ACE Posts Robust Q2 FY25 - Revenue up by 14.5% YoY with Expanded Margins

Action Construction Equipment Ltd. (ACE) reported a robust financial performance for Q2 FY25, with revenue rising by 14.5% YoY. Executive Director, Sorab Agarwal shared that the company’s consistent strong performance is reflective of our strategic clarity, strength of our brand, capabilities of our team and the agility to run the business. By balancing growth initiatives with prudent financial practices, we have been able to deliver strong returns while continuing to invest in capacity expansions with cutting edge technologies. In the quarter gone by, we have reinforced our liquidity position, improved working capital efficiency and further fortified our balance sheet which gives us the flexibility to seize growth opportunities in the future. We have a clear and compelling strategy and with our positioning in the Infra, Manufacturing, Logistics and Agri sectors, underpinned by strong operational excellence and our distinctive capabilities, we will continue to drive growth and create a purpose-led, future-fit Organization.

The operational revenues grew by 12.20% on a YoY basis to ₹754.34 Crs. with an EBIDTA margin of 18.04%. The EBITDA during the quarter expanded by 268 bps and increased to ₹142.19 Crs. in comparison to ₹105.74 Crs. on a yearly basis, which is a growth of 34.47%. The PBT expanded by 199 bps to ₹126.26 crores and the PAT expanded by 127 bps to ₹94.37 crores on a YoY basis. The PBT and PAT margins stood at 16.01% and 11.97% respectively. Margin expansion continued, driven by operating leverage, better product mix with improved price realizations, efficient cost control measures and favorable commodity prices.

The Company has sustained its growth momentum across all operating segments. In the Cranes, Material Handling & Construction Equipment segment during the quarter gone by, ACE registered consolidated revenue of ₹693.07 crores as compared to ₹612.74 crores in Q2 FY24 which is a growth of 13.11%. The company recorded sales of 2863 units in the quarter which is up by 9% YoY. The margins also expanded to ₹127.41 Crores vis-à-vis ₹91.16 crores; thereby registering a growth of 39.77% YoY.

The Agri equipment Division has registered revenue of ₹61.27 crores with 3.85 % margin. Going forward, with adequate water reservoir levels, better liquidity, and consumer credit availability, the company expects the demand momentum to improve in the Agri space.

Further, for the H1 FY25, the company has been able to grow its operational revenues by 12.50% to ₹1,488 Crs. On the half yearly basis, EBITDA grew by 31.72% to ₹267.7 Crores, the PBT grew by 27.9% and PAT grew by 26.32% to ₹237.68 Crores and ₹178 Crores respectively. For H1FY25, the margin profile of the company stood at 17.28% EBITDA, 15.34% PBT and 11.49% PAT which represents a healthy margin expansion YoY.

Looking ahead, India remains as one of the fastest growing economies, and its prospects remain very strong for the period ahead. The FY25 Union Budget raised capital expenditure to INR 11.11 lakh crores, marking a 17% increase from FY24’s estimate of INR 9.5 lakh crores. This capex amount constitutes 3.4% of India’s GDP for FY25, reinforcing the government’s commitment to infrastructure development and growth-oriented spending having multiplier effect on the economy. The budget allocation focuses on critical infrastructure sectors, with roads and railways receiving significant portions. The road sector was allocated INR 2.78 lakh crores, and railways were allocated INR 2.52 lakh crores. This allocation emphasizes the government's strategy to bolster connectivity and logistics, which is crucial for sustaining long-term economic growth and supporting the "Vikasit Bharat" vision for 2047. The manufacturing sector was also recognized as a critical driver for sustainable economic growth, especially as India works toward becoming a global manufacturing hub.

This bodes well for our company which is poised for growth with sustained demand for cranes, material handling & construction equipment. Further, with capacity built up, the company remains optimistic about the medium-to long-term prospects and remains focused on delivering its sustainable growth agenda.