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Action Construction Equipment Limited
Business
Description
Action Construction Equipment Limited engages in the manufacture
and supply of hydraulic mobilecranes, mobile tower cranes, and
material handling and construction equipment in India. The
companyoffers hydraulic mobile cranes for the engineering,
construction, and infrastructure industries for loading,unloading,
moving, shifting, and erecting materials; mobile/fixed tower cranes
for civil construction; backhoe and wheeled loaders for the
construction and infrastructure sector for digging, moving,
grading, andloading earth and other loose aggregates. Its products
also comprise lorry loader cranes to lift andtransport loads;
forklift trucks to lift and transport materials; and crawler cranes
for use on soft ground
for plant erection and maintenance work or plant renovation. In
addition, the companys products consistof piling rigs for the
construction of bridges, metro rails, and ports; vibratory rollers
used to compactloose soil or asphalt for roads and highway
construction; and tractors used for farming, construction,and
industrial purposes. Its products are also used in various sectors,
such as power projects, dams,coal mines, steel industry, railways,
cement, petroleum, defense, chemicals and fertilizer plants,
andbuilding construction.
Notes
Positives
1. ACE is the largest Mobile Cranes & Tower Cranes
manufacturer in India and has over 50% marketshare in this
segment.
2. The company is the 3rd largest manufacturer of Forklifts in
India.
3. It has wide range of products in its portfolio. This enables
the company to cross sell to itscustomers which includes bigwig's
of the infrastructure and construction industry. Most of its orders
arefrom repeat customers.
4. The company has a pan-India presence through a network of 96
sales and service locations,supported by 13 area offices and 5
zonal offices at Delhi, Mumbai, Chennai, Kolkata
andVisakhapatnam.
5. It has a healthy balance sheet with ZERO long term debt. Cash
Flow from Operations is greaterthan the Net Profit.
6. ACE has sales and marketing tie-up for promotion,
distribution and installation of equipment inIndia with Zoomlion -
China for Fixed Tower Cranes, with Autogru PM - Italy for Lorry
Loader Cranes,with Maber - Italy for Mast Climbing Platforms and
Construction Elevator Lifts, and with TIGIEFFE SRL -Italy for
Aerial Access Platforms.
7. The company has alloted 3 million equity shares to Reliance
Capital Ltd. at Rs. 65.53/- per equityshare in October, 2010.
8. Delivered an EPS of Rs 4.30 for FY2011 and paid a dividend of
Rs 2.00. Expect EPS of Rs 5.50 in FY2012 and dividend of Rs 2.50.
Target Price = 80.00 (P/E = 15) Delivered an EPS of Rs 2.33 by Q2
of FY2012.
Risks andConcerns
Raw Material: The main raw material used by the company is
Martensitic (MS) Steel. It constitutes
around 60% of its overall cost. Any abrupt or large-scale
escalation in the prices of the raw material canadversely affect
the profits.
Competition from Imports: There is threat from similar imported
products to the ConstructionEquipment the company manufactures.
However, logistics cost for imports is high and hence does notcarry
any cost advantage.
Downturn in Infrastructure Industry: Any economic slowdown in
the infrastructure industry orreduction in government spending will
have severe impacts on the revenue and profits as happenedduring
the FY'09 and FY'10.
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Competitors
Hydraulic Mobile Cranes: Escorts Construction Equipment Ltd,
TIL
Mobile Tower Cranes: Protain, Shirke, Bhai
Back Hoe Loaders: JCB, L&T, Terex, Tata, Telcon,
Caterpillar, BEML
Lorry Loader Cranes: TIL , Escorts Construction Equipment Ltd,
Imports
Tandem Rollers: L&T, Escorts Construction Equipment Ltd
Mast Climbing Platforms / Lifts: Imports
Tower Cranes: Shirke, Bhai, ImportsAerial Access Platforms:
Imports
PlantLocation
1. Jajru Road, 25th Mile Stone, Delhi-Mathura Road, Ballabgarh,
Faridabad - 121004, HaryanaManufactures: Mobile Cranes, Mobile
Tower Cranes (300 units pm)
2. Dhudholla Link Road, Village - Dhudholla, Palwal - 121102,
HaryanaManufactures: Tractors, Loaders, Forklift Trucks, Road
Making Machinery (450 units pm)
3. Plot No.C-5, 6, 7 & 8, UPSIDC Industrial Area-I, Bazpur,
Uddham Singh Nagar - 262123,UttrakhandManufactures: Mobile Cranes,
Mobile Tower Cranes
4. Dhudholla Link Road, Village - Dhudholla, Palwal - 121102,
HaryanaManufactures: Tower Cranes
5. Plot No.40 & 41, Nand Nagar Industrial Estate, Phase-1,
Mahuakheraganj, Kashipur, UttrakhandManufactures:
ProductOfferings
Hydraulic Mobile Cranes: 3X, Rhino 60, Rhino 90 C, Rhino 110 C,
12 XW, 14 XW, 15 XW
Mobile / Fixed Tower Cranes: MTC 2418, MTC 3625, TC 5013 B
Loader/Backhoe Loader: FEL 75, AX 130
Lorry Loader Cranes
Mast Climbing Platforms / Construction Elevators
Aerial Access Platforms
ClientsReliance Industries Ltd., Airport Authority of India,
Punj Lloyd Limited, BHEL, ACC Limited, Bridge &
Roof, Shapoorji Pallonji Co. Ltd, Coal India Ltd, Gannon
Dunkerley & Co. Ltd., Neyveli LigniteCorporation
