand at 18.02% and 13.77%, expanding by 338 basis points and 277 basis points, respectively, for the quarter on a standalone basis.
Margin expansion for the company was driven by our cost efficiencies, soft commodity prices, and price increase that we had effected in the last quarter on account of general inflation and implementation of revised emission and safety norms, coupled with increase in other income of the company. It is important to note that the first half of the year typically contributes around 40% - 45% to our annual revenues, with the second half generally being stronger as market conditions stabilize. In H2 of last year, we saw a surge in demand driven by anticipated purchases ahead of the transition to new emission norms, resulting in liquidation of older inventory within quarter one of FY 2026. Looking ahead, we expect market activity to normalize from quarter two onwards.
Moving on to segmental performance, in the cranes, construction equipment, and material handling segment, during the quarter gone by, we registered consolidated revenue of INR 605.43 crores as compared to INR 690 crores in quarter one FY 2025. However, the margin expanded to INR 107.83 crores as compared to INR 103.76 crores, which leads to an expansion by 279 basis points for the division. The aggregate revenue increased by 8.26% on a year-on-year basis to INR 46.51 crores as compared to INR 42.96 crores. Going forward, with retreating monsoons, early festive season, better liquidity, and consumer credit availability, we expect the demand momentum to improve across our product range. Looking ahead, the macroeconomic fundamentals of the Indian economy remain resilient despite global headwinds marked by geopolitical tensions, evolving trade policy dynamics, and heightened uncertainty and volatility in the operating environment.
Lower inflation, reduction in interest rates, and liquidity support by RBI, coupled with tax cuts announced in the recent union budget, are expected to support growth in the coming quarters. Cranes and construction equipment and material handling business have done well in the recent time and have poised well for further growth if government's thrust on attaining sustainable growth in manufacturing and focus on infrastructure projects. There has been short-term turbulence, but the demand for construction machinery is expected to normalize post-monsoons, and we expect the medium to long-term growth momentum to continue. However, we will communicate our guidance post the monsoons depending on the overall macroeconomic scenario, settlement of geopolitical issues, and the festive season sales trend.
Further, with our capacity built up and process optimization in place, we remain optimistic about the medium to long-term prospects of the company and remain committed to deliver our sustained agenda of growth. With this, I would request the moderator to open the call for question and answer sessions, please. Thank you.
Thank you very much. We will begin. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking the question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Puneet Javeri from Zaveri and Company. Please go ahead.
Hello, sir, and thanks so much for the opportunity. I just wanted to understand, in this quarter, you mentioned that there were some new emission norms and that the reason why a pre-buy happened in quarter three and quarter four. Currently, has that continued in quarter two, or do you see that demand has come in between July and August? I know you can't give any numbers, but the consolidation of the customers, has that already happened that you are seeing that the demand is back to a certain level compared to the second half of last year?
Yes, you know, quarter one was a dampener because of the price increase and obviously the technology change, especially from BS3 to BS5. A lot of customers, especially for machines having engines powered on 50 horsepower, were very skeptical of the electronic engine going straight from mechanical to electronic. That seems to have settled. Even the price increase seems to have settled in now with a reasonable number of deliveries for BS3 to BS5 compliant machines, which has happened. Things seem to be stabilizing there. Yes, the inquiry level, I would say, especially in the last 10 days, 15 days, 20 days, started to normalize a little. The only thing is this is more or less peak rain time happening, and the rain starts to recede post August 15. That's when things really start to improve. By the middle of September, they are more or less normal.
That has been the normal trend over all the years in the past. Yes, things are looking a little better.
Is the expectation that quarter two will largely be flat compared to the same time last year?
Yeah, I think so. It has always been like that generally. Looking at the current scenario, coupled with global uncertainties and a general sentiment, it should be flattish, maybe slightly more. The best time to comment with respect to quarter two would be, I think, another one month down the line.
Sir, could you give us?
The action would have started to happen.
Right. Sir, could you give us some picture on your exports currency? I think in this quarter you sold roughly 2,337 cranes, construction equipment, and material handling equipment. Out of that, if not a direct number, could you give us what was the export revenue in this quarter and how is it shaping up?
Yeah, I think the export revenue in the current quarter was close to around INR 27 crore, and it is shaping up well. In terms of what our expectation for the whole year for export, last year we had gone down to 4% of our total revenue contribution, and this year it appears that it can easily go up to 6% - 7%. That is for exports, and like we've always said, coupled with defense, 3% - 4% for defense in this year, 6 %- 7% for exports. That's about a 10% contribution that can come from both of these put together. Like in the past, our medium-term target was about 10%- 15% from these two segments put together. Hopefully we should be hitting a 10% mark this year.
Got it, sir. In terms of margins as well, is your exports currently at similar margins to domestic? Your domestic, your overall margins have actually now hit a higher, I think, at over 20%. How should we look at margins for the export? Is it similar generally because it's a little higher than domestic, but for you specifically, if you can give us some color?
Yeah, see, definitely the export margins are slightly better than the domestic margins. The 20%, there has been a reasonable contribution in this quarter from the other income. I think I believe that they should stabilize our overall margins somewhere around 16 %- 17%.
Sir, final question in terms of both defense as well as your Ghana project as well. If you can give us an update on that for defense, I think you mentioned in your presentation as well that you'd gotten a single order. How much of that is already executed up until now? If you can give us an update and when do you expect this to fully finish? Would it be in the next two years? You also had a Ghana project, I think, sometime last year, but I think it had gotten stuck because of the government there. Is that still on or is that now it seems distant to start at least in the near term?
See, a personal answer with respect to the Ghana project, I think it is in a limbo as of now. It has been like that for the last one and a half, two years. Since this time, there is financial clarity. We really don't know how to proceed about it. Although our agreements with the Exim Bank of India and the three-party agreement, everything is in sync, but you know, the funding has been stopped. Obviously, as of now, we see no light there. With respect to defense, yes, we did receive our single largest order. I think it was in the last quarter. The execution is slated to start in quarter three, but in a small way, because there are a lot of requirements with respect to training and a lot of documentation that needs to be done for this, which is happening. The order is in place.
Everything is fine. Hopefully in quarter three, we'll start executing. It will pick up steam in quarter four. We'll get some contribution within this year from maybe about INR 50 crore, INR 60 crore, INR 70 crore of business we'll be doing out of this order in this year. Most of it will go into the next year. Maybe close to about INR 50 crore into three. Let's say about an INR 200 crore execution in the next year. Whatever will be the balance will go into the year after that. About, I would say, INR 50 crore, INR 60 crore in this year, INR 200 crore in the next year, and the balance INR 100 plus, whatever will go into the year after that.
Sir, have you participated in any more tenders, or are you expecting any more tenders to come at least from the defense space in the orders that you want to go for in this year? Is that something that you're already doing in quarter one and the start of quarter two?
Yes, you know, this right now, the business I'm going to talk about is basically with Ashok Leyland Defense because, you know, there's a lot of projects which are happening integrated on a Tata or a Leyland vehicle. This particular order we are about to get is again a good order, not very big, but let's say close to about INR 45 crore -INR 50 crore. It's already done. Another one, similar one, for the 90-odd machines after this, which would be again close to INR 70 crore -INR 80 crore, is on the annuals. Yes, things are progressing there. In the interim, I think it's nearly finalized, some more 602 model cranes, which we had supplied to Army recently. That is in the pipeline. Very recently, we have executed orders for BRO again for backhoe loaders.
For motor graders, again, there is this time one of the biggest requirements they've come up with in a single tender. Things are happening, and I foresee this as some sort of a continuous pipeline of around maybe 3 %- 4% on a yearly basis to continue.
Excellent. Thanks so much, sir. Thank you for the opportunity and for being so transparent. Thanks so much.
Yeah, thank you.
Thank you. A reminder to the participants, please press star and one to ask a question. The next question is from the line of Sitesh Choordia, an individual investor. Please go ahead.
Good afternoon, sir.
Good afternoon.
Sir, in the last quarter, we have taken part in the Guam Amunis exhibition. Do you have any key takeaways, especially with respect to the European auto export markets hosted by ACE?
Yeah, we had partnered in Guam in April. We got very good response. The main purpose was to showcase our products and, you know, especially get dealerships, distributors, and similar partners in different countries, or maybe, you know, get better ones in the countries we are already operating in. Yes, a long list of possible future dealers, distributors has been drawn up, and we're working on it. We have established a couple of new ones. We have also been able to establish a couple of dealerships within Europe as well, especially for our smaller tractor, the Orchid tractor, which is very popular there. I think very soon, again, in the next two, three months, we are going to be participating in, I think it's called Agritechnica or whatever, which is especially for agriculture in Europe. We intend to participate there as well.
Okay, sir. That's the issue.
Thank you. Participants, to ask questions, please press star and one. The next question is from the line of Aman, an individual investor. Please go ahead.
You'll have to be a bit louder, not audible.
Hello, I'm audible now?
Yeah, much better.
Yeah, sir. One of your peers, known as Escorts, they have lost a market share of around 150 basis points. They gained a market share of around 150 basis points. What's happening here? Have you lost any market share in the current segment?
No, not really. I'll explain it to you. See, the pick and carry cranes consist of two types of cranes. One is a Hydra type, the old generation, and the new generation. The split between Hydra and new generation is approximately about 55%-60% for the Hydra type and about 35%-40% for the new generation type. Within the new generation, the market share between Escorts and our company is similar. Around, we are about 50%-51% rather. They're close to about 49%-50%. The other type, which is about, I would say, 55%-60% of the market, the Hydra type, their market share is 70% +. I would say maybe in the range of 70%-75%. Those are the machines which have majorly gone from BS3 to BS5, you know, which have gone that 12%-13% price increase and not 5%-6%, 6%-7% price increase.
Those machines primarily go to the retail segment, to the industrial areas, to the rental companies and transporters and handling people working in the industrial areas and manufacturing sectors. This is the part of the market which has been, you know, which was in some sort of a suspended avalanche in the last two, three months. That's why the numbers have not been so healthy. We had more than 70% market share here and this market shrank the maximum because of CEV Stage V/BS V effect. That is the reason you are temporarily seeing maybe a 1% or 2% share here and there. By the end of this quarter, everything will normalize. As a matter of fact, we might be slightly a little up only. As soon as these Hydra type of cranes, the market normalizes, which has started happening.
Okay, sir. The second question I had is on the construction equipment side. What is the outlook for the rest of the year? Is.
Yeah.
Are we seeing any government CAPEX in the future?
Yeah, quite a lot. See, construction equipment and road machinery side of our business, we are hopeful that that should be able to grow at least 30%-40% this year. Only three or four days back, our Minister for Road, Transport and Highways, Mr. Gadkari, conveyed that the process for releasing orders for roads and all are going to be sped up very quickly. INR 2 lakh crore worth of orders have been released, but INR 7 lakh crore will be released very quickly. In the next year, he's planning for INR 10 lakh crore. I think with respect to especially construction equipment and road machinery, there should be good times ahead.
Okay, thank you.
Yeah, welcome.
Thank you. A reminder to the participants, please press star and one to ask a question. The next question is from the line of Deepak Ajmera from IGE India. Please go ahead.
Thanks for the opportunity. On the volume side, since you said Q3 and Q4 was like early buying because of the transition, this year we will be looking at like degrowth in volume by the year end, or how should we look at it?
I don't think so because the second half is definitely much better for us and all the rains and everything. Most of the issues would have been settled, including the CEV Stage V/BS V emission norms. I don't think we would be looking at volume degrowth or anything. As a matter of fact, there should be contribution with respect to price increases, which has happened, coupled with some volume growth. Yes, the exact quantum of what growth we should be looking at for this year, let's say a reasonably precise number. I think the best time would be end of second quarter to come out with that.
Got it. What's the absorption at the market? Means what sort of percentage increase is not impacting the volume, and what's the strategy, how much are we increasing in Q3?
The question was somehow not very clear to me. If you could just repeat it.
I'm saying what is our strategy on the price increase, and how much we are planning to increase in Q3, Q4, and by when we can expect the transition is fully over in terms of price increase?
Transition from our side with respect to price increase started happening in April. Obviously, there are no old stocks left anywhere, not even with our dealerships. They could not have been registered post-June. Price increase has been pushed. Market has come to terms with the price that has been increased because of increased safety requirements and especially the TR5, the CEV Stage V/BS V emission norms. The effect is already showing somewhat in the last quarter's number, which we have released. They'll be more pronounced in the current quarter. Generally, on account of inflation and other expenses increasing, we take a price increase every January. Apart from what we have done in April, I don't see any price increase till December. The commodity prices also, as of now, remain reasonably under control. I see no need for price increase.
If there is a very swift movement in steel or some other major commodity price, I don't foresee any further price increase in the currency.
Got it. Thank you. Thanks for it.
Thank you. Participants, to ask questions, please press star and one. The next question is from the line of Aditya from Old Bridge Mutual Fund. Please go ahead.
Hello, sir. Good evening and thank you for the opportunity. Sir, my first question is, sorry if I'm repeating the question as I joined the call a bit late. My first question is on the gross margins. This quarter we have seen gross margins expand considerably to 34% kind of a number. Is this all due to the price increase that we have taken place?
Yeah, it's a mix of a lot of things, but yes, especially price increase and reasonably accommodative commodity prices all put together. You can definitely say the major factor is the price increase, yes.
Okay, how much of this would be sustainable going forward, and where do you see this gross margin stabilizing for the year?
Yeah, I think this is totally sustainable. As we have communicated earlier, I think around gross margins of anywhere between 33% - 35% should be, let's say, 34% is what you mentioned, is actually the ballpoint plus minus percentage from there, are sustainable.
Okay, sir, just on that. With this new engine emission norm change, how much would be the price increase that we have taken a vehicle, and commensurate to that, how much would be the cost increase for the particular vehicle that we make?
See, the price increase we have taken for machines which were below 50 horsepower, that is BS3 to CEV Stage V/BS V, is close to about 12 %- 13%.
Okay.
The machines which went from BS4 to BS5 is close to about 6 %- 7%. The price increases are accommodative of this approximate gross margin.
Okay, okay, okay.
Otherwise, if you would have just part of the price increase, our gross margin would have gone down there.
Yeah. One last thing on the tower cranes. In this quarter, if we see the overall cranes construction equipment segment volumes, volumes were down by 21%. What would be the case for tower cranes if you look at quarter one FY 2025 last year or over last quarter as well? If you can give some volume numbers for the Q1 FY 2025 and Q4 FY 2025?
For tower cranes year on year, quarter one to quarter one, tower cranes have increased from 144 to 167.
Sir, this is your younger.
Yeah, the real estate side of our business has been holding up. Even when we look at the overall industry, not only our company, but let's say all other segments of construction equipment, we are not present also. For example, earth moving year on year has held up. Material handling, which includes our types of cranes, primarily has gone down a little, owing to that 50 horsepower, the price increasing 12%, 13% and engine from being mechanical straight away going to the high-end electronics. This is the biggest sufferer. If you look at material processing type of equipment, again, the volumes have held up. If you look at concrete machinery, concrete pumps, transit mixers, again, the volumes have held up. I think this is a temporary phenomenon with respect to the price increase, coupled with the pre-buying that happened.
Like I said, the tower cranes have gone up and most of the other categories within us, even if you look at the forklifts, the numbers have gone up by about 10% on a year on year. They were primarily driven by pick and carry cranes on account of pricing and other factors put together, pre-buy.
All right. Thank you. Thank you so much, sir.
Yeah.
Thank you. Before we take the next question, we would like to remind participants that you can press star and one to ask a question. The next question is from the line of Rajeev Maheshwari from Praj Investment. Please go ahead.
Good evening, everyone. Thanks for giving me the opportunity for asking the queries. The first update which I want is, it's been almost a year when this CATO JV was formally announced in the stock exchanges, but somehow the official statement on the finalization has still not come up. Can you just update me on the same?
Yeah, see, it is very much under progress. We are hopeful that within this quarter or early next quarter, the agreements would be concluded in totality and work can start. We are targeting to start work quarter three.
Okay. Another thought regarding the Q1 result is the other income has come up around INR 1,950 crore. What exactly is this other income which has come up in the numbers increasing by INR 250 crore?
Yeah, this is more to do with the investments the company has made over the years with the accumulated cash. I think Mr. Luthra would be the right person to shed more light on it.
Okay.
Yes, sir, you are right. It is the income. Sir, you are right. This is the income generated on the investments. We have surplus cash. What we generate from a business, we invest into investments and all those things. I do not pump into working capital and just save it for a future expansion.
Okay. Coming to the July 25 sales, can you give me the numbers? How many equipments and machines we have sold in the month of July this year?
I don't think we would be having July data with us right now. Luthra sir, do you have it?
The July numbers are, you can say, more or less similar to June numbers. Overall, if we talk about the main all put together, I'll let you work it out.
Basically, this July number, yeah, please go ahead.
Maybe Mr. Luthra, you can send the numbers to Mr. Rajiv Maheshwari, right?
Yeah.
Yeah, sure. I'll resend it to all parties.
No problem. The number for July 25 or maybe till 10th of August is the same if we compare to year on year, July 2024.
Sure, sure.
The number.
I'll give it to you because otherwise I don't have them in front of me.
No, if you can just give me a fair estimate that it's flattish or it's a degrowth or it's a growth, that would serve, and Mr. Luthra can send me later on. Not an issue.
It should be similar, with a slightly negative bias, I'm sure.
Okay. Maybe with a negative bias, it's on the similar list. One thing you told in the beginning of the call is, I think, three of the orders in which we are almost done or on the verge of getting it. One was you told in this entire with that Ashok Leyland and the other one was some motor grader order and another third one was INR 70 crore-INR 80 crore. Can you throw a light on these orders in the details and when exactly do we expect to get a formal announcement for the same?
Yes, I think first is with Ashok Leyland with respect to 54 special machines, which are again for the Army. They are called HRV, which is more or less through. The only thing is the Army wants another 90. Looking at the lead time for the components for putting it together, we are not able to confirm the delivery.
Okay.
Fifty-four machines, which is more or less confirmed. The ninety machines order, we are hopeful that over the next week, 10 days, we are able to try and people are working on it, how to catch up on the delivery part, which the Army wants because otherwise, damages and other things come into play. Yes, there is a tender for motor grader, which has come up. We are very hopeful we will be in a position to get it.
is the value for this?
Apart from another two, three, six, four things are also happening.
Okay. Lots of things are there, which are expected to maybe come into the normal domain maybe next month or so. Any organic or inorganic growth, which we are looking currently or any discussions going or we have through all those things as of now?
No, we are looking at inorganic growth. We are working very actively on some proposals. Hopefully, over the next one or two quarters, as things progress, we would like to update as and when there is something concrete. We are definitely looking at some inorganic proposals. We are also looking at some organic and especially some white labeling. Small ones have started. There was a reasonably big proposal on the annual with respect to white labeling, but unfortunately, the tariffs have played quite a sport in the last 10 days, 15 days.
Yeah, the Trump tariffs.
Trump tariffs, yes.
Yeah.
As of now, this one very big proposal, which was, you know, it was a very good thing to happen the way it was shaping up over the last seven, eight months.
Okay.
We were nearly there. It was sort of done, nevertheless, I'm sure it'll come back again, not in a hurry. Till such time, Trump tariffs are there.
Is it still on with a time gap, or means it's off the radar?
No, the discussions were happening. Everything was in place. It has been expected as of now, till such time for the.
Okay. And one just.
To be very.
One final update. I read somewhere that the ministry is considering putting tax on the construction equipment from the Chinese imports and all. I read somewhere. Is it coming into some discussion or reality, or is it just a rumor or something like that?
See, finally, I think the Indian government has understood that certain categories of machines and construction equipment are facing a very stiff challenge from Chinese pricing. Subsidized pricing is the right word because, you know, India is at a price visibility of 30% - 40% at least because of the subsidies and benefits they get in China, apart from a 15% - 20% lower commodity pricing for their self-consumption within China.
Yeah.
The government has been very active on that, and they have been thinking of a lot of tariff and non-tariff barriers. This article you're referring to is especially with focus to hydraulic excavators, which are produced by Tata Hitachi, L&T, Komatsu, Hyundai, plus plus in the country.
Okay.
The government is serious on it. Generally, when Mr. Rajan Luthra says something, he follows up upon it.
Yeah, yeah.
My profession, the government is looking at in all directions. One is, yeah, you know, tariff and non-tariff, how it is possible that the indigenous industry can grow faster and bigger.
That's right, yeah.
They are also, to some extent, looking at incentivizing the industry as they have incentivized other sectors. I cannot say any more than that at this juncture, especially with respect to incentivization.
Okay.
In our own case, last year, we had initiated the DGTR proceedings with respect to anti-dumping duties on heavier and bigger cranes, which are made in very few numbers in the country or not made. That is also in the process. We were expecting it to finish by June, July. All the final hearing submissions, everything has happened. Hopefully, that should also see the light of day within August or latest by September.
If these things fall in place in terms of the construction industry as a whole, construction equipment, just a minute, just final 30 seconds. If these things formally happen in terms of the anti-dumping duty, then it will be a really good boost for the domestic sector as well as our company as a whole in terms of reduced competition and more realization from the revenues.
Yes, especially with respect to the Chinese machines, where our company faces stiff competition for crawler cranes and truck cranes.
Yeah.
is some competition for tower cranes. It will be a very good scenario to be in. Over the next three, four, five years, it can lead to an INR 500 crore -INR 1,000 crore revenue addition only on account of these types of machines. We are very hopeful all of this will go through. If you look at the excavator industry, Chinese entered five, seven years back, and in four, five years, six years, they've taken 25% - 30% market share. If they are not sick today, they will go to 50% - 60%, and eventually, they will make the Indian industry, the excavator industry, sick.
Yeah, right.
That they have done in the past to our cell phones or other industries. They take over, they sell at ridiculous prices, ridiculous credit terms. It is a very good thing to happen that the government at the senior most level has taken notice of this and are proactively planning for this.
Okay, right. Let's hope this Swadeshi movement takes a leap and it helps everybody. That's all from my side.
It has to. Thanks to Mr. Trump. It has to.
Right. Thank you, Mr. Agarwal.
Yeah, thank you.
Thank you. A reminder to the participants, please press star and one to ask a question. The next question is from the line of Ravi Swaminathan from Anand Rathi Share and Stock Brokers Limited. Please go ahead.
Sir, thanks a lot for doing my question. My question is regarding the growth, which we had seen in the past five years had been stupendous. We had tripled our revenue. Over the next four or five years, what are the top two, three sectors that you think might be driving the growth for ACE? What kind of growth one should think of is the question that I have in mind.
Obviously, our growth is primarily driven by the manufacturing and the infrastructure. Both of them are of prime importance and concern to the government. Hopefully, we are in safe hands. Now that the government, especially with respect to the current geopolitical scenario and the tariff scenario, the only way for the government to spruce up the sentiment as and when it goes down or starts to dampen a little is to focus more on infrastructure because that is where they can do direct spending. We anticipate and we are very hopeful that, and Mr. Gaskari has already said three, four days back that the spending on infrastructure projects is going to increase immediately. Hopefully, all of that is going to gel well for us going forward in our country with respect to manufacturing and infrastructure because most of our machines are made and developed for this scenario.
The government is definitely focused on the 2047, you know, 2047 bar. That is not possible unless and until self-reliance and manufacturing is increased in the country, coupled with focus on infrastructure and making world-class infrastructure. One of the major disabilities India has as compared to China is also logistics cost, which is higher than China. By improving infrastructure, even the logistic cost goes down. Apart from that, yes, our focus on more defense business and export markets will further help us grow a little in times to come. We have been doing that. Yes, this quarter has been a little slow on account of primarily pre-buying and the cost factor and the technology factor. Such hiccups are sometimes good. They wake you up. They bring you out of competency. They check your agility. I hope all of that happens.
Got it, sir. Sir, in private sector, I mean, as of now, it doesn't fully fire like steel, CAPEX, etc. If it does, can it make a big delta to your top line, bottom line?
Yes, yes, definitely. It will fire. It has to fire. See, if you were talking about our growth, we wanted to triple ourselves between FY 2023 and FY 2026. Unfortunately, we have a little slowness we had in the last year on account of elections, and this year because of the emission norms or whatever. I'm sure one year here and there, as conveyed even last time, maybe it will not happen in three years, tripling of our revenue. It will happen in four years, FY 2023 to FY 2026. We had also thought, sorry, doubling. We had also talked of tripling from FY 2023, tripling by FY 2028. Maybe things can be kept postponed by a year here and there. I think as a country and as a company, everything is moving in the right direction. All our medium term, long term things are pointing to growth. Hopefully, we are able to capitalize on that.
In the past, in the recent past as well, we have increased our capacities. We are capable of INR +5,000 crore . We did close to INR 3,300 crore. We have excess capacity available. Apart from that, we are operating on around close to about 100 acres of land. For future growth and expansion, we have taken about 138 acres of land. Going forward, first of all, we have 30% - 40% extra capacity available to increase our revenue without any CapEx, infinite CapEx. Even for future CapEx after that, we have most of the land available. Land is one of the most costliest resources when you're doing CapEx today. I think we have put all our blocks in place. Things are looking good. Let's see how it pans out.
Got it, sir. Thanks a lot.
Yeah, thank you.
Thank you. The next question is from the line of Vinay Maheshwari from IGE. Please go ahead.
Sir, thank you for the opportunity. Can you please elaborate some colors over the current CAPEX going on and how could be the commissioning timelines?
See, for our capacity expansion, which we had planned, most of the CAPEX has happened and is in place. Our capacity is now, the revenue capacity is about a little over INR 5,000 crore. Apart from that, in the current year, we have envisaged a CAPEX of over INR 100 crore with respect to further modernization and upgradation and introducing more robotics, etc., into our setup so that we are able to compete in the global stage with respect to our export market and also, you know, batching our products and quality for the Indian market. That's about a little over INR 100 crore. Apart from that, the lands, which I mentioned, we have to make some balance payments for those lands. That will be close to about INR 130 crore plus minus outflow that will happen in this year.
We did have plans to further increase our capacity, you know, for a particular type of product, which currently we have put on hold for the next three, four months. Yes, we are continuing with the land development and the other part of it. I think the major part of that expansion should take shape in the next year. That expansion is close to about, I think, INR 250 crore-INR 300 crore of CAPEX. Most of that will be happening in FY 2027 and FY 2028.
Got it. Is there any particular area where we are facing any kind of bottleneck as of now?
Yes, sir. The market to come back to its same spirits, nothing else. Of course, the markets to bounce back. I'm sure it'll happen because the festival season is a little early. September onward, things should be good. With respect to capacity, our readiness, our products, the upgradations within the products, I think we are totally geared up for the future and hope it is good as it has been in the past.
Got it. Since we are on the.
Sorry to interrupt you, sir. I will request you to join back the question queue for follow-up questions as there are several participants waiting for that. Thank you. We request participants to limit your questions to one per participant. Thank you. The next question is from the line of Karthik from Multiple Equity. Please go ahead.
Hello. Am I audible?
Yes, Karthik, you're audible. Good evening.
Good evening. Thank you for this opportunity. I just wanted to understand one thing. If I want to, when I look at, say, the Vahan volumes, how do they, I mean, how or what would be the same time gap between wholesale dispatches and Vahan registrations, or would they be fairly one-to-one basis?
I think there is a lag of one to two months at least.
Oh, okay.
Minimum would be one month. Average put out, you can easily say 45 - 60 days because it goes through, they are delivered sometimes to the dealerships, then to the customer, and then the registration application. The Vahan data is representative, but not of the current factual. It is with a lag of one and a half, two months.
Oh, okay. Okay. Got it. Thank you so much. That's it from my side. Thank you.
Thank you. The next question is from the line of Kushal Duri from an individual investor. Please go ahead.
Hello?
Yeah, hi.
Hi, sir. My question is in relation to the previous one only. For July, the RTO data was showing volumes of some 577 units. You mean to say that might be higher than what you have discussed?
Let's say July 577, Wahan would mean machines which were delivered to customers, let's say in June or within July. This data is, you know, because sometimes registration happens immediately, sometimes it happens with a lag of 10 or 15 days. Sometimes at our end, the delivery to the dealership and the dealership holding some stock for some time, it is skewed by one or two months. It is very difficult to, you know, put a number to it. Maybe next time when we have a con call, we will figure out a correlation for the last four or five months. Maybe that could be helpful to all of you.
Thanks. On a year-on-year basis, has there been any change in the volume for the month of July? Is it lower or same? The volume numbers.
Luthra sir, I really don't have the July numbers, but they were similar to June numbers for us.
Okay.
July is the heaviest, you know, the rains are at their, you know, the fiercest and the peak of rains happens in July. They were similar to June. Unfortunately, we have numbers of June and before. We don't have a July number right now.
Okay. Thank you.
Kushal Vyom, this side, I would just like to add a little bit to the Vahan data. I mean, Vahan number, which you and Karthik also asked. There are a certain number of machines which we manufacture. They do not go on the Vahan data. For example, tower cranes do not get registered. Our numbers will have a little bit of a disparity with respect to the Vahan data. As sir said, there will be a lag. Vahan data may not be the right, or I would say, the exact parameter to look at us because some of the machines which are not getting registered are also in our portfolio.
Vahan data would be signifying more of the retail sales, right?
Yes, sir. It will be more or less the registration sales. We do not have crawler cranes and tower cranes. In fact, some of the forklifts which we do, and they are maybe running inside a factory premise, which may or may not be registered.
You know, even for some cranes, people do not take registrations, which are running inside closed premises.
Okay. Sir, one last query from my side. Any development on the registration of electric crane?
Hello.
I'll take that question, and then we can.
Yes, sir. Sure.
Yes, a development is happening. Our approvals are pending with AREI, the CMBR authority. I think last hit, some Exide battery approvals with respect to electric vehicles are pending at the end of Exide. We are hopeful it should get through quickly.
Thanks a lot.
Thank you. The next question is from the line of Jinal from Prudent Corporate Advisory. Please go ahead.
Yeah, am I audible?
Yes, sir. Please go ahead.
Yeah, my question was regarding the industry outlook. There are numerous forecasts about the non-agri segment of cranes, construction equipment growing by around mid-single digit to some forecasting it growing by double digits or so. What do you think the segments like cranes or construction equipment can grow? What can the industry growth and what can the company see in its volumes too?
See, in the beginning of, I mean, in our last call, you know, being a little conservative, we had projected 14 %- 15% of growth. Looking at the current juncture and all the things, I think it would be prudent that we take this call by the end of quarter two to give a more realistic picture. It would not be wise to come out with a number at this juncture. Once there is more clarity on every front, including the CEV Stage V/BS V emission norms acceptance, which has happened, the numbers will normalize. You know, the second half of the year will start where the numbers actually start to normalize. The government's focus coming back to infra, you know, all the basic things coming into place. I think it won't be prudent to give. Yes, one thing I can tell you for sure.
Now, just let's forget our company for a second, but let's talk of the industry. The earth-moving industry has been flat year on year for the first quarter. The road machinery industry has been flat. The concrete or concrete carrying or concrete processing, that has increased by about 16%. That is more of civil structures and real estate plus plus plus. The material processing is flat. Cranes were a little down. The main reason was 50 horsepower and below, which is what we have been able to pinpoint at. I would feel that we would like to answer that only at the end of September when the second quarter has, you know, gone by to be able to give you a more predictively correct answer.
You said something about construction equipment or some segment growing by around 30% or so. I'm sorry if I misheard.
16%. That is the concrete industry. When I say concrete, I'm talking of batching plants, concrete pumps, transit mixers. The concrete part of the construction equipment industry has grown by about 16% in the last quarter, year on year.
That's it.
Thank you. A reminder to the participants, please press star and one to ask a question. The next question is from the line of Puneet Jaweri from Zaweri and Company. Please go ahead.
Thanks so much for the opportunity again. Just one question. You mentioned that, of course, the guidance will come at the end of Q2. We'll wait for that. Your previous plan was to put double revenues to roughly about INR 4,400 crore in FY 2026 and INR 5,500 crore in FY 2027. Given your capacity, roughly about INR 5,000 crore revenue, when should we expect the additional, if any, capacity that you will need? By FY 2027, you will be very close to almost 95% utilization. Is the INR 100 crore CAPEX number of this year including that, or will you have to do a lot more CAPEX either at the end of this year or the start of next year to get to additional revenue capacity of INR 5,500 crore and above? That's the only question.
Yeah, for the first part of your question, hopefully, this INR 4,400 crore instead of FY 2026 should happen by FY 2027, which I clarified even in the last call.
Right.
Tripling from our FY 2023 revenue and taking it to INR 6,600 crore would happen by FY 2029. That means we have enough capacity till FY 2027, that is, end of next year, end of next financial year. In any case, in the next year, we will start to expand our capacity, which I did mention, making a new plant for a particular type of products and cranes. This will give us an additional revenue of maybe around close to INR ±1,500 crore . We will start to do that next year. Earlier, we were thinking of starting to do it in the second half of this year, but we will start to do it next year once there is more certainty because today already we have INR 5,000 crore worth of capacity.
Generally for us, keeping the land part out, which we have more or less acquired, a INR 100 crore investment can generate about INR 800 crore-INR 900 crore worth of revenue for us. Right now, that is how it works out.
Sir.
Vyom, you're there?
Go ahead.
I think we lost hope. About INR 100 crore CAPEX can lead to INR 800 crore.
Yes, sir, you were right.
Revenue capability, yeah. Our CAPEX to revenue capability is about 8 - 9 times, which we will start to exercise in the next year again, looking at the scenario.
Got it, sir. Essentially, you mentioned that you're at least about 14 %- 15% growth this year, and of course, you'll revise it. I just heard that you were a little conservative because you've already done INR 3,400 crore of revenue in FY 2025, and even a 15% growth would be INR 4,000 crore. The guidance of INR 4,400 crore by FY 2027 just seems very conservative because you should be able to touch INR 5,000 crore at a minimal growth rate as well, right? That's where the question was coming from. Thanks so much for the clarification.
Yeah, things are a little different from what they were perceived. Keeping everything in mind, you can be assured we will leave no stone unturned in terms of doing more revenue and not losing out on account of CAPEX or capacity. I think we are very well geared for that in our minds, and we will deploy our money as soon as possible, as fast as possible, as soon as the opportunity is there. You should be very comfortable from that aspect. We have enough of it to make sure that we don't lose out on the market share or the growth potential.
Got it, got it. Thanks so much for your opportunity.
Yeah, thank you.
Thank you. Ladies and gentlemen, as there are no further questions, I now hand the conference over to Mr. Rajan Luthra for closing comments.
Thanks a lot, everyone. On behalf of Avindesh Parks, we will conclude today's call. We thank you all for joining us, and you may disconnect your lines. Thank you.
Thank you, everybody. Thanks a lot. Bye-bye.
Thank you, everyone. Thank you, sir. Yeah, thanks.
Ladies and gentlemen, on behalf of Avindesh Parks and Action Construction Equipment Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.