Arisinfra Solutions Ltd

Ladies and gentlemen, good day and welcome to the Q3 FY26 Earnings call of Arisinfra Solutions Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star and zero on your touchtone phone.

Please note that this conference is being recorded.

Today we have with us Mr. Ronak Morbia, Chairman and Managing Director, Mr. Srinivasan Gopalan, Chief Executive Officer and Mr. Bhavik Khara, Whole-time Director and Chief Financial Officer. We will begin the call with the opening remarks from the management, after which we'll have the forum open for the interactive Q&A session.

I must remind you that this conference call may include following statements about the company which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risk and uncertainties that are difficult to predict.

I now hand the conference over to Mr. Srinivasan Gopalan, Chief Executive Officer of Arisinfra Solutions Limited for his opening remarks. Thank you and over to you, sir.

Over the last few months we have evolved our brand from Arisinfra to calling ourselves simply Aris.

This reflects what the business has grown into. Aris today is not just an infrastructure supplier, it is a network and an organized execution backbone for construction materials.

The simpler name aligns the brand with the role we now play across supply execution and risk management in the construction ecosystem. Before stepping back into the broader context, let me briefly share what Q3 looked like for us because this quarter clearly marks a step change in the business. Let me quickly run through the excellent performance that we have had this quarter as compared to last year's same quarter.

Last year's same quarter we had a revenue of INR181 crores and the same period this year is INR270 crores marking a 50% rise in our turnover. The gross margins have done exceedingly well from a 15.5% in Q3 2025 through a 17.4% in Q3 2026, an increase of almost 200 business points.

The EBITDA increased 2.3x from a mere INR13 crores to a INR30 crores and the EBITDA percentages last year was at 9.38%, which has improved itself to 11.75% and the PAT increased nine times from a INR2 crores to an INR18.27 crores this quarter. There are reasons for these things to happen.

Apart from the profitability that we spoke about, it's important to know the networking capital days.

The networking capital days in Q3 2025 was 116 days which has come down drastically by 42 days to 74 days. The increase in gross margins and EBITDA are very, very clearly defined and an outcome of the strategy that we have clearly worked on.

The contract manufacturing portion which is a highly profitable venture increased from a 35% of turnover to a 48%. From a numbers perspective, it increased from INR65 crores to INR130 crores almost two times. Similarly, the services where again the margins are exceedingly high, the percentage on sales last year was at 6% which increased to 9% and then absolute terms increased from a mere INR11 crores to a current INR24 crores showing more than 2x growth.

To put the performance in perspective, it's important to briefly look at the environment we are operating in and the opportunities that we have in front of us. India is currently executing one of the largest infrastructure build-outs in the world. The government of India has budgeted close to INR11 lakh crores of capital expenditure in financial year 2026 alone, nearly three times what it was five years ago.

Large expressways, freight corridors, metro networks, airports, ports and urban infrastructure projects are under construction across the country spanning multiple regions and asset classes. What stands out is that while these projects are large, organized and institutionally funded, the materials that build them, namely aggregates, concrete and allied inputs are still supplied through a fragmented and largely informal system.

As project sizes grow and timelines tighten, the lack of an organized execution-led distributor layer becomes a real bottleneck. This is not a pricing issue. It is fundamentally an execution, reliability and risk management issue and that is precisely the gap Aris exists to address. Coming back to our business, one of the most important shifts we are seeing now is where profitability is coming from, not just how fast revenue is growing.

Aris operates across three segments, B2B trade, contract manufacturing and services and together they form a very deliberate progression in how customers engage with us. B2B trade acts as an entry layer. It gives us scale, customer relationships and steady demand across regions.

As these relationships deepen, a larger share of business naturally moves into contract manufacturing where we secure capacity, improve utilization and bring predictability into supply, achieving the economics of manufacturing without owning plants, vehicles or carrying the operational burden of running them. The most powerful shift, however, is in our service offerings.

While services contribute a smaller share of revenue, they already contribute a disproportionately large share of EBITDA. This is because services are built on execution capability, systems and trust, not on deploying capital. As this segment scales, EBITDA grows with very little incremental capital. What this mixed shift tells us is very important.

As the business moves from trade to manufacturing partnerships and into services, profitability improves while capital intensity reduces. This is why EBITDA is now growing faster than revenue and why returns on capital are structurally expanding as the mix shifts towards services and contract manufacturing.

Looking at performance over the 9 months, revenue stood at INR724 crores, representing a 33% year- on-year increase. More importantly, EBITDA has grown by around 54% year-on-year and profit after

tax has increased nearly six times over the same 9-month period as compared to last year. This clearly shows operating leverage and improving earnings quality.

Equally important is how this growth has been funded. Despite rapid scale-up, net working capital has reduced from well over 116 days last year to below 75 days now, unlocking capital within the business.

This improvement has been driven by tighter credit discipline, better counterparty quality and technology-led monitoring of receivables and execution.

The practical implication is straightforward. The business can now grow faster without requiring proportionately more capital, which is often the key concern investors have in this sector. When you put all this together, what becomes clear is that the model has entered a new phase.

Scale is improving margins, margins are improving cash generation and stronger cash generation is reducing capital intensity. This feedback loop is what allows Aris to compound in a disciplined and sustainable manner. As we move forward, our focus remains unchanged. Deepen execution capability, strengthen risk and credit control and scale with discipline.

India's construction ecosystem is formalising rapidly and the need for an organised execution backbone for construction materials will only grow from here. We believe Aris is well positioned to play that role and to do so in a very, very capital efficient manner. Thank you for your time. We are happy to take any questions that you have.

Thank you very much sir. The first question comes from the line of Deepak Poddar with Sapphire Capital. Please go ahead.

Yes. Okay. Okay. First of all, I mean many congratulations for a great set of numbers. I mean I could see overall improvement even your working capital has improved a lot. So many congratulations on that front. So now I just wanted to understand on your mix?

Now it's 47% B2B, 44% contract and 9% is services and that's a marked improvement from what we have seen last year. I mean 33% contract manufacturing to 44% now. So how should one look at this mix going ahead? I mean though our focus remains on contract and services, but how are you seeing the mix?

Yeah. Just like to rectify a little bit, the contract manufacturing segment now contributes to 48% of the revenue. It was 44% at the end of quarter 2. We are seeing improved utilization. Even while rapidly scaling, the revenue contribution has increased and we expect that as the utilization improves going further, the revenue contribution will increase and as move -- as we shift more towards asset light manufacturing and services, the improved profitability is here to sustain and that's how the model is designed.

Okay. So given improved profitability is sustainable, so I mean without other income, your EBITDA margin is close to 11% this quarter. So is that a sustainable thing that we should keep it as a base going forward?

Yes, yes. We do believe so because the improvement is structural. Margins are improving due to mix and execution, not temporary pricing or one-offs. As long as this mix continues and working capital stays disciplined, profitability should remain stable and improve gradually.

Understood, understood. And is there any lever which can drive this 11% even further higher? I mean, can you throw some more light on that?

At the moment, we are happy with how the model is turning out and with all the capital efficiency that is coming to play now and the improved profitability is only a reinforcement of the business model that we have at play. So the focus is going to be on improving this mix, focusing on capital efficiency and as long as these underlying matters are in place, I think the profitability will sustain.

Okay, fair enough. And just one last thing, in terms of your growth, I mean, we have seen very good growth on your top line since last two quarters, I mean, 39% for second quarter and 49% in this third quarter. Now, for this entire year, a 40% growth is what we have been seeing in the past. So we are on track for that?

However, having said that, we are projecting good profitability as well. So yes, well in line to achieve the growth numbers that we are predicting.

Okay. And we are going into the strongest quarter, right? Fourth quarter ideally would be the strongest.

So how is that traction? Can you throw some light? How is the on-ground situation in terms of traction on the customers?

Absolutely. Quarter 4 is usually the strongest. We have been preparing for this ever since we started going into December, planning our production lines, revenue visibility. And because of the projects that we are involved in, the customers that we have onboarded and the recurring orders that we have been getting, we have real good visibility on the demand, not just this quarter, but for the next three to four quarters. And that's why we are confident of achieving these good numbers.

Okay. So we have good visibility from customer in quarter 4 as well, right? Absolutely. 100%.

Okay. And in the supply side, how are we looking at the supply side in terms of getting more mills and all to contract with you guys? I mean, can you throw some more light on that?

Yes. So you have two things here. With respect to contract manufacturing, as mentioned in the last call, we currently have about 9 million metric tons of capacity under our control through this network. And that is... How about 9? We have 9, right?

9 million. 90 lakh metric tons annually. That is spread across stone aggregates and ready-mix concrete.

But recently, we also made an announcement of entering a new segment, which is called Asphalt. And that's a segment which looks pretty exciting for the future. So that is one new vertical that we have added. We are in the process of forming a joint venture for the same.

And we have executed two projects, which kind of give us experience of how this business is done. And we have real good visibility with respect to the orders in the next few quarters. We made a contract as well of a INR35 crores order from an infra company. And we recently executed a small order for Apco in Mumbai as well. So contract manufacturing looks very, very exciting for the next few quarters.

And what can be the potential of this Asphalt opportunity size for us?

Yes, we are projecting revenue in the north of INR80 crores to INR100 crores in the next 12 to 18 months. In the next 12 to 18 months? Yes.

And margins are in line with company-level margins or is it better?

It will be in line with the company-level margins. And that is why we are confident of sustaining these margins as well as we go further.

Understood. Understood. I mean, that's very helpful, sir. And that's it from my side and wish you all the very best. Thank you so much. Great. Thank you so much.

Thank you. The next question comes from the line of Kaushal Sharma with Equinox Capital. Please go ahead.

So my question is on your -- congratulations, first of all, for a very good set of numbers. So my question is on your working capital side, sir. Could you please tell me what is the current receivable as on date in our books? And how much is for more than 6 months and less than 6 months? And what about our borrowings as of now?

Yeah, the current receivable number is approximately INR385 crores. And above 6 months, the number is close to about INR50 crores to INR55 crores.

Okay. And what about the company’s overall borrowings as of now?

Our current borrowings are in the range of around INR40 crores. And this is only the working capital facilities and a small long-term debt of about INR6 crores.

And I can see in your result in note number seven that we have utilized almost 100% of our working capital that we have reached through IPO. But now we are projecting a good aggressive growth of 35% to 40%. So how would we sort these incremental working capital going ahead? And currently, we are securing a good amount of capacities in terms of contract manufacturing against which we require certain deposits.

So if we expand our contract manufacturing, like we are growing, so we require certain amount for these security deposits as well. So how we are going to fund, will this increase our borrowings going forward? And what kind of levels are we targeting?

Yes, first on the utilization of IPO proceeds for working capital, this is not locked up capital. These are vendor payments that are returned through customer receivables. And we have had two very healthy quarters of receivables. So it's back in the system, which are being reinvested as working capital. A note on trade deposits and advances. It's very important to note what these deposits are.

They are a strategic enabler not idle capital. Deposits actually help us secure capacity, prioritize supply and better commercial terms in a fragmented ecosystem. In return we get reliability and higher throughput without owning assets. So as utilization improves, incremental growth requires relatively lower incremental deposits. So that is the advantage that we have or that is the model that we are operating on where we invest one-time deposit to generate multi-year returns.

So what kind of sustainable borrowing levels are we looking in our business going ahead?

So I think we have mentioned this… So what kind of range are we expecting in terms of our borrowing going ahead?

So even if we have to create new capacities, we have enough gunpowder to provide deposits. However, if you look at the deposits that we have already provided and the kind of capacity utilization that we have, we still have around 30% to 40% room to go in the existing deposits itself.

Okay. So that will not increase our borrowing in the near future, right?

No, that will not. Okay.

And so what is our current existing contract manufacturing capacity and what is our target in terms of securing further and utilization?

Yes, the current capacity is about 9 million metric tons. As of quarter two, we were at a utilization of 45% plus. As of quarter three now we are at a utilization of 55% plus. So there is significant headroom

even with the current capacity that we have and that is why we are confident that the revenue from our contribution from contract manufacturing will increase as we grow further in the next few quarters.

And what is the terms of the security deposit that we need to give against securing these capacities?

When will these securities arrive in our business?

So these deposits are refundable in nature. These are multi-year deposits, as in when the concerned plant utilization increases and improves to about 80% plus. And when the cash flows of that particular plant become healthy, these deposits will be returned back into the system and be invested somewhere else to increase the capacity. That is how these deposits are designed.

The next question comes from the line of Namish Gupta, an Individual Investor.

Sir, congratulations on a very good set of numbers. Thank you. Sir, my question was, sir, our working capital days, like our debtors around 120 to 130 days, is this our industry-level benchmark, sir? Like is it the same or is it a little more than that or is it less, sir? First of all, I wanted to know this. And sir like in RHP we gave some competitors' names. One of them was prominent, Infra.Market. Do they also have the same working capital days that you have? I wanted to understand this a little bit. Sir, why is it so elevated?

Sir, the number of receivables that you are looking at is around 18 to 120. And we have improved this number and come this far. If you look at the industry standard, the fundamental nature of the industry is that it runs on the credit environment. So the infra companies and builders that we give, they also have a credit cycle of around 90 days. So like any infra company, any road builder, they also get the bill submission and their payment.

All this runs on credit. If you look at the industry number or standards, there is a receivable number of 90 to 100 days. But efficiency comes when we can narrow the gap between the payable and receivable. Which we can see in our numbers.

We were around 120. Now we have come to 75 days. So we have unlocked a capital of around 40-45 days because of which efficiency is coming in the system. So more than the number, we look at the quality of receivables.

Okay. And sir, what will happen to our other competitor, whom I have named, because I think they are in the same line of business as you guys?

Sir, I don't know much about them. We will not be able to comment on them. But as far as we are concerned, the numbers are also improving in terms of receivables. Payables are also improving well without affecting vendor payment. And our concentration and focus is now more on the quality of receivables than on numbers. We have also established a relationship with big infra companies, from where recurring orders are also coming.

Okay. Sir, I have one more question. Sir, what is our customer retention ratio now? We have been doing business for so many years now. So our customer retention ratio must have also developed, right?

Yes. Sir, our repeat occurrence is 80% plus. This is a little different from the B2C segment, where retention is not the same. Here, if we are involved in a project or if we are associated with big infra companies like EPC companies in India, then we get recurring orders from here because these projects normally run for 2, 3, 4 years. So as long as your service is good, you are sourcing and the cost is effective, then you get repeat business. And because of this, our percentage is 80% plus.

Okay. Sir, I have one more question. Actually, I am a little new in this industry, I don't understand much, but I wanted to understand one thing, sir. The way your business model is, you procure goods from other contractors, then you give them to big developers. So I just wanted to understand that these contractors?

You are earning a gross margin of around 15%-16%, so will these contractors give you so cheaply that you can earn more by giving them? I mean, I am not able to understand this business model properly, sir, if you can explain this a little?

No, no, this is a very correct question. For this, it is important to know the model. The place from where we buy goods are not contractors, they are small manufacturers and suppliers. And if we look at our operating profit or profitability or gross margin, then there is a margin of materials and a margin of services, which is also our big differentiator.

So if you look at our profit, then it comes from around 30%-40% of services, because of which our profitability is very good. So this does not mean that we buy expensive goods in the market and sell them expensively. Our volume discounts are very good, our services revenue is good.

And when we get all this and our cost control is very good, then it is only because of this combination of supply, services and technology which is our differentiator, that our gross margin and operating profit is also good.

Sir, let me ask you a simple question. In your business, it is written in your PPT that your business of aggregates is very good. Aggregates means bricks, small stones, etc. I’m just trying to understand, if our gross margin is 12%-13%, then can the manufacturer who is giving us this, give us at such a low margin, that we can also generate a margin of 12%-13% after that? I wanted to understand this a little bit.

Sir, the business of aggregates, the manufacturing margin is also higher than this. If you look at the typical setup, where an aggregates manufacturer operates, their margin goes up to 25%-30%. Now they supply directly to the infra companies.

So aggregates has been such a business that the margins are high and the main reason for that is that it is very unorganized, there are small players and this material is very complex and it is difficult to source it in bulk. This market is very untapped. Today there is no player who owns a market in aggregates. So

aggregates is a very exciting segment. That is why we get the most revenue from aggregates and that is why our margins are better.

Sir, I wanted to ask one last question. Sir, normally the aggregates suppliers, there is no GST or anything like that, they deal in cash. So how does your tax system like GST what the government puts how does that work? Because I have seen that they normally play in an unorganized way. So how do you manage that?

Sir, we are in the B2B segment. We do not do retail business. So all the B2B business that we do, the proper GST is applied on it. And all the business that we do, all the INR350-INR400 crores or INR500 crores business that we do, it is done on paper only after applying proper GST.

Okay. The supplier who is giving you is also adding the GST to it? 100%. Okay. Thank you, sir. Thank you.

The next question comes from the line of Kapil Ahuja with Equinox Capital. Please go ahead.

Actually, I wanted to have some clarification on receivables. So you told that you have a receiver of INR55 crores above 6 months. So are they coming to the company or what is the status of the INR55 crores receivables? Because 6 months is a big time period.

So the 6 month receivables as a percent of total revenue close to total receivables is just about 12%- 14%. This has been continuously moving. And every quarter we are seeing a reduction in the number of receivables. We expect all of these first of all are moving accounts.

The ECL that we have taken which is basically the expected credit loss has been updated and we are following a waterfall mechanism to calculate that as well. This INR55 crores, all of the accounts are moving and we expect this number to come down to about INR30-INR35 crores by March and then we expect further movement in the next few quarters.

So you are not expecting any write-offs in this?

No, whatever we are expecting --factored that in the ECL number which is already there in our P&L.

Okay, fine. And secondly regarding this is the same question that previous participants have also asked I wanted some clarification on this top line that you are growing 35%-40% every year. For FY’27 if you go for INR1100 crores target as per your guidance, so how will you manage your receivables?

Because even if you go for the 90-100 days of receivable cycle, so you will be having receivables of above INR300 crores. So we can't confirm internal accruals and how will you manage this working capital? I can't give you a clarification on this.

Well I think yes, the concern would be that the business would become more capital hungry as it scales.

But that concern normally applies to traditional models, not ours. We secure capacity instead of owning assets and services which are growing, scale with very little incremental capital. I mean the fact that the net working capital now is below 80 days and it is continuously improving down from about 120 days, it just tells us growth is becoming less capital intensive, not more. So that could impact the margins also?

No, in fact while scaling rapidly and the net working capital is down below 80 days and with the gross margin improving to about 17% plus and EBITDA growing to about 11% plus, I think the efficiencies in terms of profitability and capital efficiency is all coming into play. So the model now, I think we believe we are at an inflection point, where the model will now compound itself. And as we move further, the benefits of scale in terms of profitability will also be visible.

So I am getting you, after 2-3 years and you are talking of INR1800 crores top line, so this model will apply and you will be managing working capital days efficiently, am I right? Yes.

Okay, thank you. That’s all from my side.

As there are no further questions from the participants, I now hand the conference over to Mr. Srinivasan Gopalan for closing remarks.

Thank you ladies and gentlemen. We always keep looking forward for your blessings and confidence in our company. We thank you for that and look forward for more such updates. Thank you.

Thank you on behalf of Arisinfra Solutions Limited that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.