Detailed Narrative
Q3 & 9M FY26 Performance Overview
Shankara Buildpro Limited reported a robust Q3 FY26 with an overall top line of ₹1666 crores, marking a 29% year-on-year growth. For the nine months of FY26, the top line reached ₹4829 crores, growing 30% YoY. EBITDA for Q3 stood at ₹55 crores with a margin of 3.30%, improving from 2.75% in the prior year. Profit After Tax (PAT) for 9M FY26 was ₹86.5 crores, reflecting a strong 77% growth over the same period last year, with ROCE at 37% and working capital under 30 days.
Steel Segment Outperformance
The steel segment demonstrated strong performance, with sales volume reaching 2.61 lakh tonnes in Q3 FY26, a 37% YoY increase. Steel sales revenue for the quarter was ₹1520 crores, growing 34% YoY. For 9M FY26, steel sales volume was 7.27 lakh tonnes (up 38% YoY) and revenue was ₹4384 crores (up 34% YoY). This growth was primarily driven by aggressive penetration and market share gains in western geographies like Maharashtra, Gujarat, and Madhya Pradesh, which contributed approximately 50% of the volume growth.
Non-Steel Segment Challenges & Outlook
In contrast to steel, the non-steel segment faced headwinds, with sales declining 5% YoY to ₹146 crores in Q3 FY26. Management attributed this to several factors including weak export markets, volatility in raw material pricing, and elongated monsoons. Additionally, a post-COVID slowdown in new project launches and state-level government policy changes in Southern States like Karnataka and Telangana have delayed construction activity. The company expects the demand environment to improve, with results from internal changes anticipated from Q2 FY27.
Profitability & Margin Analysis
EBITDA margins for Q3 FY26 came in at 3.30% (₹55 crores) and for 9M FY26 at 3.28% (₹158 crores), showing an improvement over the previous year. However, Q3 PAT sequentially fell from ₹29 crores to ₹25 crores. This decline was primarily due to one-time📎 impacts: a ₹2.61 crore additional gratuity provision related to a new labor code and a ₹1.5 crore cost booked for the demerger process.
Inventory Management & Price Volatility
Despite significant steel price fluctuations, including a downward trend for 8-9 months followed by increases in December and January, the company managed its inventory effectively. While Q2 FY26 saw an inventory loss of approximately ₹12 crores, Q3 FY26 had no significant inventory loss. This was achieved through careful planning, effective purchasing strategies, and securing price guarantees from suppliers, allowing the company to hedge against price volatility.
Strategic Growth Targets & Future Outlook
Shankara Buildpro aims to achieve 1 million tonnes in steel volume for FY26. Looking ahead, the company targets an overall volume growth of 20% for FY27. Long-term aspirations include a top line of ₹10,000 crores and a 20% non-steel revenue contribution by 2030. Profitability targets include an EBITDA margin of 3.5% for FY27, with an aspiration to reach 4% in FY28, focusing on better margin mix in both steel and non-steel products.
Capital Structure & Working Capital Efficiency
As of December, the company reported acceptances of approximately ₹450 crores and borrowings of around ₹50 crores, totaling ₹500 crores. The cost of debt on these acceptances is competitive, ranging from 7.5% to 8%. The company maintains efficient working capital management, keeping it under 30 days overall, with non-steel requiring about 48 days due to higher inventory for display, and steel at 27 days.