Action Construction Equipment Ltd. (ACE), established in 1995 and headquartered in Haryana, India, is a leading manufacturer of construction and material handling equipment. The company offers a diverse portfolio including cranes, forklifts, loaders, and agricultural equipment. With a dominant market share in pick-and-carry cranes, ACE serves core sectors like infrastructure, manufacturing, logistics, agriculture, and defense, supporting India’s industrial growth.
In this article we are going to discuss the summary of the management commentary that was delivered on Q4FY25 performance.
Segmental Performance
Cranes, Material Handling, Construction Equipment
- Revenue: ₹3,090 crore (+15.5% YoY).
- Volumes up ~14.75%.
- Segment profit grew 25.36%.
- Margin expanded to 18.26% vs 15.58% last year.
Agri Equipment
- Revenue: ₹230 crore.
- Margin: 3.73%.
- Margins remain lower than company average; ongoing improvement focus.
Defense Business
- Largest order till date: 1,121 rough terrain forklifts & telehandlers, worth ₹420 crore for Indian Armed Forces.
- FY26 revenue contribution expected ~4%, targeting 5%+ in FY27.
- Execution to start Sep/Oct 2025.
Exports
- Current year target: 5%-6% revenue contribution.
- Combined Defense + Exports = 9%-10% of FY26 revenue.
- Medium-term target: 10%-15% contribution.
Capacity & Capex
Company’s crane capacity now stands at 13,200 units, while the metal handling and construction equipment capacities are at 2,700 units and 1,800 units, respectively. Company’s blended capacity utilized for cranes, metal handling and construction equipment stands at around 70%.
Capex FY26: ₹300-₹350 crore:
- ₹100 crore for modernization/upgrades.
- ₹100 crore to expand specific crane capacity (₹250 crore project).
- ₹150 crore for land acquisition for future growth.
Guidance & Outlook
- FY26 Revenue growth target: 14%-15% (vs earlier 20%).
- Margin guidance: stable at 17%-18%.
- Second half of FY26 expected to be stronger due to delayed demand and price normalization.
- Focus on:
- Cost efficiency
- Disciplined capital allocation
- Strategic pricing
Long-term target: ₹4,400 crore revenue by FY27 (previously targeted for FY26).
Macro Environment
- India remains fastest-growing large economy (~6.5% GDP growth expected).
- Government capex strong; no payment delays.
- Government infra pipeline remains robust.
Minor demand slowdown due to:
- Geopolitical tensions
- Monsoons
- Impact of emission norm price hikes.
Strategic Initiatives
Anti-Dumping Duty (ADD) case against Chinese truck cranes & crawler cranes progressing.
- Final order expected by June-July 2025.
- ADD could be around 40% (as per internal estimates).
- Huge opportunity: ₹1,500-₹1,600 crore market potential.
JV with Kato (Japan):
- Targeting ₹100 crore revenue in FY26 (contributing to bottom line only, JV is 50:50).
- Opportunity size ~₹800-₹1,000 crore initially.
Electric Cranes:
- Product ready; awaiting final government approval.
- Expecting commercial launch within 1 month.
Overall Performance & Highlights
| Particulars | Q4 FY25 | Q4 FY24 (YoY Growth) | FY25 | FY24 (YoY Growth) |
|---|---|---|---|---|
| Total Income | ₹967.55 crore | ~₹856 crore (+13%) | ₹3,420 crore | ₹2,988 crore (+14.47%) |
| EBITDA | ₹171.26 crore | ~₹150 crore (est.) | ₹599 crore | ₹479 crore (+25%) |
| EBITDA Margin | 17.7% | 17.53% | 17.52% | 16.04% (+148 bps) |
| Profit Before Tax (PBT) | ₹160 crore | ~₹142 crore (est.) | ₹543 crore | ₹433 crore (+25%) |
| PBT Margin | 16.59% | ~16% | 15.88% | 14.5% (+138 bps) |
| Profit After Tax (PAT) | ₹118 crore | ~₹104 crore (est.) | ₹404 crore | ₹328 crore (+23%) |
| PAT Margin | 12.24% | ~12% | 11.8% | ~10.97% (+83 bps) |
| Dividend (Final) | ₹2 per share (100%) | ₹2 per share (100%) | ₹2 per share (100%) | ₹2 per share (100%) |
| Debt Position | Long-term debt-free | Long-term debt-free | Long-term debt-free | Long-term debt-free |
Segmental Revenue Highlights (FY25):
| Segment | Revenue (FY25) | YoY Growth | Remarks |
|---|---|---|---|
| Cranes, Material Handling & Construction Equipment | ₹3,090 crore | +15.5% | Segment profit +25.36%, margin 18.26% |
| Agri Division | ₹230 crore | N/A | Margin 3.73%, focus on improving |
| Defense Order (Pipeline) | ₹420 crore order | N/A | Execution to start in H2 FY26; targets 4%-5% revenue contribution in medium term |
Capacity & Utilization (as of FY25 end):
| Segment | Installed Capacity | Utilization |
|---|---|---|
| Cranes | 13,200 units | ~70% |
| Material Handling Equipment | 2,700 units | ~70% |
| Construction Equipment | 1,800 units | ~70% |
Capex Guidance FY26:
| Item | Planned Capex (FY26) |
|---|---|
| Modernization/Upgradation | ₹100 crore |
| Capacity Expansion (Specific Cranes) | ₹100 crore (₹250 crore project) |
| Land Acquisition | ₹150 crore |
| Total Capex FY26 | ₹300-₹350 crore |
Question and Answer Session Highlights
Q: Congratulations on a good set of numbers. My question is regarding the growth guidance. In the Q3 call, the doubling guidance (FY23 to FY26) was reaffirmed. Now it seems the growth target has halved. What has changed in the past 2-3 months? Many of the reasons mentioned now were already known earlier. Why the sudden change in tone?
The confidence has not vanished. As I mentioned earlier, we remain cautiously optimistic. We were hopeful of doubling between FY23 and FY26, but now it seems we may fall slightly short. That is simply the truth.
However, from FY22 to FY25, we have already more than doubled from ₹1,600 crore.
I believe that if not exactly by FY26, between the third and fourth year, we will still achieve that doubling target.
Previously, we had projected ~20% growth for FY26 (confirmed by Vyom Agarwal).
Q: You mentioned defense will be 5% of revenue in the medium term. Are we behind on the execution timeline? Earlier you had indicated exports + defense would be 15% of revenues. Can you give an update on the pipeline and targets?
- Defense contribution: Expected to be around 4% or slightly over in FY26, and 5% or more in FY27.
- Execution: INR 420 crore order for defense; execution will begin around September/October 2025 after required formalities and training.
- In FY26: about INR 80–90 crore to be executed.
- The balance over the next 2 years (3-year timeline in total).
- Exports contribution: About 5%-6% expected in FY26.
- Combined (Defense + Exports) target: Around 9%-10% of revenue in FY26.
- Medium-term goal: Still targeting 10%-15% combined contribution.
- Exports setback: There was a temporary decline due to market weakness in key export geographies, but they are aiming to recover going forward.
What kind of impact is the company witnessing due to the new emission (BS V) norms? Is this a temporary issue or likely to persist over the next 2-3 quarters, potentially impacting revenues for the financial year?
The impact is expected to be temporary. Some prebuying occurred in Q3 and Q4, ahead of the BS V norms implementation.
- Around 60% of products saw a 12%-13% price increase; 40% saw a 5%-6% increase, which was easily absorbed by the market.
- The higher price increase (~12%-13%) is taking time to adjust in the market, particularly because 50% of customers are rental/hiring companies, who need time to renegotiate rental rates with end users.
Based on past experience (BS III to BS IV transition in 2021), such adjustments typically take 2-3 months. Most of April and May are already done, so the company expects the major impact to be limited to the current quarter (Q1).
Overall, this should be a localized and short-term effect. The company expects a faster second half (H2) of the year, which typically contributes 55%-60% of annual revenue.
Are you seeing any slowdown in domestic demand, particularly government capex, or delays in government payments that could affect growth?
Also, apart from exports, is there any other factor tempering your growth?
No issues from the government side regarding capex plans or payment delays.
- In fact, the budgeted capex is higher this year (over ₹11 lakh crore) compared to last year’s revised estimates.
- However, there has been some slowness in inquiries and order flow over the past 20 days, possibly influenced by the recent Pahalgam attack and border conflict.
- This is expected to normalize soon.
The average realization for the Crane, Construction Equipment, and Material Handling business increased by 2% in Q4. However, it was mentioned that emission norms led to a 5%-6% price increase. Where is this delta coming from?
The delta is mainly due to the product mix. Very few BS V / CEV V machines were sold in Q4. The full impact of BS V norms will be seen starting this quarter (Q1 FY26). In April, many deliveries were still BS III as registrations are allowed until June-end. From May and June, it will be purely BS V. Overall, the price increase across products is around 5%-12%, with a blended increase of 7%-8% expected going forward.
What is the expected blended price increase due to the new norms?
The blended price increase is expected to be around 7%-8%.
What is the company’s margin expectation for FY26, given that margins were around 18% in Q2 and Q3, but have slightly declined?
Margins have been hovering between 17.5% and 17.7%:
- Q3: 17.76%
- Q4: 17.7%
- Last year Q4: 17.53%
- Full FY25: 17.52%
Management expects to maintain margins between 17%-18% in FY26. If additional operating leverage materializes in H2, margins could improve further.
Will the company achieve its earlier revenue guidance of ₹4,400 crore by FY26?
Earlier the target was to achieve ₹4,400 crore in FY26.
Now, the management expects:
- Possibly ₹4,200-₹4,300 crore in FY26 due to industry headwinds (tariffs, market conditions).
- However, management is confident of exceeding ₹4,400 crore by FY27 at the latest.
Could you provide an update on the anti-dumping duty (ADD) investigation on Chinese cranes above and below 100 metric tons? You had indicated earlier that the process was at an advanced stage — what is the current status?
We were hoping for a judgment in April, but the final hearing was deferred twice. A plant visit, which is part of the final investigation, is now scheduled for the end of May. We expect the hearing to take place in early June. The department’s internal deadline is also June, so we hope to see a final order by June or latest by July. However, the Finance Ministry typically takes another 2-3 months to implement the order, so we expect the ADD to be in effect during Q2 FY26.