SHANKARA - Shankara Build.

📊 NSE: SHANKARA 🏢 Trading 📅 Last Updated: 12/14/2025 13:08

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue grew 27% YoY to ₹3,325 Cr in H1 FY26. The steel segment, which constitutes 90% of the business, saw a 30% volume growth in FY25. The non-steel segment grew 30% by revenue in FY25. Retail segment (52% of revenue) grew 15% in FY25, while Enterprise and Channel segments contribute 21% and 27% respectively.

Geographic Revenue Split

The company is a clear market leader in South India across both retail and non-retail verticals, with a robust physical presence of 130 operational stores and fulfillment centers primarily in this region.

Profitability Margins

Net profit for H1 FY26 stood at ₹58 Cr, marking an 84% YoY increase. PAT margin improved by 54 bps to 1.73% in H1 FY26 from 1.19% in H1 FY25. Q2 FY26 PAT margin was 1.50%, up 35 bps YoY.

EBITDA Margin

Consolidated EBITDA margin improved to 3.31% in H1 FY26 from 3.01% a year ago, a 30 bps increase. H1 FY26 EBITDA rose 39% YoY to ₹110 Cr. Q2 FY26 EBITDA margin was 3.03%, up 20 bps YoY.

Capital Expenditure

Not disclosed in absolute INR Cr for future periods, but the company is focused on attaining higher capacity utilization (currently sub-50%) rather than massive new greenfield capex in the immediate term.

Credit Rating & Borrowing

Liquidity is rated as 'Adequate' with bank limit utilization at approximately 47-53% for the 12 months ended June 2025. Interest coverage ratio stood at 3.26x in FY25 compared to 4.75x in FY24.

⚙️ Operational Drivers

Raw Materials

Steel products (pipes, tubes, and cold-rolled coils) represent approximately 90% of the business volume. Non-steel materials include tiles, sanitaryware, and plumbing fixtures.

Import Sources

Primarily sourced within India, with a heavy focus on major domestic steel and building material hubs to supply their 130 fulfillment centers.

Key Suppliers

Key supplier partnerships include AM/NS India, JSW Steel, APL Apollo, Jaquar, Kohler, and Parryware.

Capacity Expansion

Manufacturing capacity utilization is currently at approximately 50% or sub-50%. The company plans to increase this to 60-65% to drive EBITDA margins toward a 3% target for the manufacturing entity by FY27.

Raw Material Costs

Raw material costs are a significant portion of the 90% steel-based business; however, the company operates a marketplace model which mitigates direct manufacturing cost risks for a large portion of its revenue.

Manufacturing Efficiency

The company aims to improve manufacturing EBITDA margins from the current sub-2% level to 2.5% in H2 FY26 and 3% in FY27 through better capacity utilization.

Logistics & Distribution

Distribution is handled through a network of 130 operational stores and fulfillment centers, catering to tens of thousands of customers across various segments.

📈 Strategic Growth

Expected Growth Rate

10-15%

Growth Strategy

The primary strategy is the demerger of the marketplace business into 'Shankara Buildpro Limited' to unlock value. Growth will be driven by a 1.0+ MT volume target for the steel segment in FY26, same-store sales growth (which reached 22% in Q2 FY26), and increasing manufacturing capacity utilization to 60-65%.

Products & Services

Steel pipes, color-coated roofing sheets, plumbing fixtures, sanitaryware, tiles, and a comprehensive range of building materials sold through retail, enterprise, and channel streams.

Brand Portfolio

Shankara Buildpro, Taurus, Vishal, and Centurywells (subsidiaries for pipe and roofing sheet processing).

New Products/Services

Expansion into niche and value-added products in the manufacturing segment to drive EBITDA margins toward the 3% target by FY27.

Market Expansion

Continuing growth in Retail and Non-Retail across South India in all key markets, leveraging the 130-store footprint.

Market Share & Ranking

Clear market leader in South India across both retail and non-retail verticals for building materials.

Strategic Alliances

Maintains key supplier partnerships with brands like Jaquar, Kohler, and JSW to maintain its 'one-stop-shop' marketplace status.

🌍 External Factors

Industry Trends

The industry is shifting toward organized marketplaces. Shankara is positioning itself by demerging its marketplace business to enhance operational efficiency and capture the 15-20% growth seen in organized retail building materials.

Competitive Landscape

Faces competition from a fragmented unorganized market and small, owner-operated businesses that have broadened the competitive landscape beyond metros.

Competitive Moat

Moat is built on a robust physical network of 130+ stores and fulfillment centers in South India, providing a 'one-stop solution' that is difficult for unorganized players to replicate at scale.

Macro Economic Sensitivity

Highly sensitive to the real estate and building industry demand; currently witnessing reasonable demand in residential and commercial sectors.

Consumer Behavior

Increasing preference for one-stop-shop solutions for building materials, driving the company's 22% same-store sales growth.

Geopolitical Risks

Management noted that war-like situations with neighboring countries could hinder smooth growth in the fiscal year.

⚖️ Regulatory & Governance

Industry Regulations

Compliant with Indian Accounting Standards (Ind AS) and Section 134(5)(f) of the Companies Act regarding proper systems for legal compliance.

Environmental Compliance

The company maintains an Internal Control System as per the Companies Act 2013 and SEBI LODR Regulations 2015.

Taxation Policy Impact

Effective tax rate is approximately 25% (₹19 Cr tax on ₹77 Cr PBT in H1 FY26).

Legal Contingencies

No specific pending court case values in INR were disclosed in the provided documents.

⚠️ Risk Analysis

Key Uncertainties

One-off expenses and write-offs in the manufacturing business (as seen in Q2 FY26) and marginal decreases in marketplace margins could impact short-term profitability.