Summary
Shankara Buildpro Limited - Q3 FY26 Earnings Call Summary Thursday, February 12, 2026 4:00 PM
Event Participants
Executives 4 Alex Varghese (CFO), C. Ravikumar (Executive Director), Dhananjay Mirlay Srinivas (Executive Director), Sukumar Srinivas (Managing Director)
Analysts 7 Aadarsh (Negen Capital), Deepak Poddar (Sapphire Capital), Madhur Rathi (Counter Cyclical Investments), Nishant Bhat (Equitywrks Limited), Palak Bhanushali (MIV), Rahul Kumar (Vaikarya Fund), Viraj (Enigma)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Steel Sales Volume | 2.61 lakh tonnes | +37% YoY; driven by aggressive expansion in Western region (Maharashtra, Gujarat). |
| Total Revenue | ₹1,666 crores | +29% YoY; robust steel demand offset by 5% YoY decline in non-steel sales. |
| EBITDA | ₹55 crores | +55% YoY (est); margin expanded to 3.3% from 2.75% YoY. |
| Profit After Tax (PAT) | ₹25 crores | Sequential decline from Q2 (₹29cr) due to ₹2.61cr gratuity provision and ₹1.5cr demerger costs. |
| ROCE | 37% | Maintained high efficiency despite volume scaling. |
| Working Capital Days | <30 days | Steel segment at 27 days; Non-steel higher at 48 days due to display requirements. |
| Debt & Acceptances | ₹500 crores | Includes ₹450cr in acceptances and ₹50cr in borrowings as of Dec-25. |
| Inventory | ₹400 crores | Management noted no inventory loss in Q3; potential for gains in Q4 following price hikes. |
Geographic & Segment Commentary
- Steel Segment: Revenue grew 34% YoY to ₹1,520 crores, supported by 38% volume growth in 9MFY26. Growth was strongest in the Western region (+50% YoY), which now contributes 17% of volumes, while Southern markets grew 20%. The segment caters to infra, industrial warehousing, and airports.
- Non-Steel Segment: Revenue declined 5% YoY to ₹146 crores due to slowdowns in Karnataka and Telangana. Performance was hindered by local government policy changes (e-khata requirements), prolonged monsoons, and delayed project completions. Management expects a recovery by Q2 FY27.
- Retail vs. Enterprise: Retail channels currently contribute 54% of volume, with Channel/Enterprise at 46%. In the non-steel segment, retail weightage is higher at approximately 60-65%.
Company-Specific & Strategic Commentary
- Demerger Milestone: This was the first call post-listing as a standalone entity (January 9, 2026), focusing on an asset-light building materials marketplace model.
- Product Expansion: Growth is being driven by a shift into “long and flat” steel products and deeper penetration into Tier-2 and Tier-3 towns.
- West Region Strategy: Management is aggressively targeting Maharashtra, Gujarat, and MP, which are currently the primary engines for market share gains.
- Operational Efficiency: The company maintains a 5.3 lakh sq. ft. footprint across 130 stores/fulfilment centers while keeping working capital under 30 days.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Steel Volume | 1 million tonnes (FY26) | Standalone target for the current financial year; management is confident in achieving this. |
| Steel Tube Volume | 1 million tonnes (Long-term) | Specific aspiration to scale the tube sub-segment to the million-tonne mark. |
| Revenue Mix | 20% Non-steel (FY29-30) | Long-term target to rebalance mix toward higher-margin non-steel products as construction cycles turn. |
| EBITDA Margin | 3.5% (FY27) to 4% (FY28) | Margin expansion expected through improved product mix and operating leverage. |
| Revenue Target | ₹10,000 crores (FY30) | Conservative long-term top-line aspiration. |
Risks & Constraints
| Risk | Context |
|---|---|
| Steel Price Volatility | While rising prices currently offer inventory gains, management noted resistance to price hikes in Jan-26 and historical sensitivity to downward trends. |
| Regulatory/Policy | Recent growth in non-steel was hampered by state-level administrative changes (e-khata) and new electricity connection rules in South India. |
| Segment Concentration | High dependence on the steel segment (90%+ of revenue) exposes the company to industrial cycles and lower gross margins (4-5%) compared to non-steel (8-10%). |
Q&A Highlights
Steel Growth Drivers
- Question: How did you achieve 37% growth when manufacturers are growing at low teens? (Viraj, Enigma)
- Answer: Aggressive penetration in Western India (Maharashtra/Gujarat) saw 50% growth, while traditional Southern markets grew 20% (Management).
Margin Contraction vs. Volume
- Question: Why did PAT fall sequentially despite record sales? (Aadarsh, Negen Capital)
- Answer: Impacted by non-recurring items: ₹2.61 crore additional gratuity provision for new labor code and ₹1.5 crore demerger-related costs (Alex Varghese).
Non-Steel Slowdown
- Question: Why is non-steel struggling despite the real estate boom? (Madhur Rathi, Counter Cyclical)
- Answer: Post-COVID project launches take 3-4 years to reach the finishing stage. Local issues like e-khata in Karnataka also delayed occupancy and finishing (Dhananjay Mirlay Srinivas).
Inventory Management
- Question: How were inventory losses managed in a volatile market? (Rahul Kumar, Vaikarya Fund)
- Answer: Losses were limited to ₹12 crore in H1FY26 through careful purchasing and volume-based price guarantees from suppliers (Management).
Key Takeaway
Shankara Buildpro delivered a strong Q3 FY26 with 29% revenue growth, primarily powered by a 37% surge in steel volumes as the company expanded aggressively into Western India. While the demerged entity achieved a high ROCE of 37% and maintained lean working capital of under 30 days, the bottom line was temporarily weighed down by one-time demerger costs and labor code provisions. The non-steel segment remains a point of friction, declining 5% due to regulatory bottlenecks in Southern states, though management expects a cyclical recovery by mid-FY27. Strategically, the company is transitioning from a volume-led growth phase toward a 4% EBITDA margin target by FY28, anchored by a long-term goal of ₹10,000 crore revenue. Looking ahead, the company is on track to hit the 1 million-tonne steel volume milestone in FY26, with potential Q4 tailwinds from inventory gains following recent steel price hikes.
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