SHANKARA - Shankara Building Products Limited Share Price

Management's outlook for Shankara Building Products Limited, as presented by Mr. Sukumar Srinivas, Managing Director, is optimistic. The company anticipates continuing its growth trajectory in the coming quarters, particularly in steel volumes, with a target to achieve 1 million tons for FY26. The performance in Q1FY26 has set a solid foundation, with steel volumes reaching 2.38 lakh tons, reflecting a significant 35% year-on-year growth, marking the highest Q1 volume ever.

Key forward-looking points include:

1. Non-Steel Growth: The non-steel segment experienced 5% growth year-on-year, with the company focused on improving performance despite headwinds in this area. Management aims to escalate non-steel contributions moving forward.

2. Margin Improvement: EBITDA margins improved to 3.58% in Q1FY26 from 3.20% in Q4FY25, with EBITDA rising to Rs. 59 crores, up 43% year-on-year.

3. Working Capital Management: The company maintained strict control over working capital, averaging 29 days in Q1, compared to 30 days in FY25, and aims to hold this steady.

4. Demerger Pace: The final hearing for the demerger process is anticipated by end-August 2025, with expectations to finalize the demerger in Q3FY26.

5. Sales Growth Target: The company aims for a retail sales to store sales growth of 20% in FY26, building on the 22% achieved in Q1FY26.

6. Future Expansion: The company plans to open about four new stores in FY26, enhancing its footprint mainly in central and western India, to support ongoing growth.

These metrics and targets position Shankara Building Products for a robust performance amid the evolving market dynamics of the building materials industry.

Here are the major questions and their detailed answers from the Q&A section of the earnings transcript for Shankara Building Products Limited:

Question 1: "Are the margins in the enterprise segment sustainable, or are there run-offs?"

Answer 1: Yes, I believe the enterprise margins are sustainable. In Q1, we did not experience significant inventory drops, which has helped maintain these margins. While we have seen consistent growth in our enterprise business, I anticipate these margins can hold steady moving forward.

Question 2: "What is the difference in working capital between non-steel and steel?"

Answer 2: Non-steel has a net working capital holding of approximately 40 days. This is influenced by higher inventory levels required to cater to various customer needs across multiple verticals. Steel has a tighter inventory holding, allowing for a lower overall working capital cycle.

Question 3: "What has changed for the company in the last two to three years?"

Answer 3: The key differentiator has been our focus on ambitious growth rather than solely on margins, particularly pre-COVID and during the pandemic. The change towards aggressive growth strategies in a competitive environment has significantly shifted our company's trajectory toward better sales performance.

Question 4: "What's the outlook for the pipes segment?"

Answer 4: We experienced a 30% growth in our pipes segment. While maintaining that growth rate may be challenging, I believe if we manage to sustain around 20% growth over the next three quarters, we will have performed exceptionally well in that area.

Question 5: "Can we expect completion of the demerger by Q3 FY26?"

Answer 5: We are hopeful to conclude the demerger in Q3 FY26, although it depends on the availability of the NCLT. While we've fulfilled all required formalities, some procedural delays could affect timing, but we're confident we will meet this timeline.

Question 6: "How will the company address SSSG sustainability in retail?"

Answer 6: To maintain our strong same-store sales growth, we plan to optimize the performance of our existing retail outlets and gradually add new stores, targeting two to three additional locations by the end of FY26. This strategy is critical to sustaining strong growth numbers.

Question 7: "What are the anticipated EBITDA margins for the marketplace after the demerger?"

Answer 7: Post-demerger, we aspire to increase our EBITDA margins in the marketplace segment to approximately 4% over the next couple of years, up from the current margin levels we have been experiencing.

This summary captures the essence of each question and response within the character limitation provided. If you need further details or additional questions, feel free to ask!