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Strong performance across all segments…

About the stock: Action Construction Equipment (ACE) is a construction equipment and material handling company based in India

ACE has eight manufacturing and one R&D site in Faridabad, Haryana

The company has a capacity of 12000 construction equipment and 9000 tractors annually

ACE’s product portfolio is divided into four main categories viz. agricultural equipment, construction equipment, road construction equipment and earth-moving machinery

Q3FY22 Results: ACE reported Q3FY22 results.

Revenue for the quarter was at | 436.6 crore, up 9.1% YoY, 21.2% QoQ

Absolute EBIDTA was at | 39.4 crore, up 13.2% QoQ and down 13.3% YoY

PAT came in at | 27.5 crore vs. | 30.9 crore in Q3FY21 and | 23 crore in Q2FY22

What should investors do? ACE continues to tread on its growth path. The management has guided for 20-25% growth

We continue to remain positive and retain our BUY rating on the stock

Target Price and Valuation: We value ACE at | 290 i.e. 18x PE (FY24E).

Key triggers for future price performance:

Construction equipment segment growing and occupying a larger pie in overall revenue contribution

Upcoming government & private capex providing fillip to the sector

Alternate Stock Idea: We also like NRB in our capital goods coverage.

It offers a play on needle roller bearings, which are largely used in auto applications

BUY with a target price of | 220 per share

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