Citi Research reduced Ajax Engineering Ltd.'s target price while it maintained a 'Neutral' rating as the brokerage remains wary of rising competition for the company. The target price is Rs 690 from Rs 745 apiece. The current target price implied an 11% upside from the current level.

Citi Research has also cut net profit estimates for Ajax Engineering by 8.5% and 8.1%, respectively, for financial years 2026 and 2027, the brokerage said.

Ajax Engineering's market share is 75%, and the rest is dominated by Schwing Stetter India Ltd., Conmat Heavy Industries Ltd., Fiori Group's self-loading concrete mixer and others, Citi Research said in the report. Now, its competitors are not listed; hence, there is no direct competition.

However, Citi Research cautioned that market share loss is real, with its margin peaking in financial year 2018. The brokerage is estimating 14% CAGR revenue growth for the financial years 2024 and 2027 compared to the 16% and 18% revenue CAGR estimated for Action Construction Equipment and BEML Ltd.

Ajax Engineering is India's largest SLCM manufacturer with a strong supplier and dealer network. Besides its strong brand position, Ajax Engineering's SLCMs have the highest resale value. The company is well-positioned to benefit from robust mechanised concrete demand, Citi Research said.

Citi Research is estimating that its margin will revert close to what it was in financial year 2025 by financial year 2027. Management is incorporating construction equipment vehicle stage V emissions impact, which will pressure the margin.

As far as the bull case for Ajax Engineering is concerned, Citi Research sees faster-than-expected revenue at 17% CAGR and Ebitda and margin at 16% CAGR for financial years 2025 and 2027.

In a bear case, Ajax Engineering will likely report revenue CAGR at 7% and Ebitda and margin at 13% for the period between 2025 and 2027.