SRM - SRM Contractors

📊 NSE: SRM 🏢 Construction 📅 Last Updated: 12/14/2025 13:41

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue from operations grew 150% YoY in 1HFY26 to INR 348.6 Cr from INR 132.4 Cr in 1HFY25. Growth is driven by the core segments of road construction, slope stabilization, and tunnels, with a strategic shift toward higher-margin slope and tunnel projects in 2HFY25.

Geographic Revenue Split

The order book is geographically concentrated with Jammu & Kashmir contributing 41%, Uttarakhand 19%, Gujarat 18%, Leh & Ladakh 12%, and the remaining 10% from other northern states.

Profitability Margins

Gross profit margin for 1HFY26 stood at 45.3% (INR 158 Cr). PAT margin improved significantly to 19.71% in 1HFY26 (INR 33 Cr) compared to 9.34% (INR 13 Cr) in 1HFY25 due to better execution and higher-margin project mix.

EBITDA Margin

EBITDA margin was 15.11% in 1HFY26 (INR 52.6 Cr), a decrease from 19% in 1HFY25, reflecting competitive pressure in road projects despite an 81.3% YoY increase in absolute EBITDA value.

Capital Expenditure

The company has planned capital expenditure of INR 40 Cr for FY26, primarily for procuring additional equipment and machinery to support the execution of its expanding order book.

Credit Rating & Borrowing

Credit rating was upgraded in July 2025 to CARE A-; Stable (Long-term) and CARE A2 (Short-term) from CARE BBB+; Stable. Interest coverage ratio improved from 7.36x in FY24 to 10.77x in FY25 due to debt reduction following the IPO.

⚙️ Operational Drivers

Raw Materials

Not disclosed in available documents; however, typical construction materials include cement, steel, and bitumen.

Capacity Expansion

Expansion is focused on equipment fleet growth with an INR 40 Cr capex plan for FY26. The company is also expanding its technical capacity through the 51% acquisition of Maccaferri Infrastructure Private Limited.

Raw Material Costs

Not disclosed as a specific percentage of revenue, but the company manages costs through internal accruals and IPO proceeds to maintain a low overall gearing of 0.10x.

Manufacturing Efficiency

Efficiency is driven by the use of owned specialized machinery for tunnel and slope works, reducing reliance on third-party rentals.

📈 Strategic Growth

Expected Growth Rate

25-30%

Growth Strategy

Growth will be achieved through the acquisition of a 51% stake in Maccaferri Infrastructure (adding INR 350-450 Cr revenue), diversifying into the Hybrid Annuity Model (HAM) sector, and expanding geographically into Jharkhand and Odisha.

Products & Services

Infrastructure construction services including roads, bridges, canals, tunnels, slope stabilization, and small hydro projects.

Brand Portfolio

SRM Contractors Limited.

New Products/Services

Expansion into Hybrid Annuity Model (HAM) projects and international business diversification are expected to contribute to future revenue streams.

Market Expansion

Targeting expansion into Jharkhand and Odisha to mitigate the 41% revenue concentration in Jammu & Kashmir.

Market Share & Ranking

Registered as a 'Class A' contractor with the Jammu & Kashmir Public Works Department.

Strategic Alliances

Acquisition of 51% stake in Maccaferri Infrastructure Private Limited (MIPL), the Indian subsidiary of Officine Maccaferri S.P.A., Italy.

🌍 External Factors

Industry Trends

The industry is shifting toward specialized infrastructure like tunnels and slope stabilization. SRM is positioning itself by moving away from highly competitive plain road projects toward these high-margin technical segments.

Competitive Landscape

Intensely competitive and fragmented with many mid-sized players; contracts are primarily awarded based on the lowest attractive bid (L1).

Competitive Moat

Moat is based on specialized expertise in high-altitude and difficult terrain construction, which has higher entry barriers than standard civil construction. This is sustained by a 20-year track record and 'Class A' registration.

Macro Economic Sensitivity

Highly sensitive to government infrastructure spending and budgetary allocations for the Border Road Organisation and Indian Railways.

Consumer Behavior

Not applicable as the primary customers are government and institutional entities.

Geopolitical Risks

Operations in border areas like Leh, Ladakh, and J&K expose the company to geopolitical tensions and regulatory shifts in sensitive zones.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to environmental clearances for tunnel and hydro projects and strict adherence to 'Class A' contractor standards set by the PWD.