Financial Deep Dive
Shankara Buildpro Limited, recently listed on the BSE and NSE following its demerger from Shankara Building Products Limited, has reported a robust financial performance for the third quarter (Q3) and the first nine months (9M) of FY26. The company's overall revenue for Q3 FY26 surged by 29% year-on-year to ₹1666 crore. This significant uptick was largely propelled by its core steel segment, which saw revenues climb 34% to ₹1520 crore, supported by a substantial 37% increase in steel volume to 2.61 lakh tonnes.
Conversely, the non-steel segment, which includes products for home improvement and construction, experienced a 5% year-on-year decline in revenue to ₹146 crore. This segment has faced market headwinds.
For the nine-month period ended December 2025, Shankara Buildpro posted consolidated revenue growth of 30% year-on-year, reaching ₹4829 crore. The steel volume grew by 38% to 7.27 lakh tonnes, with steel revenue up 34%. The company's Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) for 9M FY26 stood at ₹158 crore, a notable improvement from ₹124 crore in the prior year, leading to an expansion in EBITDA margin to 3.28% from 2.8% YoY. Profit After Tax (PAT) for 9M FY26 more than doubled, rising 77% to ₹86.5 crore.
However, Q3 FY26 PAT saw a sequential dip to ₹25 crore from ₹29 crore in Q2 FY26. This was attributed to several one-off expenses, or 'exceptional items'. These included ₹1.5 crore for demerger costs, ₹2.61 crore for additional gratuity provision due to new labour codes, and ₹2.8 crore for prior year tax expenses, totalling ₹6.91 crore in exceptional charges for the quarter.
The Quality: Despite these one-off impacts, the company demonstrated margin improvement over the nine months. The overall EBITDA margin for 9M FY26 improved by 48 basis points year-on-year. The balance sheet shows acceptances of approximately ₹450 crore and borrowing of about ₹50 crore as of December 2025, indicating controlled debt levels.
Risks & Outlook
Specific Risks: The primary concern highlighted is the performance of the non-steel segment. Management attributed the 5% year-on-year revenue decline in Q3 FY26 to tepid demand, weak export markets, raw material volatility, extended monsoons, and changes in government policy affecting construction, particularly in Southern states. Improvements in this segment are expected from the next fiscal year (FY27). The impact of exceptional items on quarterly profits also warrants investor attention.
The Forward View: Shankara Buildpro is optimistic about closing FY26 on a strong note, aiming to achieve its standalone steel volume target of 1 million tonnes. Looking ahead, the company targets approximately 20% volume growth for the next fiscal year. The long-term ambition is to achieve a ₹10,000 crore top line by 2030, with a strategic shift post-FY2027 to focus more intensely on margins. The company also aims to reach 4% EBITDA margins within two years, up from the current 3-3.5% range. Store expansion plans include adding 3-4 hybrid stores in FY27 with an estimated CAPEX of ₹3 crore per store, including inventory.
Peer Comparison
In the competitive Indian steel distribution and building materials sector, Shankara Buildpro's performance in its core steel segment shows parallels with industry leaders like APL Apollo Tubes. APL Apollo, a dominant player in structural steel tubes, has consistently reported strong revenue growth and market share gains, driven by product innovation and an extensive distribution network. While Shankara Buildpro's current results highlight strong volume growth in steel distribution, similar to trends seen in APL Apollo's segment, the mixed performance of Shankara's non-steel vertical contrasts with more diversified building material players who may have broader product portfolios offering more resilience against segment-specific headwinds.