Shankara Build.

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.

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.

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.

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.

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.