Shankara Building Products Limited — Q2 FY26 earnings call

Call held 20 Nov 2025

Management summary

Shankara Building Products Limited reported strong consolidated revenue and profit growth for Q2 and H1 FY26, primarily driven by robust steel business volumes. While the non-steel segment faced headwinds from construction slowdowns, the company maintained tight working capital control and saw significant growth in its e-commerce platform. The demerger of the marketplace business (Shankara Buildpro Limited) received in-principle approval, with listing expected by end of November, aiming for better focus and value creation for both manufacturing and marketplace entities.

Highlights

  • Consolidated revenues stood at ₹1,681 crores in Q2 FY26, registering a strong growth of 26% year-on-year.

  • Steel business achieved a significant milestone by delivering 2.52 lakh tons in Q2, representing a 31% year-on-year growth.

  • Q2 EBITDA stood at ₹51 crores, a 36% growth year-on-year, and net profit for the quarter stood at ₹25 crores, marking a 66% year-on-year increase.

  • Retail same-store sales growth reached 22% in Q2 FY26.

  • Online store and e-commerce business saw significant traction with revenue of ₹10 crores in H1, an increase of 250% year-on-year, and is EBITDA positive.

Concerns

  • Non-steel business recorded a moderate 10% growth year-on-year in Q2 and 8% in H1, facing strong headwinds.

  • Manufacturing business EBITDA stood at 1% for H1, impacted by a one-time expense of ₹6 crores in Q2.

  • Slowdown in construction activities in Karnataka, Kerala, and Telangana, attributed to delays in government approvals, longer monsoons, and slower money rotation, impacted the non-steel segment.

Key financials

  1. Consolidated Revenue ₹1,681 Cr +26%YoY
  2. Consolidated EBITDA ₹51 Cr +36%YoY
  3. Consolidated Net Profit ₹25 Cr +66%YoY
  4. Consolidated EBITDA Margin 3%
  5. Working Capital Cycle 30 days

What they filed

Q1 FY27: revenue up 8.4%, net profit up 266.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue337 1,437 1,639 323 280 −17%420 −71%341 −79%350 +8%
EBITDA5 40 51 6 -1 −112%5 −88%13 −74%6 +4%
Net profit1 18 28 0 -5 −700%1 −93%7 −74%2 +267%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Manufacturing Business (Shankara Building Products Limited)
    ₹280 Cr Revenue (Q2 FY26)₹603 Cr Revenue (H1 FY26)₹5.8 Cr EBITDA (H1 FY26)1% EBITDA Margin (H1 FY26)₹11.8 Cr Adjusted EBITDA (H1 FY26)2% Adjusted EBITDA Margin (H1 FY26)
  • Marketplace Business (Shankara Buildpro Limited)
    2.52 lakh tons Steel Volume (Q2 FY26)4.9 lakh tons Steel Volume (H1 FY26)₹155 Cr Non-steel Sales (Q2 FY26)₹299 Cr Non-steel Sales (H1 FY26)₹1,700 Cr Retail Revenue (H1 FY26)₹1,624 Cr Non-retail Revenue (H1 FY26)₹10 Cr Online/E-commerce Revenue (H1 FY26)22% Retail Same-Store Sales Growth (Q2 FY26)27 days Working Capital Cycle₹27 Cr Cash Flow from Operations (H1 FY26)

Capital allocation

high confidence
  • Capex ₹10 Cr
    • Machinery upgrade for manufacturing business ₹10 Cr
    We will be expecting in the region of INR 10 crores to INR 15 crores.
  • Debt Debt disclosed
    Despite our expanding scale, we maintained strict control over working capital, which averaged to 30 days this quarter. This working capital discipline also allowed us to keep our finance costs in check while maintaining our robust growth.
  • M&A Shankara Buildpro Limited Divestment · Pending regulatory

    To get better focus and create better value in the marketplace business and manufacturing business.

    Demerger expenses and legal case write-offs of ~₹6 crores incurred in Q2 FY26.

    We are pleased to announce that as on 12th November 2025, we have received the in-principle approval from both stock exchanges, the NSE and the BSE for the listing of our marketplace business, Shankara Buildpro Limited. We are optimistic and confident that the company will be listed by end of November.
  • Liquidity Liquidity disclosed Cash flow from operations for Shankara Buildpro (marketplace business) was around INR 27 crores for H1.
    Shankara Buildpro cash flow from operation is around INR 27 crores.

Guidance & targets

Volume

  • Steel Volume Target Volume · FY · High confidence 1 million tons
    We are on track to achieve our 1 million tons target for the financial year.

    — Sukumar Srinivas

Margin

  • Manufacturing Business EBITDA Margin Margin · H2 FY26 · High confidence 2% to 2.5%
    Going forward, we hope to sustain a 2% to 2.5% EBITDA for H2 FY '26.

    — Sukumar Srinivas

  • Manufacturing Business EBITDA Margin Margin · FY27 · High confidence 3%
    FY '27, definitely, the target is to take it to 3%, very much so.

    — Management

  • Marketplace Business EBITDA Margin Margin · FY27 · High confidence Upwards of 3.5%
    It will incrementally increase and FY '27, we hope to be definitely upwards of 3.5%

    — Management

Capacity

  • Manufacturing Capacity Utilization Capacity · FY27 · High confidence 60% to 65%
    Currently, we are at about maybe just about at 50% or sub-50%. So the immediate target is to take it to at least 60% to 65%, which should drive the margin growth.

    — Management

Revenue Growth

  • Marketplace Business Revenue Growth Revenue Growth · FY27 · High confidence 15% to 20%
    FY '27, definitely, the marketplace, we are keeping the same in the 15% to 20% revenue growth.

    — Management

  • Manufacturing Business Revenue Growth Revenue Growth · FY27 · Medium confidence 10%
    Manufacturing business, I would say, anywhere in the region of around 10%, you can take it as.

    — Management

Store Expansion

  • New Stores and Fulfillment Centers Store Expansion · H2 FY26 to FY27 · Medium confidence 8 to 9
    So we're saying including the second half of FY '26 till FY '27, around 8 to 9 will be added fulfillment centers and stores.

    — Sukumar Srinivas

Profitability

  • Listed Entity (Manufacturing) EBITDA Profitability · FY · High confidence 1.5% to 2%
    See, this year, we hope to close around an EBITDA because the second quarter was bad. We will close in the region of around 1.5% to 2% in the current listed entity.

    — Management

Non-steel Business Contribution

  • Non-steel share of total revenue Non-steel Business Contribution · Next 2-3 years · Medium confidence Closer to 20%
    And definitely, the aim is that as we march forward, the non-steel should take over from to be moving closer to the 20% over the next 2 to 3 years.

    — Management

Non-steel Business Operating Margins

  • Non-steel operating margins Non-steel Business Operating Margins · Ongoing · Medium confidence Upwards of 6%
    Okay. And obviously, our operating margins on the non-steel business is, I think, upwards of 6%, right?

    — Rahul Kumar

What to watch in Q3 FY26

Manufacturing Business EBITDA Margin (H2 FY26)

next quarter (H2 FY26)
Current 1% (H1 FY26)
Target 2% to 2.5%

Why it matters

To assess the effectiveness of restructuring efforts and machinery upgrades in the manufacturing segment.

Going forward, we hope to sustain a 2% to 2.5% EBITDA for H2 FY '26.

Risks & concerns

  • Slowdown in construction activities impacting non-steel segment

    medium

    Non-steel segment faced strong headwinds due to slowdown in construction activities in Karnataka, Kerala, and Telangana, attributed to delays in government approvals, longer monsoons, and slower money rotation.

    Management acknowledged

  • Steel price volatility

    medium

    Steel constitutes 90% of the business, leading to concerns about price fluctuations, though the company is trying to control this.

    Management acknowledged

Q&A highlights

7 direct
Strategic focus and market share drivers post-demerger Direct
for the manufacturing business, we have a clear idea on how we are going to take it forward with an experienced person to head operations, Upgradation of machinery, sales team focused solely for tier sales as well as focusing on niche and value-added products. So that's what we're looking at in the manufacturing business. When you talk about the marketplace, it is going to be continued as business as usual.

Clarifies the distinct strategies for the manufacturing and marketplace entities post-demerger, focusing on specialization and operational efficiency.

Asked by Veer Vadera

New store expansion and product category additions Direct
So currently, in the H1, we've already opened around 6 fulfillment centers and stores. Maybe in H2, we may be looking at 2 to 3 as of now, which are in the pipeline. We may have an update, more update, we'll get back to you if we have more in the pipeline. And the second half of your question was new products. Really, as of now, we do have a complete range of products with us.

Provides specific numbers for recent and planned store expansion and indicates a focus on optimizing existing product categories rather than adding new ones.

Asked by Veer Vadera

Inventory loss and lease rental for manufacturing business Direct
So there has been no significant inventory loss in Q2. So nothing to really report. ... And for the second half, there is -- so as we mentioned, the manufacturing business has leased out the properties to the marketplace business. So there will be a rental charged from October onwards to the marketplace business from the manufacturing. ... So that will be approximately around INR 5 crores for the 6 months period.

Confirms no inventory loss and details the new inter-company lease arrangement, providing a specific financial impact for the manufacturing entity.

Asked by Rahul Kumar

Sequential reduction in Marketplace business margins Direct
Actually, there was a one-time write-off which we have taken in the Buildpro I mean, the Building Products Limited. So when it is consolidated, if you see the first quarter, it has been consolidated. So if we add that INR 6 crores or INR 5 crores approximately, which is a one-time expense, we are back to the same more or less there would be a substantial fall between Q1 and Q2 in the EBITDA margins.

Explains the reason for margin compression, attributing it to a one-time expense related to the demerger, which is crucial for understanding underlying profitability.

Asked by Keshav Kumar

Expansion of non-steel business to new geographies like Maharashtra and Gujarat Direct
Yes, we are. We do have a plan to do that. We actually do have a presence in Gujarat with an experience center in Morbi for our tiles, but we are looking at how we can expand our stores in Maharashtra in the coming quarters or years.

Indicates strategic geographic expansion plans for the non-steel segment, which is a key growth driver.

Asked by Rahul Kumar

Achieving the 20% non-steel business target by FY25 Partial
Sorry, we have talked about it as FY '30, not in FY '25, number one. Number two, the proportionate increase in steel, we have also been growing very fast in steel. If you see the last couple of years, the growth in volumes as well as revenue is around 20% and volume growth is upwards of 25%. So I think we are still I mean, keeping the FY '30 target very much in place.

Clarifies a previous target timeline, correcting a misunderstanding and reaffirming the long-term goal for non-steel contribution.

Asked by Parasurama Praveen

EBITDA margin improvement plan for the listed entity (manufacturing) Direct
So now there's an experienced team, which will be fully focused, and we have revamped from our side at the manufacturing site, the setup and so on. That's number one. ... So I think with these 3, already we are guiding for around 2% EBITDA from this quarter. I'm very confident that in the next year, that should further improve.

Outlines the specific steps being taken to improve the profitability of the manufacturing business post-demerger, including team, focus, and machinery upgrades.

Asked by Manish

Marketplace business working capital cycle and growth outlook for retail and non-retail segments Direct
The working capital cycle in the marketplace business is approximately around 27 days. And the growth, I think we will sustain at that 15% to 20% top line growth as we guided even earlier.

Provides key operational metrics for the marketplace business, including working capital efficiency and reaffirming top-line growth guidance.

Asked by Jatin Damania

3 min read 5 chapters

Detailed narrative

Robust Steel Business Performance Drives Consolidated Growth

Shankara Building Products Limited reported strong performance in Q2 and H1 FY26, primarily fueled by its steel business. Consolidated revenues grew 26% year-on-year to ₹1,681 crores in Q2 and 27% year-on-year to ₹3,325 crores in H1. The steel division achieved a significant milestone with 2.52 lakh tons in Q2, marking a 31% year-on-year growth, and 4.90 lakh tons for H1, a 33% year-on-year increase. The company remains on track to achieve its 1 million tons target for the full financial year, with steel volume averaging around 1 lakh tons per month.

Non-Steel Segment Faces Headwinds, Strategic Focus on Expansion

The non-steel business experienced moderate growth, recording 10% year-on-year in Q2 with sales of ₹155 crores and 8% year-on-year in H1 with sales of ₹299 crores. This segment faced strong headwinds due to a slowdown in construction activities across Karnataka, Kerala, and Telangana, attributed to delays in government approvals, prolonged monsoons, and slower money rotation. Despite these challenges, plumbing and sanitary ware verticals grew by 14% and 7% respectively. The company plans to expand its non-steel presence in new geographies like Maharashtra and Gujarat, with 2-3 new fulfillment centers and stores in the pipeline for H2 FY26 and a total of 8-9 by FY27.

Manufacturing Business Restructuring and Margin Improvement Plan

The manufacturing business, housed under Shankara Building Products Limited, generated revenues of ₹280 crores in Q2 and ₹603 crores in H1 FY26. However, its H1 EBITDA stood at ₹5.8 crores, translating to a 1% margin. This was impacted by a one-time expense of approximately ₹6 crores in Q2, related to demerger expenses and legal case write-offs. Excluding this, the adjusted H1 EBITDA would have been ₹11.80 crores, with a 2% margin. Management is implementing a strategy to improve profitability, targeting 2-2.5% EBITDA for H2 FY26 and 3% for FY27, through better capacity utilization (aiming for 60-65% from current ~50%), machinery upgrades (₹10-15 crores capex for FY27), and a dedicated sales team for niche products.

Marketplace Business Performance and Demerger Progress

The marketplace business, Shankara Buildpro Limited, reported H1 retail revenue of ₹1,700 crores (51% of total) and non-retail revenue of ₹1,624 crores (49%). The online store and e-commerce segment showed significant traction, with H1 revenue of ₹10 crores, a 250% year-on-year increase, and is now EBITDA positive. The working capital cycle for the marketplace business averaged around 27 days. The company has received in-principle approval from NSE and BSE for the listing of Shankara Buildpro Limited, with listing expected by the end of November. This demerger aims to provide better focus and create value for both the manufacturing and marketplace entities.

Financial Efficiency and Future Outlook

Despite expanding scale, Shankara maintained strict control over working capital, averaging 30 days in Q2, which helped keep finance costs in check. Retail same-store sales growth was healthy at 22% in Q2 FY26. The company is cautiously optimistic about improved demand in the second half of the year. Management expects the marketplace business to sustain 15-20% revenue growth and aims for EBITDA margins upwards of 3.5% by FY27. For the manufacturing business, a revenue growth of around 10% is anticipated.

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