ARTNIRMAN - Art Nirman Ltd

📊 NSE: ARTNIRMAN 🏢 Construction 📅 Last Updated: 12/13/2025 18:31

💰 Financial Performance

Revenue Growth by Segment

The company operates in a single segment, Real Estate, which generated INR 8.25 Cr in H1 FY26, representing a 40.87% decline compared to INR 13.96 Cr in H1 FY25. However, Q2 FY26 revenue of INR 6.75 Cr showed a 350.3% sequential growth over Q1 FY26.

Geographic Revenue Split

100% of revenue is derived from India, specifically focused on operations in Gujarat. No separate geographic disclosures are considered necessary as conditions are uniform across the company's operational area.

Profitability Margins

Net Profit Margin for H1 FY26 was 4.38%, a decline from 6.74% in H1 FY25. Profit Before Tax for H1 FY26 stood at INR 0.36 Cr, down 33.1% from INR 0.54 Cr in the previous year's corresponding period.

EBITDA Margin

Not explicitly disclosed, but Operating Profit before Working Capital changes for H1 FY26 was INR 1.32 Cr, down 66.7% from INR 3.96 Cr in H1 FY25, reflecting a significant compression in core profitability due to rising finance and other expenses.

Capital Expenditure

Payments for purchase of Property, Plant & Equipment were INR 0.03 Cr in H1 FY26, compared to INR 0.032 Cr in H1 FY25. Total PPE value decreased by 5.1% to INR 4.32 Cr as of September 30, 2025.

Credit Rating & Borrowing

Credit rating not disclosed. Borrowing costs have surged significantly; finance costs for H1 FY26 were INR 0.86 Cr, a 2417% increase from INR 0.034 Cr in H1 FY25, following a rise in total borrowings to INR 19.83 Cr.

⚙️ Operational Drivers

Raw Materials

Real estate construction materials including cement, steel, bricks, and sand. Cost of materials consumed represented 92.8% of revenue in H1 FY26 (INR 7.66 Cr).

Import Sources

Sourced locally within India, primarily from the state of Gujarat to support projects in Ahmedabad.

Capacity Expansion

Current capacity is reflected in an inventory value of INR 63.59 Cr as of September 30, 2025, which grew 30% from INR 48.90 Cr in March 2025. Planned expansion is supported by a newly approved borrowing limit of INR 300 Cr.

Raw Material Costs

Cost of materials consumed was INR 7.66 Cr in H1 FY26, down 31.5% YoY from INR 11.18 Cr, though it remains the largest operational cost component.

Manufacturing Efficiency

Not applicable for real estate; however, inventory turnover is slow with inventory representing 72.1% of total assets.

Logistics & Distribution

Not disclosed as a separate percentage of revenue.

📈 Strategic Growth

Expected Growth Rate

Not disclosed

Growth Strategy

The company is aggressively expanding its financial capacity, having approved a massive increase in borrowing power to INR 300 Cr (from current borrowings of ~INR 20 Cr) to fund new real estate projects and land acquisitions. The strategy focuses on leveraging assets to secure large-scale funding for residential and commercial developments in the Ahmedabad market.

Products & Services

Residential and commercial real estate units, including apartments and office spaces.

Brand Portfolio

ART Nirman

New Products/Services

New residential and commercial projects are expected to be launched following the INR 300 Cr borrowing approval.

Market Expansion

Focus remains on the Ahmedabad, Gujarat region with plans to scale project sizes using increased debt capacity.

Market Share & Ranking

Not disclosed.

🌍 External Factors

Industry Trends

The industry is seeing a shift toward organized developers and increased regulatory compliance under RERA. Future direction is growing, driven by housing demand, though currently facing high interest rate pressures.

Competitive Landscape

Competes with local and regional developers in the Gujarat real estate market.

Competitive Moat

Moat is based on local brand recognition in Ahmedabad and a large land/inventory bank of INR 63.59 Cr. Sustainability depends on the ability to convert high inventory into sales while managing the 2417% increase in finance costs.

Macro Economic Sensitivity

Highly sensitive to GDP growth and urban migration in Gujarat; real estate demand is closely tied to regional economic health.

Consumer Behavior

Shift toward 'comfort-oriented' residential spaces as indicated by the company's 'Crafting Comfort' tagline.

Geopolitical Risks

Low, given the localized nature of real estate operations in India.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by RERA (Real Estate Regulatory Authority) norms, local municipal building codes in Ahmedabad, and IND AS 34 for financial reporting.

Environmental Compliance

Not disclosed.

Taxation Policy Impact

Effective tax rate for H1 FY26 was 0% as no current tax was provided. Deferred tax liabilities stand at INR 0.19 Cr.

⚠️ Risk Analysis

Key Uncertainties

The primary risk is the high debt-to-equity ratio potential following the INR 300 Cr borrowing approval, which could lead to unsustainable interest burdens if project sales lag.