Action Construction Equipment Limited (ACE.NS) Q2 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Action Construction Equipment Limited Q2 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the call over to Mr. Divyam Jain from B&K Securities. Thank you, and over to you, sir.

Good afternoon, everyone. On behalf of B&K Securities, we are pleased to invite you to the Q2 FY '26 Earnings Conference Call of Action Construction Equipment Limited. I would like to welcome the management and thank them for the opportunity. We have with us today Mr. Rajan Luthra, the CFO, and Mr. Vyom Agarwal, the President from the Action Construction Equipment management. I now hand over the call to Mr. Vyom Agarwal. Thank you, and over to you, sir.

Thank you, Divyam. Good afternoon, and welcome, everyone, to this earnings conference call for discussing the results for the quarter and half year ended 30th September 2025. Along with me in today's earnings call, we have our CFO, Mr. Rajan Luthra. I hope that all of you have had an opportunity to look at the company's financial statements and the earnings presentation, which have been circulated and uploaded at the stock exchanges. As anticipated, the current financial year commenced on a relatively soft footing for the construction equipment industry, impacted by the transition to new emission norms and a temporary moderation in infrastructure development activities due to extended monsoons. The first half of FY '26 has broadly played out in line with our outlook with a modest decline in Q1, followed by a stabilizing flattish performance in Q2. This trajectory reinforces our assessment that the most challenging phase is now behind us. Importantly, we are witnessing early indicators of recovery, underpinned by a resilient domestic macro environment and strong policy continuity. The government's continued emphasis on infrastructure creation, reduction in direct and indirect tax burdens, improving liquidity conditions, softening interest rates and progressive duty reforms in support of the Make in India agenda collectively signal a constructive demand environment ahead. To brief you on the stand-alone financial performance of the second quarter of FY '26, the total income was flattish on a year-on-year basis at INR 782.18 crores with an EBITDA margin of 19.40%. The EBITDA during the quarter expanded by 137 basis points and increased to INR 151.75 crores in comparison to INR 142.19 crores on a yearly basis, which is a growth of 6.72%. The PBT expanded by 157 basis points to INR 137.49 crores and the PAT expanded by 131 basis points to INR 103.87 crores on a Y-on-Y basis. The PBT and PAT margins stood at 17.58% and 13.28%, respectively. On a sequential basis, the total income increased by 11.27% and the company was able to sustain its expanded margin profile despite a challenging environment in H1 FY '26. The contribution of cranes, material handling and construction equipment segment stood at 94% of our total revenue, and we reiterated our market dominant position while registering a revenue of INR 694 crores, which is flat as compared to Q2 FY '25. However, in the quarter gone by, we have strengthened our market share. The company recorded sales of 2,348 units in the quarter, which is down by 18% Y-on-Y. The margins sustained at 18.16% and stood at INR 126 crores. The revenue contribution of the Agri segment stood at 7%, and we registered a revenue of INR 47.13 crores in that segment. Now, talking about the half yearly performance. For the H1 FY '25, we have been able to register a total income of INR 1,485 crores, which is down by 4% approximately Y-on-Y. On the half yearly basis, EBITDA grew by 10% to INR 294.30 crores. The PBT grew by 11.13% and the PAT grew by 12.7% to INR 264.13 crores and INR 200.70 crores, respectively. Despite headwinds in the sector, we have been able to deliver sustained profit growth. And for H1 FY '26, the margin profile of the company expanded by almost 240 basis points and stood at 19.82% EBITDA, 17.78% PBT and 13.51% of PAT. On the policy front, the government continued emphasis on fair trade and manufacturing self-reliance is encouraging. The recent recommendation to impose antidumping duties on certain cranes import, that is crawler cranes and truck cranes from China is a significant structural positive for the domestic construction equipment sector, including our company. For several years, the Indian market has seen aggressive pricing and supply from overseas players, which at times created distortions and discouraged meaningful investments in advanced local manufacturing. A corrective framework, therefore, not only protects against unfair dumping but also strengthens the long-term foundation for Indian OEMs to scale, innovate and compete globally. This move complements the broader Make in India agenda and ensures that value creation, technology development and employment stay anchored within the country. As a 100% Swadeshi company, we are deeply committed to domestic production and localization, and we see this as a long-term tailwind for our heavy cranes business and our industry. Looking ahead, India remains one of the fastest-growing major economies supported by policy continuity, resilient domestic demand and a strong infrastructure and manufacturing push. Continued government focus on capital investment, logistics, modernization along with rising private sector participation and increasing mechanization provides a positive multiyear demand outlook for the construction equipment industry. While H1 required prudence and agility, the medium- to long-term fundamentals remain intact. Sustained public CapEx, easing cost pressures, improving liquidity and signs of private investment revival are laying the foundation for recovery. With our strategic initiatives, operational discipline and customer-focused execution, we are well positioned to benefit as demand strengthens across our core markets. With the strong prebuying seeing in H2 FY '25, creating a high base, we expect the current year to normalize gradually. And generally, 55% to 60% of our revenue is generated in the second half of a financial year. That said, we retain a constructive and a disciplined outlook. As demand recovers through the year, we're anticipating achieving flattish to single-digit revenue growth in FY '26, supported by sustained operating performance. We also expect a modest expansion in EBITDA margins versus last year, driven by cost efficiencies, product mix improvements and operating leverage as volumes scale. Over the medium to long term, we remain positive on the opportunities ahead and confident that the building blocks for sustainable profitable growth are firmly in place. Our focus remains on strengthening our capabilities, expanding our product and technology platforms and further enhancing customer value creation as we scale responsibly and profitably. With this, I would like to open the call for questions. Thank you.

[Operator Instructions] The first question is from the line of Rashmika Rao from Rekha Enterprises. Please go ahead.

I have a couple of questions to ask. My first question is in quarter 3 and quarter 4 of this year, the base year sales number becomes very high because of prebuying last year. So will we be able to beat those numbers in quarter 3 and quarter 4 this year? Or are we looking at a year of degrowth in FY '26? What is your growth outlook for FY '26? Is it going to be a year of degrowth given the tough comparables for quarter 3 and quarter 4? What is your growth outlook for FY '26?

Thank you so much for the question. As I've already mentioned in my address, the demand outlook has started to improve. And this year has exactly panned out as anticipated by us. So we anticipated a modest beginning to the year, which happened with a modest decline in Q1, which was followed by a stabilizing performance in Q2. And we would like to view Q2 as the first sign of recovery, wherein the rate of decline has clearly moderated. So we have every reason to believe that the demand will keep on improving from here on, starting from middle of Q3 and going strong into the Q4. So also one thing is that all the worst things are now behind us with the extended monsoons and the transition from BS-III to BS-V. Along with that, the price pressures that were there in the system. Now, that is behind us. And the macro -- on the macro front, everything seems to be falling into place with lower interest rates and liquidity back into the system. I believe the only thing is the pace of execution of projects, once they start to pick up, then there is no reason why the demand should remain subdued. And we are already seeing very encouraging signs from the market towards the adoption of the new technology along with the price changes that has been pushed. I believe on a full year basis, the industry volumes may be slightly close or on a slightly negative bias from here. But as we have guided that going ahead, this year could be flattish to a single-digit growth year for us, and we have no reason to not believe in that.

The next question is from the line of Suraj Malu from Catamaran.

Can you help understand -- the Backhoe Loader segment, can you help understand how many units were sold this quarter versus last year, the same quarter, and the market share in that?

Are you talking about the Backhoe Loader segment?

Yes, sir.

So I believe Backhoe Loader segment, we have done well, and Luthra ji will have the exact numbers. But backhoe loader on a Q-on-Q basis, I think we have increased our numbers by around 35% to 40%. Here, the base is slightly small. And on a year-on-year, there has been an increase of 15% to 20%. Luthra ji?

We did about 280 numbers.

So we did around 280 numbers.

This quarter?

Yes.

And then where do you see your market share in [indiscernible]

For this quarter, we have done is 166 -- 168.

These are just the backhoe loader numbers, not the construction equipment numbers.

Right, sir. Just the back loader, it's 168 this quarter. Got it. And sir, where do you see the market share in this segment in the next 3 years? Because this is the largest segment in the construction equipment and that's the next focus area, right?

Yes. So currently, our market share stands close to 2.5-odd percent, which we would like to stabilize and increase gradually towards 5% to 6%. And then finally, we would like to take it to double digits from there on.

Got it. And how do you see the acceptability of this product?

I think it's been very encouraging ever since we have launched our upgraded backhoe 3, 4 years back. The feedback that we got from the customers as well as our dealer channel partners was very encouraging. The only thing is that with this transition that happened from CEV--- backhoe was at CEV-IV, which went to CEV-V. The prices increase were there in this segment, which has been very smartly tackled by us, and we are seeing some good adoption at the customer level for these products. Productivity-wise, I think it is -- I would like to claim that it is one of the best in the industry.

[Operator Instructions] The next question is from the line of Yash from IIFL.

So I had a few questions. So what is the realization change quarter-on-quarter for our core and noncore units like the agricultural equipment? Quarter-on-quarter.

Quarter-on-quarter, there has been increase in the major sector. [indiscernible] carry crane is about nearly 15% to 20%, mainly on account of change in emission norm from BS-III to BS-V and BS-IV to BS-V. But till June of this year, most of the players were selling the old inventory lying with the dealers and all those things. So real impact of price increase has come only in this quarter. And going forward, this is one way. Agri is more or less a similar price. There is no significant increase in the Agri, except for the reduction in the GST rate, which is again passed on to the customers. So nothing on the Agri. Agri price realization remain the same. And definitely in the -- our major business, which is Pick-n-Carry and other construction equipment, there has been significant price increase and the real impact of transition from CIII to CV and CEV-IV to CEV-V has come into play in this quarter only. And going forward, that is what is going to remain.

Okay, sir. And what is our capital allocation strategy, like given that we have excess cash -- in mutual fund. So what is our strategy going forward? Are we going to do like CapEx or dividend or buyback? What is our capital allocation strategy?

As of now, we are -- as you are aware that we are in an expansion phase, not for the current, but for medium and long term, we are going for an expansion mode, and we have acquired 2 pieces of parcel of land last year and 1 -- a big chunk of land of nearly 86 acres of land is being -- will be acquired probably in this year, which will require about nearly INR 200 crores of money to acquire those land. But that will -- and going forward, as discussed in the previous con call also, once we -- the revenue from the present facility, it touches around INR 4,400 plus, and we'll start expanding into the parcel of land what we do. So going forward, is the dividend, we're already paying a dividend. And going forward also, we can expect increase in dividend rate and balance is still -- and third activity, what we are going forward going on is the improving in the robotics and mechanization and quality improvement projects for keeping the company way ahead for the technological improvements and for the export market. With the India adopting CEV-IV now, the whole world has opened for export market. The world is open. That is bound to take time, but we are just spending, investing in the quality improvement projects mainly for the -- so that our machines are as good as any European machines or American machines so that we can compete in those markets.

Okay, sir. And like what is our export revenue share as of now?

This year, we are about 4%-5% export we did this year. But in the -- if you compare the 6 months as compared to previous 6 months, corresponding last 6 months, there have been nearly 30% increase in the export from there. But over -- if you compare with the average company revenues, still it is around 4% to 5% only, which is below expectation, below our target, I should say, long-term -- medium to long-term target to at least 8%, 9% of the company revenues would come from air and the balance from the 7%, 8% from the defense only.

[Operator Instructions] The next question is from the line of Deepak Ajmera from IGE India.

Am I audible? Hello?

Can you be a little louder, please?

So instead of Deepak, Arpit this side. So any update on the Ghana order or Ghana project?

Ghana project has been kept on a back burner because of certain geo issues, which are going on between the government -- at the government level. We are all in readiness for execution of that project. But given the territory, I think we would not like to move ahead without having advanced payments or confirmed LCs in our hands. So we are just waiting for that, and it is -- the situation has been at a similar level for the last, I believe, 18-odd months, 24-odd months. So we continue to wait, and we don't want to risk our financial assets without having confirmed payments in our hands.

Got it. Secondly, our defense execution, so have they started?

So there are various projects in defense, which we are executing. And as Luthra indicated, our medium- to long-term target is to get around 8% to 10% coming out of exports and 5% to 8% coming out of defense. So there are a number of projects which we are doing. In the last con call also, we had indicated that there are special pick and place kind of cranes, which we are doing with DRDO, along with Ashok Leyland Defense and Tata Advanced Systems. So that is very much on the cards. One of the orders is getting executed. And hopefully, in this quarter, we should get a couple of new orders of those special cranes. As far as the rough terrain forklift order goes, which we got in Q4 last year, so which is the biggest -- single biggest order in the history of the company, around INR 420-odd crores. Now that order, when the machine was tested and the order was placed, again, there's an emission norm between the testing and the ordering and finally, the execution of the order. So we are waiting for a small NOC, which has to come from the Ministry of Defense that we can supply them a particular emission, rather BS-IV emission norms forklift. As soon as we get that NOC, the execution from our end will begin. It should have been there in Q3, but unfortunately, I think it will get pushed over to Q4. So that is also one of the reasons why we have kind of tapered down our guidance for this year.

Got it. And the flat to single-digit kind of growth what you are guiding of is into value terms or volume terms?

It's into value terms.

Value terms. So what has been the price increase from last year to this year?

So here, it is on 2 different levels. Below 50 horsepower engines, they have migrated from a BS-III era to CEV-V. There, the price increase has been on a higher side, let's say, northwards of 12% depending upon models. It can be 12%, it can be 13%, 14% also depending upon models and the specifications of the machine. However, when you talk about migration from CEV-IV to CEV-V, there the price difference has been a little less. So on a blended basis, you can say that it would be close to 8%, 9% price differential, which has come on account of change of the technology. It's a broad blended on the company's average, on the company's sales because there are certain machines which have not even migrated something like a tractor, something like a tower crane, a crawler crane, they have not migrated because they do not fall under these emission norms. So on a blended basis, you can say that around 8%, 9% of the price increase might come in.

The next question is from the line of Shubham Harne from Purnartha Investment Advisors.

I just wanted to understand what's our strategy for the Agri business. I can see that the margins are kind of low and what's the plan going ahead?

Yes, sir, unfortunately, we have not been able to deliver on the agenda on the Agri side, if you see our numbers year-on-year, but that is more to do with some of the orders which got executed in -- export orders which got executed last year. And going ahead, we have a big export order. When I say big, it's in 3-digit tractors orders, which we have got recently and should be executed in this quarter as well as the next one. So I believe by the year-end, we will be doing the catch-up on the Agri. And Agri's growth will be in line with what I've said. In fact, I'm very confident that in Agri, we will achieve growth in terms of volume as well as value because there is no clear-cut price increase there. So I'm very hopeful that in Agri, we will definitely attain better results in H2.

Can I understand what sort of horizon we are looking at maybe 2 years or 3 years down the line?

So our first aim is to actually stabilize our position in the India -- in the Indian states. So we are not present across the country. We are only present in certain pockets, and we will try to deepen our presence in those pockets. And post that, we will try and slowly expand into the nearby area. That's the broad strategy in the Agri business domestically. However, we are focusing on the export segment in the Agri, where in certain countries, India exports a lot of tractors. And we have already seeded our tractor in those territories, again, getting very good response from the channel partners there. And I believe that strategy should keep us in a good space on the bottom line as well as on the top line front. And we have been constantly participating in the exhibitions overseas to gain traction on this ground. So all in all, put together, I believe this division should perform from here on because I think all the other building blocks are in place. So a good product at the right price is definitely at place. I think the only thing where we are foundering is the channel vintage because most of these the Agri, especially the tractors, they are being sold by the channel partners. So OEM sells it to the dealer who in turn advances the tractor to the farmer. So once you are advancing the tractor, you need to have a strong presence in the local district or the Taluka level along with some financial power to advance the tractor which I believe we are lacking. But now I'm sure with a stable channel network for the last 3, 4 years, slowly and gradually, we will build up this competence as well and the growth will come on the domestic side.

Got it. And my final question is, I can see that for 8 to 12 quarters, our volumes are almost nearby stable. May I know at what sort of capacity level utilization level we are at?

You are talking about the construction equipment, cranes and material handling, the utilization level. Am I right?

Yes, yes, you're right.

So around 65% blended capacity utilization we are working at today. Tractor is definitely low. It is around 30%, 35%.

[Operator Instructions] The next question is from the line of Nihal Shah from Prudent Corporate Advisory Services.

I had a couple of questions. One on the part of CapEx. We are seeing a lot of government initiatives that are promoting consumption. And so do you think the CapEx part of government spending can take a pause and the private consumption hasn't been that encouraging as well in the first half. So what is your view on that because we are very closely associated with that?

Yes. So in Q2, of course, there were some extended monsoons. And of course, the intensity of monsoons was also high this year. So we had seen that a little bit -- there was a little bit of a slowdown on the infrastructure development activity. But the government is persistent on the infra development side. And on the macro side, as you correctly said, that they have given certain levers, which has boosted the consumption in the economy. Now, once the consumption starts to increase, the private CapEx is definitely going to return on the table. And we have already seen some signs that the demand will scale up going ahead, and it gives us very encouraging signs because, see, this is -- what has happened in H1 is something that we had already anticipated. And the flatness in the Q2 definitely gives us a lot of confidence that going forward in Q3 and Q4, we will have a very good demand in front of all of us.

And another question was in the cash flow statement, I can see a huge increase in the inventory. So was that because of delayed deliveries because of this GST cut or something like that?

No, not really. Actually, these are September end numbers. And if we see this time, the festive season was slightly early. So on -- we had taken a decision that we will be keeping some inventories before the festive season. So there was certain inventory into the system, which I'm sure will normalize by the end of this quarter.

The next question is from the line of Suraj Malu from Catamaran Ventures LLP.

This quarter, I see that the average selling price in the construction equipment and crane segment has increased by around 22% Y-o-Y, whereas the price increase is due to norms changes on an average 12% to 13%, right? So can you help understand the balance growth?

See, so one of the factors -- there are a couple of factors that play out here. Number one is, of course, the price increase which we have taken because of the technological changes, which we have discussed earlier in the call. The other major factor that has happened is the change and the favorable change in the product mix for us. So earlier, as you are aware that let's address this with respect to the Pick-n-Carry crane segment. So Pick-n-Carry crane, around 60% of the Pick-n-Carry crane plus/minus was the erstwhile Hydra crane, which was a very, very cost-effective lifting solution for the country and around 40% of the cranes was the new generation cranes, which was slightly expensive. Now new generation cranes went from BS-IV to BS-V, whereas the older generation of Pick-n-Carry crane, the Hydra cranes, they went from BS-III to CEV-V norms. So there, the price increase has been the maximum. But at the same time, since they were slightly cheaper, the market has taken some more time to accept the price increase into their domain. So you can say that the product mix has changed, and we have been able to increase our market share also in the new generation segment, where we and Escorts used to have a 50%, 52% kind of a market share. In the erstwhile Hydra cranes, we had more than 70% of market share. So in the numbers, when you see we have the hit because Hydra cranes have been hit. But on the realization side, you see that the realization is on the higher side because the share of the new generation cranes, which were expensive, they have increased. And hence, if you see the profitability has also sustained itself, keeping in mind the product mix because more mature the crane, better in technology the crane is, better is the realization for us. I hope I was able to answer that to you, Suraj.

Yes, sir. So before, the contribution from new generation cranes was 40%, what was that now?

So it was around 35%, 40%. It has now gone up to, let's say, 45% plus.

Got it, sir. And sir, you mentioned a couple of times that you...

Even 50%.

Understood, sir. Got it. Sir, you are mentioning about that you are seeing early signs of some CapEx or positive things, right? So when you mentioned this, like what are the factors or parameters that you track that gives you confidence to say that?

So definitely, it's the order booking. And barring this order booking also, see, on the macro side, if you see, project mobilization was on a slightly slower side because of the monsoons, which has started to pick up. The government has already started to award orders in some of the key states in the country which gives us confidence in this demand outlook. And barring that, the other macros are already firmly in place. So if you see even before the general election and the modal code of conduct kicked in, we saw 6 months of slow period and then the Lok Sabha election, then the results came in and the economy was having very low levels of liquidity as well as coupled with higher rate of interest. So both of these factors have started to ease out a little. And with these GST cuts also coming in, like on some of the key sectors such as cement and all, somewhere down the line, the customers also have been given a relief on the working capital front. So the overall sentiment in the customers with respect to spending on equipment, that seems to return. So all these factors put together give us a lot of confidence that going ahead, we should see a recovery. And traditionally, also, if you see, H1 accounts for only 40% of our overall numbers. So H2 traditionally is also strong. And this time, somewhere down the line, we also believe with the strong replacement demand, which will kick in, I think there will be pent-up demand in the system also, which has to hit the market. So that time will tell, when it will hit, whether it will hit in Q3 or Q4. But I believe the work that has to be done by a crane will be done by a crane. And with increased level of mechanization, reduced availability of labor for doing the lifting jobs, I believe there is nothing that the demand. Yes, there is a temporary slowdown, and there is a temporary phenomena, but I believe things should ease out from here. And moreover, there is another structural positive going in for us, which is the antidumping duty, which has been proposed on the heavy cranes. So once that volume will also start to come in, we already have our capacities in place. The plant has a capacity to push in INR 300 crores to INR 350 crores of revenue at peak capacity utilization. So we are ready. We are the only Indian company in that domain left as of now, and we are ready for capitalizing on the market. So I believe all in all, given our product positioning, we are very strongly positioned to benefit from the macro levers as well as the growth revival.

Got it, sir. And in this heavy crane sir, like how much is the antidumping duty? And now like what's the price difference in the Chinese products and your products?

So majorly, the duty that has come on 2 equipment manufacturers , one is, I think, in around 23%, 25% and on the other it is 52%...

One is 26%, not 2. One has been...

Luthra sab has better knowledge on that subject, please.

Basically, the antidumping notification has already come in. Government has already notified, but still to be implemented. As per that notification, one of the Chinese players, Zoomlion will be having 26%. And balance, all the Chinese companies will have around 52% antidumping duty. That is the as of now. And this notification has to be notified by the Ministry of Finance, implemented, and normally, they take about 90 days for implementation, which should probably happen in the last week of -- around between 15th to 30th of December if they go for the last date or even earlier if possible. That is the impact of this. So you can imagine how much the cost will go up for those Chinese companies who are importing this product in the market, which will definitely give a boost to us because we will be now able to have a -- we can compete them with not only in terms of pricing, but also as we are going for a JV with a -- joint venture with a Japanese partner, which will also become effective only once this notification comes into play. With that JV, with the formation of JV with a Japanese partner, we will be having multiple advantages, which will definitely give boost to the heavy crane business, which is crawler cranes, truck-mounted cranes, and the rough terrains.

The next question is from the line of Riddhi Maru from Shatrunjaya Investment Manager LLP.

Hello?

Yes, ma’am. You are audible. Please go ahead.

I'm not able to hear them here.

Ms. Riddhi, are you there?

Hello?

Yes. Please go ahead with your question.

Can you be slightly louder?

Sir, actually, my answers -- the questions have been answered.

The next question is from the line of Vijay from Nuvama.

A couple of things just wanted to check. One was on the defense order, which we have got. So how much of this has been accounted for as of H1 FY '26? And how much will come in the second half?

So I believe that you are asking about the INR 420 crore defense order for rough terrain forklifts. As I mentioned, we have not executed as of now in the H1, and we are waiting for a small NOC from the Ministry, which is expected. And if it gets -- if we get it in this quarter, then we will start execution from the next quarter onwards. This is one of the reasons why we just given a very conservative guidance because this was taken into account in our earlier calculations.

Okay. So do you expect this to -- like the revenue to come into the fourth quarter? Or will it be mainly into FY '27?

Mainly, it will be spilled over to the next year.

Okay. Okay. And secondly, sir, you say in terms of that Chinese cranes, so generally the price difference between ours and theirs? And have we seen any like incremental purchase over last -- I think it got announced in September. So over the last 2 months, have we seen any incremental purchase either from Chinese or from us?

See, basically, the Chinese player as what we understand is are selling at a price much, much lower than the cost of production and probably they are -- if you look, they are cheaper by -- but they sell not cheaper, they sell at least below 15% to 20% of their cost because if you compare the Chinese -- the price what they're selling about 10 years back and price to what they're selling today, the price will be nearly similar in spite of steel becoming double, dollar becoming double, and all the inflation and everything. So they have been dumping the product. That is why the -- when we applied for the antidumping duties on those products, when the government officials were able to see the cost difference. What cost, what we have and what price they're selling. That is why they have been -- the antidumping duty have been notified at 26% and 52% to other players. So besides the cost, if you can look at, they are also not only cost they're putting into it. Second thing they're disrupting the market by selling at giving credit of -- from 1 year to 3 years to the customers, which is again very lucrative for a customer in terms of pricing and also so all those factors are already in there. I think with this notification coming into implemented, we will be able to increase more because right now also, we are selling these products in the market, but the volumes are very small. Majority has been dominated by Chinese players as of now, but nearly 90 -- you can say 97%, 98% has been dominated by Chinese player, we are just selling 3% to 4%. And going forward, what we feel that in medium to long term, I think the 50% of the market should come to us in the coming 3 to 4 years' time.

The next question is from the line of Divyam Jain. Please go ahead.

Rajan sir, you mentioned you are targeting a 50% market share in the heavy load crane segment. Sir, as far as I have researched, last year, which is FY '25, India imported kind of around 1,300 to 1,400 heavy load cranes, right? So do we expect a similar number to be imported every year going ahead? Or what is the life cycle of the heavy load cranes? And what is the replacement time line for these cranes? And how large of a market would FY '26 and FY '27 in terms of numbers or units of these heavy load cranes and how much of them would ACE be able to take over?

See, actually, this market has developed in the last 4, 5 years only. Earlier, there was no such big demand for this because these are all heavy lifting machines ranging from 40 tonnes to 300 tonnes or 400 tonnes for this. Out of the 1,300 numbers, the addressable market for us will be somewhere about 800 to 900 cranes per annum because above that is for 300 tonnes and all those things, which we are right now, we are not making. So going forward, as I said, keeping in with the price and -- price and everything, we should expect 40% to 50% market share in the next couple of years. And that is -- and the life of the machine is again in the range of 8 to 10 years maximum because these are all heavy lifting machines. And some of them are already on the truck and these truck-mounted cranes don't have life more than 10 years for all those things.

Right, sir. And in terms of numbers imported or, let's say, purchased in India in terms of heavy load cranes, do you agree it will be around 1,300, 1,400 or supposed to increase over a few years? [indiscernible]

So the market is moving towards going for heavy cranes because all those metros and all those things require heavy lifting because if you look at any metro side, you will find a number of these type of cranes already working on both sides. And going forward, what I believe is probably in the coming years, as the cities will expand and major metros like Delhi, Bombay and all will be requiring much bridges, one bridge above the other. [indiscernible] what happens in the European country that you may find 2 bridges going on the same road, one above the other at a different level. So these all require heavy machineries to them. I think the market should grow for these machines.

Right, sir. And in terms of margins, as ACE, how would we be better in margins in the heavy load cranes rather than in the Pick-n-Carry cranes or any other cranes?

I think the margins will be in line. Right now, the margins in these products are less as compared to our regular Pick-n-Carry and other products. So going forward, we expect that this will also have the similar margins as other crane products.

Okay. Right. And if I can squeeze in one last question. So what is the manufacturing cycle time for heavy load cranes? And in the sense, my question is related to the fact that why would we take on such a huge project cycle if the margins are not lucrative? [indiscernible]

Divyam, let me clarify this. First of all, this is an industry which has expanded in the last 3 to 4 years, let's say, 5 years, once the pace of construction has increased and the nature of construction has moved more towards prefabricated. So this is too huge a size for us to remain out given our market leadership in the lifting business in the country. So it makes all the more sense for us to be in this segment. This segment will grow progressively from here onwards as the cities expand as what Mr. Luthra also explained to you. Now margins post this -- now you would say why we were not so aggressive in the last 4, 5 years because of the aggressive dumping by the Chinese players into the Indian country. Now with government taking note of it, they have already -- they have given the recommendation to the Ministry of Finance. The government will take its time before it is implemented. And by the time it is done, then our margins will be in line with the other construction equipment or the crane business. Then we will go for throttle against production of these machines. And we are already in readiness for this. Because before putting in such a kind of a recommendation, the government would like to come to our premise and they would like to see our readiness of catering the industry, whether we can cater the industry for these type of cranes or not, which they found satisfactory. And currently, the plant that we have set up has got a capacity to churn out a revenue of plus/minus INR 350 crores at peak capacity utilization levels. Having said that, if the business goes to that level, which it will, and we will -- nothing stops us from going into the further capacity expansion for this segment. Also, having said that, we will be -- we are already lining up a joint venture with KATO WORKS. Now KATO WORKS is a 5-decade old company when it comes to heavy lifting segment. So with them joining hands with us, we will have access to Japanese technology, which any given day will be sold at a premium. So a Japanese technology coming into the Indian setup. Of Indian, I would say, with our cost competitiveness and the strength of Japanese technology, we are going to become a market leader in this segment and bring glory back to the country. And the margins will definitely be in line with what we have been doing. And you've seen that in our last 2, 3 calls, we have been always saying that we will be expanding our margins going ahead also, given the challenging situation of what we have seen in H1, we have projected that there will be a minor increase in the operating margins going forward. So not only we are looking at stabilizing our margins, we are looking to increase our margins from where we are. And this cannot be done if we leave aside a segment, which will underperform. So the margins in this segment will be definitely in line with what we do as a company, which we are looking to expand. I hope I'm now able to articulate the answer in a more…

The next question is from the line of Deepak Ajmera from IGE India.

So as you articulated about the margin expansion, can you just let us know how the magnitude of the expansion could look like?

See, going forward, given our product mix and cost efficiencies which play in, the margin -- we see a scope of slight margin expansion. But going forward, as the volumes pick up because now, we are sitting at a production capacity, which can give us a revenue of almost INR 5,000 crores plus. So as the volumes pick up, the operating leverage will also kick in. And there is one anecdotal evidence also if you see when the technology change happened from -- for above 50 horsepower from BS-III to BS-IV, we had very smartly migrated our machines in a very cost-effective technology and our margins saw a bump up. Now again, in the BS to, the migration to a BS-V territory, we are very confident that with our solutions and the technology that we have gone to the customers with, it poses significant challenges to the competition. And at the same time, we are -- we will be able to upgrade our margin profile from here on as well. Yes, the quantum and the speed will be dependent upon how quickly the volumes catch up.

Got it. And how the guidance for this year or upcoming year could look like?

As of now, the current margin profile that we have posted in H1, I think there can be a small uptick from here.

Got it. Anything on the revenue side of guidance for medium term or, let's say, not for this year, like next year?

So our medium- to long-term guidance remains intact, which we had projected that probably by the end of FY '27, we would be around INR 4,000 crores to INR 4,400 crores. And from FY '29 to FY '30, we should be somewhere around INR 6,000 crores to INR 6,200 crores. So our medium- to long-term guidance is very much intact because we believe that this is a very temporary transitory phase where we have seen a shift in the emission norms and the market is somewhat slightly subdued because of the exorbitant price increases that has been pushed into the system. This will normalize. And going ahead, nothing has changed structurally except the imposition of antidumping duty, which is a long-term structural positive for us. So nothing has changed on the ground. And whatever we have lost in the last 6 months, I think the pent-up demand, we will make it up very quickly.

Ladies and gentlemen, that was the last question for today. We have reached the end of the question-and-answer session. I would now like to hand the conference over to the management for closing remarks.

Yes. Thank you, everyone, for joining in.

Thank you everybody.

And just in case there are some questions which have been left unanswered, please feel free to write to us. The e-mail IDs can be found on the website. So please write to us. We'll be more than happy to address any of the unanswered questions. Thank you so much.

Thank you. On behalf of Emkay -- on behalf of Action Construction Equipment Limited, Q2 FY '26, we conclude this call.

Thank you.

Thank you.