Detailed Narrative
Strong Financial Performance in FY26
Shankara Buildpro Limited reported a robust financial performance for FY26, with revenue reaching INR 6,826 crore, marking a 30% year-on-year increase. Q4 FY26 revenue stood at INR 1,996 crore, up 28% YoY and 20% sequentially. The company's EBITDA for FY26 was INR 228 crore, a 51% jump, translating to an EBITDA margin of 3.35%, an expansion of 47 basis points from 2.87% in FY25. PAT for FY26 grew by 64% YoY to INR 128 crore, with Q4 FY26 PAT at INR 42 crore, a 42% YoY increase.
Steel Business Drives Growth and Achieves Volume Milestone
The steel marketplace was the primary driver of growth, with steel revenues reaching INR 6,220 crore in FY26, a 33% year-on-year increase. Steel volumes grew by 32% YoY, surpassing the 1 million tonne target to reach 10.16 lakh tonnes for FY26. In Q4, steel volumes were 2.89 lakh tonnes, up 19% YoY and 11% sequentially. The company aims to grow total steel volumes to 1.2 million tonnes in FY27, 1.4 million tonnes in FY28, and 2 million tonnes by FY31.
Non-Steel Business Faces Headwinds but Targets Strong Recovery
The non-steel business recorded revenues of INR 606 crore in FY26, a modest 2% increase YoY, and INR 161 crore in Q4 FY26. This segment faced headwinds from disruptions in the ceramic tile industry due to rising natural gas prices and volume de-growth in plastic pipes due to PVC resin price volatility. Despite these challenges, management is optimistic, targeting non-steel revenues of INR 750 crore in FY27 (a 25% increase) and INR 925 crore in FY28, driven by plumbing, fitting, and sanitary ware.
Strategic Expansion and Omnichannel Model
Shankara Buildpro plans to add 7 to 10 new fulfilment centers/stores in FY27, with an estimated CAPEX of INR 15-20 crores, and 4 to 5 new stores annually thereafter. The company's e-commerce division witnessed substantial growth, clocking INR 22 crore in FY26 (a 322% YoY increase), with targets of INR 35 crore in FY27 and INR 50 crore in FY28. The company emphasizes its unique omnichannel business model, catering to a wide customer spectrum across multiple verticals and territories, which helps mitigate competitive pressures.
Margin Improvement and Market Outlook
The company aspires to increase its EBITDA margins to around 4% in the medium to long term (2-3 years), up from 3.35% in FY26, driven by product mix improvement and operating leverage. For FY27, the EBITDA margin is expected to be in the range of 3.3% to 3.5%. While Q1 FY27 is expected to be slightly slow due to demand resistance from recent price increases, management anticipates recovery from June onwards, with overall FY27 revenue growth targeted at around 20%.
Inventory Management and Exceptional Items
In Q4 FY26, the company recorded an inventory gain of approximately INR 15 crores, which positively impacted profitability. This contrasts with inventory losses of around INR 8-9 crores experienced in the previous three quarters. Additionally, Q4 FY26 included exceptional costs📎 of approximately INR 16 crores due to demerger-related expenses, additional rental expenses, and bad debt provisions of around INR 11 crores, which partially offset the inventory gains.