India Eyes ₹23,000 Cr Manufacturing Boost; Construction Stocks Rally

Government Eyes Major Manufacturing Boost

The Indian government is reportedly mulling an incentive package of up to ₹23,000 crore for the upcoming Budget 2026. The initiative aims to rapidly expand domestic manufacturing of capital goods and 'Make in India' products, thereby reducing reliance on imports.

The construction equipment sector is earmarked for incentives totaling approximately ₹16,000 crore. The automobile sector is also targeted to receive ₹7,000 crore to foster global value chains, focusing on advanced components like ADAS, 360-degree cameras, and sensors with at least 50% domestic value addition.

Action Construction Equipment: Crane Dominance and Defence Push

Action Construction Equipment (ACE) stands as a diversified manufacturer of construction and material handling equipment. The company holds a dominant global position as the world's largest pick & carry crane manufacturer, commanding over 63% market share in mobile and tower cranes. It also aims to significantly increase its share in backhoe loaders and heavy cranes.

ACE recently secured its first order from the Ministry of Defence worth ₹420 crore for 1,121 rough-terrain forklifts, with execution expected to commence in Q4 and continue into FY27. The company targets revenue of ₹4,000-₹6,000 crore by FY27-FY30. It anticipates an incremental revenue of ₹500-₹1,000 crore over five years from potential anti-dumping duties on Chinese cranes.

In the first half of FY26, ACE's total income declined 4.9% year-on-year to ₹1,477 crore. However, profitability improved, with EBITDA rising 5% to ₹282 crore and net profit increasing 4.9% to ₹187.8 crore, driven by a favourable product mix and cost efficiencies.

BEML Pivots Towards Defence and Rail Sectors

BEML, a Public Sector Undertaking under the Ministry of Defence, is strategically shifting its revenue mix. While mining and construction currently account for 43% of sales, this is projected to fall to around 40% as defence and aerospace (40%) and rail and metro (17%) sectors grow.

The company aims for defence and rail/metro sectors to contribute 60% of revenue. BEML is expanding into complex defence systems, aerostructures for combat aircraft programs, and the maritime market, targeting Goliath cranes for shipbuilding. It holds an order book of ₹16,342 crore, providing significant revenue visibility.

BEML's revenue remained flat in H1 FY26 at ₹1,473 crore. The company reduced its losses to ₹16 crore from ₹19 crore in the same period last year and targets at least 20% revenue growth in FY26.

Ajax Engineering Strengthens Concrete Equipment Portfolio

Ajax Engineering leads the Indian market in self-loading concrete mixers (SLCMs) with a 75% volume share and is the second-largest manufacturer of concrete equipment. The company is actively building capabilities in non-SLCM segments like concrete pumps and batching plants.

Ajax is operationalizing a fourth manufacturing facility and expanding its dealer network. In H1 FY26, revenue grew 18.4% to ₹912 crore. However, EBITDA declined 10.6% to ₹106.6 crore, and PAT fell 9% to ₹91.9 crore, partly due to emission norm changes and slower project execution. The company anticipates stronger performance in H2 FY26.

Valuation Metrics and Future Outlook

Analysis indicates that ACE and Ajax Engineering exhibit strong market positions and industry-leading return ratios like Return on Capital Employed (RoCE) and Return on Equity (RoE). BEML, while strategically positioned, lags in these metrics. Both ACE and Ajax are trading at valuations below the industry median.

Should the proposed ₹23,000 crore incentive framework materialize, it significantly bolsters the investment case for construction equipment manufacturers focused on localization. Clarity and timely implementation of these incentives will be crucial for earnings translation.