Buying a crane was never cheap. But for Action Construction Equipment’s customers, it has become even more expensive over the past year. Buyers have had to deal with repeated price hikes, first because of stricter emission rules and then because steel and other input costs became more expensive.
So far, ACE has managed to keep demand steady and protect profits. But customers can only absorb higher prices for so long before they start delaying purchases. With management itself saying buyers are showing some resistance, that risk is now becoming more important.
The First Price Shock Came From Emission Norms
The first major pricing reset started in Q1FY26. Machines below 50 horsepower that moved from BS-III to BS-V saw price increases of around 12-13 percent, while machines moving from BS-IV to BS-V saw a smaller increase of around 6-7 percent.
By Q2FY26, management said the impact worked out to roughly 8-9 percent on a blended basis across company sales. Some individual models affected by the transition had become 13-14 percent more expensive, while tractors, tower cranes and crawler cranes were not part of the same emission transition.
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The older Hydra-type pick-and-carry cranes moved directly from BS-III to CEV-V, while newer-generation cranes faced a smaller technology jump. Customers did not immediately accept the change. In Q1FY26, management described the quarter as a dampener because customers were dealing with both higher prices and unfamiliar electronic-engine technology. Pre-buying before the new norms, geopolitical uncertainty and an early monsoon made the slowdown worse.
Q1FY26 standalone total income fell 7.63 percent YoY to Rs. 703 crore. Revenue from cranes, construction equipment and material handling dropped to Rs. 605.43 crore from Rs. 690 crore a year earlier.
Pricing Supported Revenue Even As Volumes Struggled
The impact continued in Q2FY26. ACE sold 2,348 units of cranes, material handling and construction equipment, down 18 percent YoY. However, segment revenue remained almost flat at Rs. 694 crore. This shows that while ACE sold fewer machines, higher prices and sales of more expensive models helped support revenue.
Management also said the mix shifted toward more expensive new-generation cranes as Hydra demand weakened. The share of new-generation cranes, earlier around 35-40 percent, moved higher during the period even up to 50 percent. Buyers who still purchased machines were increasingly choosing more sophisticated and expensive models.
By Q3FY26, the situation was improving. Segment revenue rose to Rs. 763 crore and volumes increased to 2,710 units. Management said demand had stabilised in Q2 and returned to normalcy in Q3. Q4 then became ACE’s strongest quarter of FY26 on revenue, with standalone total income at Rs. 1,021 crore.
The first price shock was eventually absorbed, and demand recovered. But just as the market was getting comfortable with the new pricing, ACE was hit by another problem.
Another Pricing Cycle Followed
Towards the end of FY26, the West Asia crisis pushed up raw-material and energy-related costs. Management highlighted elevated steel prices, crude-linked inputs, supply disruptions and rupee depreciation. Steel is especially important because ACE calls it its biggest input material.
By Q1FY27, management said steel prices had risen nearly 20 percent, while tyres, belts, rubber, plastics and other inputs had also become costlier. The company’s response was another round of price hikes.
ACE raised prices three times in the first half of 2026. Prices went up around 1-1.5 percent in January, followed by another 3-4 percent hike and then 5-6 percent in June, depending on the product. Together, management said prices had increased by close to 10 percent.
Importantly, the latest increase was still being implemented when the Q1FY27 call took place. Management expected more of the pricing benefit to show up in Q2FY27, lifting average selling prices further.
Costs Are Still Running Ahead Of Pricing
The complication is that ACE is not raising prices to expand margins. It is largely trying to recover higher costs.
Management estimated that the eventual impact of input inflation could reach around 11-12 percent. Against that, ACE had already pushed roughly 9-10 percent of price increases through the market and said another roughly 2 percent hike could be required if cost pressures continued.
There is also a timing mismatch. Vendor price increases take time to flow through ACE’s inventory, while ACE’s own hikes also take time to be fully realised. Management said this adjustment generally takes two to three months.
Around 7-8 percent of the input inflation had already flowed through during Q1FY27, with some increases likely to spill into Q2. Gross margin was also down by around 140 basis points YoY, which management largely attributed to commodity costs.
Despite that, consolidated Q1FY27 total income grew 19.5 percent YoY to Rs. 840.3 crore, EBITDA rose 19.9 percent to Rs. 172.5 crore and PAT increased 22.3 percent to Rs. 119.5 crore. Crane, construction-equipment and material-handling volumes increased from 2,337 units in Q1FY26 to 2,740 units.
Customer Resistance Is Now The Key Risk
The most important comment from the Q1FY27 call was about customers. Management openly said there was “a lot of resistance” after the latest price increases. The timing made the problem harder because the largest hike came during the monsoon period, when construction activity and machine buying are seasonally softer.
ACE therefore held back from giving a precise full-year growth number at that time. Management wanted to see how demand behaved after the monsoon and how customers absorbed the higher prices.
Financing makes this more important. ACE says roughly 85-90 percent of cranes and construction equipment are generally financed through banks and NBFCs. Around half, or slightly more, are bought by rental operators, with the rest going directly to EPC companies and end users in manufacturing and logistics.
For customers using loans, a more expensive machine means they may have to borrow and repay more. For rental operators, the machine needs to earn enough money to make the higher price worth it.
And the broader interest-rate environment may now make that calculation tougher. The US Federal Reserve raised rates by 25 basis points in September, while expectations of an RBI rate hike have also increased. If borrowing costs in India rise as well, ACE’s customers could face higher financing costs at the same time that machine prices are already elevated.
The Next Few Quarters Will Test Pricing Power
ACE is in a strong position in the market, and demand improved in the second half of FY26. Q1FY27 also showed that volumes can still grow even after the earlier price hikes. A higher share of newer and bigger cranes can also help ACE earn more from each machine it sells.
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But customers have already faced two rounds of price hikes in a short time. The first came because of new technology and emission rules, while the second came from higher raw-material costs. Management is now seeing some resistance from buyers, and another price hike may still be needed.
The next few quarters will show how customers react to ACE’s higher prices. So far, volumes have held up and profits remain strong. But ACE has already seen customers delay purchases when prices rise sharply. If costs stay high and another price hike is needed, the key question is whether customers will keep buying.