Shankara Buildpro Ltd

Ladies and gentlemen, good day and welcome to the Shankara Buildpro Limited Q3 and 9M FY2026 Earnings Conference Call.

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 ‘*’ then ‘0’ on your touch-tone phone. Please note that this conference is being recorded.

I now hand the conference over to Mr. Sayam Pokharna from TIL Advisors. Thank you and over to you, sir.

Thank you, Mark. Good afternoon, ladies and gentlemen and thank you for taking out the time to join us today in this Q3 and 9MFY26 Earnings Conference Call of Shankara Buildpro Limited.

This is our first Earnings Call after the demerger from Shankara Building Products Limited.

The latest Earnings Presentation for Buildpro has been uploaded on the stock exchange and on the company website. If you wish to be added to our mailing list, please feel free to write to us. To take us through today's results, we have with us from the management team, Mr.

Sukumar Srinivas - Managing Director, Mr. C. Ravi Kumar - Executive Director, Mr. Dhananjay Mirlay Srinivas - Executive Director, and Mr. Alex Varghese - Chief Financial Officer.

We will begin with a brief overview of the quarter and nine months from Mr. Dhananjay Mirlay Srinivas, followed by a Q&A session. Please note that this conference call may contain certain forward-looking statements about the performance of the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not guarantees of future performance and involve certain risks and uncertainties.

With that said, I would now like to hand over the call to Mr. Srinivas. Over to you, sir.

Page 3 of 14 Shankara Buildpro Limited is a unique building materials marketplace where we cater to customers across the construction, infrastructure, and home improvement space. The company has two distinct verticals, steel and non-steel, operating through its 94 stores and 36 fulfilment centres spread across Tier 1, 2, and 3 cities and towns in 10 States and 1 Union Territory.

The marketplace operates on an asset-light model which results in higher capital efficiencies and superior RoCs. With a total retail footprint of over 5.3 lakh square feet, Buildpro is the largest retailer and distributor of steel pipes and tubes in India. The last few quarters witnessed a clear contrast in demand trends between the steel and non-steel industries.

Non-steel demand has been tepid for the past few quarters. The entire industry across multiple products like tiles, plumbing, sanitary ware, etc. have faced similar headwinds.

A variety of factors from weak export markets, volatility in raw material pricing, and elongated monsoon resulted in delays and postponements in construction activity. In addition to these factors, some of the Southern States were impacted by changes in government policy. All these factors led to a slower growth. We hope the demand environment improves in the coming quarters, getting us back to our growth trajectory.

Shankara Buildpro Limited delivered a robust steel sales volume of 2.61 lakh tonnes in Q3 FY 2026 and 7.27 lakh tonnes in 9 months of FY 2026, registering a growth of 37% and 38% year- on-year respectively. Steel sales stood at Rs.1520 crores in Q3 and Rs.4384 crores for the 9 months, a growth of 34% year-on-year respectively. Our non-steel sales stood at Rs.146 crores for the quarter and Rs.445 crores for the 9 months. The overall top line was Rs.1666 crores for Q3 FY 2026 and Rs.4829 crores for 9 months FY 2026, reflecting a growth of 29% and 30% year- on-year respectively. EBITDA margins for the quarter came in at Rs.55 crores at 3.30% for Q3 FY 2026 and Rs.158 crores at 3.28% for the 9 months of FY 2026, as against 2.75% and 2.8% year-on-year respectively. As a result, our profit after tax for the 9 months stood at Rs.86.5 crores, reflecting a strong 77% growth over the same period last year. For 9 months FY 2026, our ROCE stood at 37% and our working capital remains under 30 days. Looking ahead, we are optimistic to close the financial year on a healthy note and achieve our target of 1 million tonnes in steel volume in Shankara Buildpro Limited Standalone.

Buildpro continues to be a one-stop marketplace for all building material needs, with a well- diversified presence across steel and non-steel categories. We currently operate 130 stores and fulfilment centres spread across more than 5.3 lakh square feet of retail space, covering

Page 4 of 14 our 10 States and 1 Union Territory. Our operations are deeply penetrated at the grassroots level, with a strong presence across Tier-2 and tier-3 towns, in addition to metros and state capitals. This geographic mix gives us a real advantage in reaching customers across a wide marketplace. We are truly an Omni-channel marketplace, offering multi-brand and multi- category coverage, along with last-mile service to our customers. The strong foundations laid by Buildpro will result in long-term growth and value creation as we remain focused on expanding our reach, deepening our category penetration and maintaining financial discipline.

Thank you and I would now open the floor for questions.

Thank you very much Sir. We will now begin the question and answer session. Anyone who wishes to ask a question, may press ‘*’ and ‘1’ on their touch tone telephone. If you wish to remove yourself from the question queue, you may press ‘*’ and ‘2’. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Viraj from Enigma. Please go ahead.

Hi, congratulations to the team for spectacular results. Sir, my first question is, in an environment where the manufacturers are struggling in early teen’s growth and some of them are even reporting negative growth, how have we gotten such a large growth of 37% - 38%?

And is this driven by trade, non-trade? If you can just decipher that a little bit, or are we gaining market share in some geographical areas? Some granularity on this growth will help.

I think one of the key factors for this robust growth, apart from that we have not really witnessed in the steel part at least any negative growth or slowdown in demand. Demand has been fairly robust. However, we grew spectacularly, like the last time we were talking about in the beginning of the year, our penetration into the western geographies for steel. We were already present, but we were much more aggressive in Maharashtra and Gujarat, as well as to some extent in MP. I think these three States really triggered a substantial volume growth. So I think if we look at broadly the numbers, I think around 50% is our growth in the volume in the western region. I think that is what has really sustained our superior growth overall, while it has remained around 20% in the southern region. So I think that has also helped in getting that substantial growth in this overall numbers that have gone to that 34% - 35%.

Right, sir. And if you can just talk about what has been the trade and non-trade mix this quarter and for the nine months?

So 54% in the retail and 46% in channel and enterprise.

Okay. And sir, last question, looking at the price increase that we have seen since December, can you talk a little bit about how do you see the growth going forward, especially considering the significant price increase that we have seen? Is there any sluggishness in demand?

Page 5 of 14 I think the price increase, really the impact happened probably towards the end of December, basically in January, is where the real impacts have started happening. I think the first dose, as you are all aware, in the first 8-9 months, it was always a downward trend. And there was a stabilization in December, particularly in the last 10 days or so. And yes, January went through very well, I must say. And definitely there is some resistance too because the price increase has been fairly substantial. There will be some resistance at a point and we have to see the next because we are in the middle of this quarter. So far so good. The first one and a half months have gone through fairly well. We will have to see what will be the kind of resistance that could crop up on this price. However, being the last quarter of the year, generally the demand is also substantial but I think we should be able to, I think it should be able to carry through comfortably.

And sir, in the past, whenever we have seen pricing decrease, we have seen inventory loss coming to our books and sometimes substantial inventory loss of Rs. 15 - 20 crores also. So, with such a large price increase and if the price sustains of course, do you see inventory gains for us?

If you are talking about this quarter, definitely there could be. Yes.

In the fourth quarter, there will be definitely some impact of the inventory gains.

So let us say if the price increases Rs. 6000 - 7000 per ton, will we be able to retain at least I would say half of it on our inventory which is like 80,000 - 85,000 tons?

We hope so. Let us watch and wait. We have still got another month and a half. And let us keep our fingers crossed because steel prices have been quite volatile. So definitely there should be some help on that. Yes.

Thank you so much, sir. And best of luck.

Thank you. The next question is from the line of Aadarsh from Negen Capital. Please go ahead.

Hi, sir. Congratulations on the listing. I have mainly two questions. My first question is that in this quarter, we saw a record top line of Rs. 1666 crores. Yet the PAT has fallen sequentially from Rs. 29 crores to Rs. 25 crores. Given that our steel volumes have grown by 37% year-on- year, can you quantify how much of this margin contraction was due to the demerger and how much was it due to the inventory loss from falling steel prices?

Here the main impact was there was a new labour code. Around Rs. 2.61 crores of additional gratuity provision has been made that we can see in the exceptional items. That has affected the bottom line, PAT.

Page 6 of 14 So it is nothing related to the business?

Yes, demerger cost around Rs. 1.5 crore has been booked for the quarter.

Okay and my second question sir, is that the management has set an explicit target of 20% revenue contribution from the non-steel products by FY 2027. But this quarter, we have seen a 5% year-on-year decline to Rs. 146 crore. So with the current mix which is at around 9% - 11%, what changes are being made to the incentive structures or in the business to hit this target?

So I think we guided around 20% of the non-steel around FY 2029 - FY 2030 when we were looking at around a Rs. 10,000 crore top line. So I think this year has been a bit of a roadblock, I mean a bit of a speed bump. But I think things are looking better and we are looking to get back on that track from next year. We have already worked on what changes need to be done internally, whether it is expanding markets, expanding products or finding new avenues. And I think we will start seeing those results from the second quarter of the coming financial year. Okay. Thank you, sir.

Thank you. The next question is from the line of Rahul Kumar from Vaikarya Fund. Please go ahead.

Sir, can you give us what was the inventory loss during this quarter and in Q2?

So Q3, there was no inventory loss as such. Okay. And what about Q2?

Q2 I think it was around Rs. 12 crores was the overall inventory loss. Q2 it was Rs. 12 crore?

Q1 and Q2 was around Rs. 12 crores of the inventory loss.

Okay. But in Q3, we had seen a pretty sizable decline in the prices throughout October and November. It is only in the end of December; the prices had actually gone up. So how did we manage this?

See honestly, there would have been a marginal inventory loss. But the main management of inventory is how we buy effectively. So I think it is a lot of thing on the purchase part of it. And we do get certain price guarantees, etc., from our suppliers in a downward market based on your volume lifting. So I think that is how we try and hedge our inventory loss to the best we can.

Page 7 of 14 Okay. Because I think last year, if I remember, during FY 2025, there was a similar decline in the prices. And we had sort of incurred some Rs. 10 - 12 crores of inventory loss.

Last year was around Rs. 20 crores in this first 2-3 quarters. Yes.

Yeah, so I mean, what has changed between then and now that we have sort of managed this?

I mean, I guess at 20, we are about 12 this year. I think it was a little more careful planning on the purchase and the inventory management, basically.

Okay. Second question is, I think you gave us figures of 50% growth in the western region. How much does western region contribute to our steel business?

It is currently contributing close to about 17%.

So then actually the math does not add up in terms of 70% going at 50% and your rest 80% business going at 20%.

Can we take this offline, this nitty gritty? (18:15) Sure, Okay. Thank you.

Thank you. The next question is from the line of Yog Rajani from Omega Portfolio Advisors. Please go ahead.

Thank you for taking my question. My first question is regarding the tax. I believe this quarter we had a very high tax expense. If you could please explain that, that would be quite helpful.

Sorry, we just lost it in the beginning of it. What was the specific on the tax that you were asking about?

Because on the tax, I believe our effective tax expense would be around 35% for this quarter compared to a normal of 25%. If you could explain that, that would be quite helpful.

So there is one Rs. 2.8 crores of earlier year expense was there. So, that was one-time expense which was booked in quarter 3. So that was the main impact which has happened.

And even if we exclude that, it would be around 28%. Like what would our normalized be for the entire year if you could comment on that?

Yes, it will be around 25% will be there for the year.

Sorry, could you just repeat the question.

So we are planning to hit a million tonnes in sales for this financial year. And given that it is a huge volume and given that we are one of the most efficient companies, if you could please explain our core competency in a more detailed manner with regards to efficiency, how we do it so well while other companies would struggle to do so well?

See what we have done this year, we have started focusing on long and flat products in a big way. That has resulted in this kind of volume growth.

Given our ROCE is around 37%, it's a very high number. So, I wanted to understand, how do we do it so well because most players in the market would not be able to achieve such high ROCE in the business. If you could comment on how the management plans its inventory purchases, receivables, and how does it manage such a huge volume because we operate over multiple states now. So, how does a company manage to be efficient even at such a huge scale?

I think that would be giving in to our USPs and a lot of trade secrets to go to the market. So I do not think that would be something we would really be comfortable asking in a public forum.

I am sure we could take things like this. If you want to schedule a call with us as a management, we can look at that. Alright, no problem. Thank you.

Thank you. The next question is from the line of Deepak Poddar from Sapphire Capital. Please Thank you very much sir, for this opportunity. So, I just wanted to understand. I mean, you mentioned we have 20% non-steel revenue target mix by 2030, right? Yes, correct.

And what is the revenue that you mentioned by 2030? What is the target we have?

Looking at a top line of around Rs. 10,000 crores.

Rs. 10,000 crores, right? So, already we are currently in the range of I think we are doing Rs. 1,600 crores, Rs. 1,700 crores. So we are already at close to Rs. 6,500 crores kind of a run rate.

Page 9 of 14 Correct.

So if reaching Rs. 10,000 crores by 2030, the CAGR seems quite low, right?

Okay. And in terms of non-steel, this 20%, so what efforts we are doing to improve? I mean, how are we going about it to improve that mix? I mean, ideally, I also believe that your non- steel margin would be higher, right? So what is the non-steel versus steel margin also? That would be helpful.

But ideally, if there is a slowdown in construction activity, I mean, it is not visible in steel, right?

Steel, still we are seeing quite good growth. So I am not able to understand.

So steel, I think you can say the end-use of our products in steel vary and are much larger than what we have in non-steel, whereas non-steel does depend more on construction activity. Steel depends on infra, industries, a lot of other things coming in. So we have complete, I mean, we have automotives, we have OEMs, we have airports coming up, train stations, railways, we have a lot of warehousing and storage points coming up for all our new start-ups and everything else. So I think where steel products can go is a much larger market relative to our non-steel. So I think that would be why steel has continued to deliver good growth compared to the non-steel business.

Okay, understood. And overall at a company level, how should one look at EBITDA margins? So any aspiration we have or how should one, I mean, given your non-steel is also not growing that fast as steel, which has a lower GPs. So how should one look at margins for next one to two years?

Page 10 of 14 So we are focusing around 3% to 3.5% EBITDA margin. For I mean, what, next two years?

Yes 3.5% for another two years. So we are looking for more, but we are confident that 3.5% will be achieved. Management 1:

The aspiration is to go more. I think for the next year we could look around 3.5% and then take it up for the following financial year. The aspiration would be around 4%. Take it up to 4%, any timeline we have? Maybe in two years.

Okay, take it up to 4% in next two years. Okay, I think that would be it from my side. That was very helpful. Thank you so much.

Thank you. The next question is from the line of Madhur Rathi from Counter Cyclical Investments. Please go ahead.

Sir thank you for the opportunity. Sir, I wanted to understand regarding working capital needs for our steel vs non-steel segment. And where do we see this as our target of 20% of our revenue should come from non-steel, so where do we see this heading?

Overall our working capital is around 30 days. So when you are taking the break-up of steel and non-steel, non-steel will be around 48 days. Because we will be having higher inventory for display and all those things. So steel will be around 27 days. So on an average it is around 30 days. Sir, non-steel you mentioned 48 days. 48 days. 48 days okay, got it. And sir, there was a lot of real estate construction activity. So why is our non-steel segment struggling currently? And you said that over the next few quarters we see this improving. Do we see that the real estate cycle coming towards the completion stage should help us? Or what will be the driver for the segment of picking up going forward?

I think two things. I think one is post-COVID. During COVID there was a slowdown in new project launches, which has picked up afterward. And usually buildings take around 3 to 4 years to come to completion. So we should be expecting completion coming in from Q2 of FY 2027. And that is why this year I have seen a gap in terms of buildings coming to this finishing product.

Second is, last year there was an overall impact of slowdown in terms of approvals and things

Page 11 of 14 like that at different state levels, which has also slowed down construction activities. And there has been postponement of projects and end customers for the same reason. Management 1:

I think one of the key reasons is because Karnataka is our major state contributor to the volumes. I think we had a lot of governmental intervention over the last year. There was something called an e-khata that was required, so which took a lot of time for the backup in terms of delivering the e-khata to the builders. As a result, a lot of things were not delivered to the end customers. Number two, there were also certain issues in electricity connections.

There were new rules that were drafted by the local BESCOMs in Karnataka as well as Telangana. Two states that were impacted by a lot of these interventions from the government, by the state government, that is. So there were some delays. I think they are slowly getting ironed out now. At least partially in Karnataka, some of these issues have been sorted out. So we see that once these issues are sorted out automatically, occupancies and occupiers, the certificates and builders will also go faster to complete their projects.

Got it. I am trying to understand, regarding non-steel segments, what would be our percentage from retail vs institutional or enterprise level clients and how is the gross margin and working capital cycle for these enterprise or the larger builder kind of customers?

So right now, non-steel we would say around 60% - 65% would be from retail and the remaining would be from the trade segment. Working capital wise, definitely it would be similar for both because we need to hold more inventory when it comes to retail segments whereas we do have more receivables when it comes to trade segments. So they would balance out. So working capital would remain the same.

Got it. Sir, thank you so much and all the best.

Thank you. The next question is from the line of Nishant Bhat from Equitywrks Limited. Please My question was regarding the sales growth. So already we are somewhere around at 17%.

There has been a very good improvement in that. My question is, how far improvement can be there in this particular aspect? Is there room for growth?

We feel that the similar number is possible. I think going forward, we are confident that the existing stores are able to pull out and push out more turnover. So we are looking around a similar growth. I think if we do see a slowdown, then we will look at expansion or other strategies.

Got it. Thank you, that is all from my side.

Thank you. The next question is from the line of Viraj from Enigma. Please go ahead.

Page 12 of 14 Sir in the press release, you had written about you are expecting strong growth even in FY 2027.

And if I look at the commentary also of some of your suppliers like APN Apollo or Surya Roshni, they also talk about 15% and 20% or higher volume growth next year. So after doing your million tonnes this year, what would be the growth you will be looking at next year?

See broadly, like Dhananjay said earlier, giving away too many of our plans on this forum is becoming a little difficult because we find a lot of competitors trying to glean a lot of information. But however, one thing I can tell you is, in the next couple of hours, our next aspiration is to take just the steel tube volume to around a million ton. Sure. Thank you so much.

Thank you. The next question is from the line of Palak Bhanushali from MIV. Please go ahead.

Hi sir. So my question is on our sales break-up for the retail and non-retail business. I do not think that we have provided at this quarter. Can you give that number?

So our retail business would be around 55% and non-retail would be around 45%.

Okay. Can you provide a few metrics related to your stores? I mean, what is the CAPEX per store, revenue per store or margins per store? Or how are we planning to add the stores going ahead? How the stores are going to be funded? So a few metrics regarding the stores.

So we are looking at adding maybe three to four stores in the coming financial year where we see we need a strategic fit. And when it comes to the metrics, I think on average, we have a CAPEX around Rs. 3 crores per hybrid store. Management1: I think we can come back to this later.

Okay. So is it Rs. 3 crores CAPEX including the inventory lease cost? It would be including the inventories.

Including the inventories. Okay. And what are the payback periods for our stores?

Madam, can we come back to this later, please? Thank you.

Thank you. The next question is from the line of Utkarsh Somaiya from Eiko Quantum Solutions Private Limited. Please go ahead.

Page 13 of 14 Thank you for the opportunity. Given your aspiration to reach 1 million tonnes in your steel business and let us assume your non-steel remains flat next year, is it fair to assume you can grow your volumes by 20%?

Yes, I think that would be our aspiration for sure.

And given the base would be slightly higher, how should we think about growth beyond that?

Because then your journey to 10,000 will be quite close. So I just want to understand the aspiration.

So our aspiration would also be to mix our revenues going forward maybe after we come towards, closer to the Rs. 10,000 crores mark because there are products in steel and non-steel that can give us better margins. So I think definitely we are looking at maybe a better margin mix and more focus on margins also apart from just top-line.

Okay. So after FY 2027, your focus will shift more towards margin? Yes.

And sir, I have noticed that you are quite conservative on your margin guidance but you always tend to do better than we think. So a little more... I know you told us 4% is the aspirational target but a little more conviction on that would really help us investors, if you can give us something.

Thank you. Next question is from the line of Rahul Kumar from Vaikarya Fund. Please go ahead.

Yes. Thanks again. Sir can you give us the balance sheet figures as of December? What were the acceptances and how much was the debt?

So acceptance we can say around Rs. 450 crores. And borrowing around Rs. 50 crores, around Rs. 500 crores is the total borrowing.

Okay. So these acceptances increased pretty sharply I think during this quarter if I compare it to the previous quarter. So what would have driven that?

Page 14 of 14 Yes, mainly the rate of interest we are able to bargain better compared to the working capital. So that is the reason.

And what is the rate of interest which you are getting on these? We are getting around 7.5% to 8%.

Okay. And how much was the inventory as of December? Sorry, did you say inventory gain? No, inventory. The inventory is around Rs. 400 crores. Okay. Thank you.

Thank you. As there are no further questions from the participants, I now hand the conference over to Mr. Sukumar Srinivas for the closing comments. Over to you, sir.

Thank you very much. I thank all the investors and the participants who have taken time off on a working busy day in the middle of the afternoon to attend this investor presentation and call. Thank you all very much.

Thank you. On behalf of TIL Advisors, that concludes this conference. Thank you for joining us. You may now disconnect your lines.