Financial Performance Summary

Q1 FY27 Financial Highlights:

  • Total revenue from operations: ₹1,890 crore, up 21% year-on-year
  • PAT: ₹35.8 crore, up 12% year-on-year
  • EBITDA: ₹62 crore, up 17% year-on-year
  • EBITDA margin: 3.26%
  • ROCE: 35%
  • Working capital: 27 days
  • Finance costs: 0.55% of revenue

Operational Performance Breakdown

Steel Business Performance:

  • Steel marketplace volume: 2.5 lakh tons in Q1 FY27, up 10% year-on-year
  • Steel revenue: ₹1,725 crore, up 21% year-on-year
  • Core categories (pipes, tubes, flats, roofing) all recorded good volume growth
  • Healthy traction across both retail and non-retail channels
  • Sequential volume moderation of 13% from seasonally strong Q4 FY26

Non-Steel Business Performance:

  • Non-steel revenue: ₹165 crore, up 15% year-on-year and 2% sequentially
  • Fittings and sanitary ware (largest category): 32% growth
  • Accessories and electricals: ~40% growth (smaller base)
  • Tile segment affected by West Asia crisis and energy deficit but stabilizing

Market Context and Challenges

The quarter faced several headwinds:

  • Geopolitical tensions from West Asia conflict
  • Energy inflation resulting from the conflict
  • Challenging macro environment weighing on construction activities through April-May
  • Softening of steel prices by end April-May resulting in cautious customer purchase behavior
  • Industry broadly remained flattish or struggled during the quarter

Strategic and Operational Updates

Store Expansion:

  • Added three stores/client fulfilment centers in Mangalore, Mumbai, and Thrissur
  • Added 34 customer touchpoints across 45 towns and cities in 10 states
  • Plans to add around five more fulfilment centers in coming quarters

Business Model Strengths:

  • Multi-brand sourcing with over 100 leading brands
  • Deep last mile fulfillment network
  • Wide customer spectrum with ticket sizes ranging from ₹500 to ₹1.5 crores
  • Over ₹2 lakh plus SKUs spread across 25 verticals covering 75 categories
  • True omnichannel business serving homeowners, influencers, contractors, dealers, mid-size builders, and large institutions
  • Strong presence across urban, semi-urban and rural India

Same-Store Sales Growth:

  • 21% for Q1 FY27, continuing momentum from 23% in FY26

Corporate Action: Stock Split

The Board has approved a stock split subject to approvals:

  • Subdivision of one equity share of ₹10 face value into five equity shares of ₹2 face value each
  • Will not change the aggregate amount of the company's issued, subscribed and paid-up equity share capital
  • Subject to approval of members and regulatory approvals including Companies Act 2013, SEBI regulations, and stock exchange rules
  • Purpose: Encourage wider participation by retail and smaller investors and enhance liquidity of equity shares

Management Guidance and Outlook

FY27 Targets:

  • Steel volume: 1.2 million tons (20% growth)
  • Non-steel revenue: 25% growth
  • Revenue growth: 20%
  • EBITDA margin: 3.5% (steady state target)

Medium-term Targets (FY28 and beyond):

  • EBITDA margin target: 4%
  • Maintain 20% volume growth for steel and 25% for non-steel
  • Target to achieve 2 million tons steel volume in approximately 4 years
  • Non-steel target: 15% of total business share in 4 years

Financial Structure and Debt

  • Debt: ₹75 crore as of end June 2026
  • Acceptances: ₹500 crore (total borrowing including acceptances: ₹575 crore)
  • Acceptance interest cost is a major component of finance costs

Growth Drivers and Strategic Initiatives

Value-added Products:

  • Focus on cut-to-length and specialized steel products
  • Increasing product labels and white label products for retail segment
  • Infrastructure addition for value-added steel products

Market Expansion:

  • Geographical coverage expansion beyond current markets
  • Territory additions and store expansions
  • Market share increase in existing territories

Cash Utilization Plans:

  • Investment in private labels (promotion, advertisement)
  • Value addition to steel products (warehousing, cutting, laser cutting)
  • Reduction of acceptances and working capital optimization
  • Acquisitions if suitable opportunities arise

Competitive Landscape

Management noted that competitive intensity from larger players has reduced in recent quarters, particularly in the TNT steel segment. Smaller unorganized players have taken a backseat due to inventory losses and working capital constraints, creating better market conditions for organized players like Shankara Buildpro.

Industry Outlook

Management expressed strong confidence in long-term steel demand growth driven by:

  • Large capacity additions by major steel players (JSW, Tata Steel, Steel Authority, AMNS)
  • Government mission to reach 300 million tons consumption by 2030 (from current ~180 million tons)
  • Strong underlying demand driven by infrastructure development
  • New industries like data centers consuming large amounts of steel
  • Shift toward steel building construction styles
  • Growth in specialized steel categories like color-coated steels and sheets