Arisinfra Solutions Q3 FY26 earnings call

Arisinfra Solutions Limited reported a robust Q3 FY26, with revenue soaring 50% year-on-year to INR 270 crores, up from INR 181 crores in Q3 FY25. This growth was accompanied by significant margin expansion, with gross margins increasing by 200 basis points to 17.4% and EBITDA growing 2.3x to INR 30 crores. The company's PAT saw a nine-fold increase, reaching INR 18.27 crores, reflecting strong profitability improvements. Management attributed this performance to structural changes in business mix and execution.

A key highlight of the quarter was the substantial improvement in capital efficiency, with net working capital days reduced by 42 days, from 116 days in Q3 FY25 to 74 days in Q3 FY26. This reduction was achieved through tighter credit discipline, better counterparty quality, and technology-led monitoring of receivables. Management emphasized that this allows the business to grow faster without requiring disproportionately more capital, reinforcing an asset-light growth model. The company also maintains a healthy cash balance of over INR 150 crores.

Aris is strategically shifting its business mix towards higher-margin segments, with contract manufacturing and services showing significant growth. Contract manufacturing now contributes 48% of the turnover, up from 35% last year, with absolute revenue doubling from INR 65 crores to INR 130 crores. The services segment also grew its share of sales from 6% to 9%, with absolute revenue more than doubling from INR 11 crores to INR 24 crores. This mix shift is a primary driver for the improved profitability and reduced capital intensity.

The company announced its entry into a new segment, Asphalt, through a joint venture, projecting a revenue contribution of INR 80-100 crores within the next 12-18 months, at company-level margins. Management expressed strong confidence in achieving its full-year FY26 revenue growth guidance of 40% and expects Q4 FY26 to be the strongest quarter, with good visibility on demand for the next three to four quarters. The company also implicitly confirmed an analyst's target of INR 1100 crores top line for FY27, stating the model supports efficient working capital management at that scale.

Aris maintains a disciplined approach to financial management, targeting a leverage ratio (debt to equity) between 0.4 and 0.5, which they commit not to increase. Current borrowings stand at approximately INR 46 crores (INR 40 crores working capital, INR 6 crores long-term debt). The company is actively managing its receivables, with a target to reduce receivables older than 6 months from INR 50-55 crores to INR 30-35 crores by March. This focus on receivable quality and control is crucial for maintaining liquidity and supporting growth.