Action Construction Equipment Limited Q3 FY26 Earnings Call Summary

Summary

Action Construction Equipment Limited - Q3 FY 2026 Earnings Call Summary Wednesday, February 04, 2026, 4:00 PM IST

Event Participants

Executives 3 Rajan Luthra (CFO), Sorab Agarwal (Executive Director), Vyom Agarwal (President)

Analysts 11 Aditya (Old Bridge Mutual Fund), Abhishek Taparia (Emkay Global), Garvit Goyal (Serene Alpha), Himanshu (Individual Investor), Jenil Barad (Prudent Corporate), Kaushik Poddar (KB Capital Markets), Kunal Tokas (FVC), Mihir Manohar (Trust Mutual Fund), Mudit Bhandari (IIFL Capital), Pankaj Tibrewal (IKIGAI Asset Managers), Param (Individual Investor), Pratik Kulkarni (KoSh Wealth), Rajeev Maheshwari (Raj Investments), Rochan Charan (Global Consilient), Sidharth Srikumar (iThought PMS), Vijay Pandey (Nuvama)

Financials & KPIs

Geographic & Segment Commentary

• Cranes & Construction: Revenue recovered 10% sequentially as CEV V emission norm pricing gained market acceptance. Management noted a shift toward higher-tonnage new-generation cranes and tower cranes, which helped sustain 20% segment EBIT margins despite lower volumes.
• Agri Equipment: Growth driven by Track Harvesters where the company holds a ~30% market share (#2 in India). Realizations improved significantly to ₹9.9 lakh/unit as the mix shifted toward Harvesters (selling at ₹20-21 lakhs) versus traditional tractors.
• Exports: Currently contributing 7% to total revenue, up from 4% last year. Focus remains on Middle East, Africa, and South America, with the India-EU FTA and potential U.S. trade deals seen as medium-term structural boosters.
• Defense: Contribution remains at ~2% currently but is expected to reach 4-5% in FY27. The company has an order book of ₹500 crores, including a pending execution of 150 Heavy Recovery Vehicles in partnership with Ashok Leyland.

Company-Specific & Strategic Commentary

• AI & Technology Integration: Launched AI-assisted pick-and-carry cranes with “fail-safe” features and patented safety protocols. These include clutchless transmission and telematics (ACE.Live) that allow two-way communication with machines to enhance safety and operator grading.
• Capacity Expansion: Current capacity stands at ₹5,000–5,500 crores. Plans are underway to set up a new Tower Crane plant in Palwal to increase capacity from 900 to 1,100+ units as utilization hits 80%.
• Land Acquisition: Secured 108 acres in Palwal and 30 acres in Indore to lock in prices and optimize future logistics for West and South India. Total land value has appreciative significantly to ~₹500-600 crores.
• Import Substitution (CIE/PLI): Actively pursuing the proposed Construction and Infrastructure Equipment (CIE) PLI scheme. Focus areas for indigenization include Crawler Cranes, Truck Cranes, Piling Rigs, and Reach Stackers.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Emission Norms & Pricing

• Question: How has the market reacted to the price increases from BS-III/IV to CEV V? (Mudit Bhandari)
• Answer: Acceptability is now fully in place after initial struggles in Q1/Q2. Customers have absorbed the higher prices, leading to improved execution in December and January (Sorab Agarwal).

Competition & Anti-Dumping

• Question: What is the status of protection against Chinese imports? (Garvit Goyal)
• Answer: DGTR recommended duties in September, but the Finance Ministry has not yet notified them. We are hopeful the new CIE PLI scheme will provide compensatory benefits for domestic manufacturing of heavy cranes (Sorab Agarwal).

Expansion & Logistics

• Question: What is the rationale for the Indore land acquisition? (Rajeev Maheshwari)
• Answer: It serves as a hub for Central India to reduce outward logistics costs to South and West India and provide proximity to port infrastructure for exports (Sorab Agarwal).

Market Share in Earthmoving

• Question: Why is it difficult to dismantle the leader in Backhoe Loaders? (Kunal Tokas)
• Answer: It is not a product gap but a financing gap. NBFCs often “sell” the leader’s product due to historical resale data. ACE is working to break this cycle with its new, highly reliable CEV V machines (Sorab Agarwal).

Key Takeaway

Action Construction Equipment delivered a resilient Q3 FY26 with flattish YoY revenue of ₹888 crores, masking a strong 15% sequential recovery. While volumes were impacted by the high base of pre-buying in the previous year and the transition to CEV V emission norms, EBITDA margins expanded to 18.5% due to a superior product mix and pricing power in the Crane segment. Strategically, the company is pivoting toward high-technology, AI-integrated “fail-safe” equipment and is preparing for a massive capacity ramp-up to target ₹7,000 crores in revenue by FY30. With a debt-free balance sheet, ₹1,200 crores in cash, and a burgeoning ₹500 crore defense order book, ACE is well-positioned to capitalize on the government’s sustained infrastructure push. Investors should monitor the notification of anti-dumping duties and the rollout of the CIE PLI scheme as key catalysts for the heavy crane business.