Metrics raised 2
- FY28 revenue guidance raised to ₹2,700 crores (from ₹2,500 crores)
- QIP fundraising target increased to ₹250 crores (from ₹100 crores)
Interarch Building Solutions Ltd - Q1 FY27 Earnings Call Summary Friday, 7 August 2026 4:00 PM IST
Event Participants
Executives
3 Arvind Nanda, Manish Kumar Garg, Pushpendra Kumar Bansal
Analysts
10 Aasim Bharde, Akshay Korlekar, Ankur Shah, Devang Patel, Nitin Jain, Rahul Kamdar, Ronak, Shubhamkar Gupta, Sudeep Bora, Vineet Mehta
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹460 crores | +20.7% YoY vs ₹381 crores in Q1 FY26; seasonally soft quarter due to monsoon and site clearances delaying dispatches |
| EBITDA | ₹39 crores | +24.6% YoY vs ₹32 crores; margin stable at 8.6%, pricing better than revenue growth |
| Profit After Tax | ₹28 crores | Flat YoY; lower treasury/other income as IPO proceeds deployed into capex offset EBITDA growth |
| Order Book | ₹1,864 crores | As of July 31, 2026; +~9% QoQ; includes ₹165 crore energy company order at Vadodara |
| Sales Volume | 38,499 tonnes | Q1 FY27; ~80% of quarterly installed capacity of 50,000 tonnes |
| Operating Cash Flow | +₹26.83 crores | Positive Q1, nearly equal to PBT; recovery from negative FY26 flow driven by large work-contract orders |
| Capacity Utilization | 80% (FY26) | FY26 volume of 162,000 tonnes on 200,000 tonnes installed capacity; ~88% of utilizable capacity; capacity now 221,000 tonnes |
Geographic & Segment Commentary
- Industrial Manufacturing: Traditional core segment - PEB plants for manufacturing units across industries; largest share of revenue and order book, with demand driven by PLI-linked projects (semiconductors, EVs, lithium batteries, autos).
- Warehousing & Logistics: Second key segment; steady demand as supply chain and e-commerce infrastructure expands across India.
- Buildings/Institutional: 10% of Q1 revenue vs ~2% historically; includes commercial, multi-story, hotels, data centers (RailTel data center in Noida); fastest-growing as RCC-to-steel conversion accelerates; heavy structure will support 70-75% of multi-story content.
- New-Age Industries (EVs, lithium, renewables, data centers, semiconductors): ~35% of order book; margin-accretive due to complexity, size and limited competition among top players.
- Exports: ₹10-12 crores in Q1 (~2-3% of revenue); existing markets in Africa and neighboring countries; US/Canada emerging via Canadian JV; target 10% of turnover in 1-2 years.
Company-Specific & Strategic Commentary
- Capacity Expansion: Gujarat PEB plant (Phase 1) commissioned July 9, 2026, becoming the 5th fully integrated plant, with Phase 2 by October 2026; Andhra heavy structure Phase 1 in trial production with commercial production by end-August/early-September 2026, Phase 2 by March 2027 and Phase 3 by December 2027 to reach 75,000-80,000 tonnes heavy structure capacity.
- QIP of ₹250 crores: Increased from ₹100 crores to accelerate expansion - ₹140-150 crores for heavy structure Phases 2 & 3 in Andhra (compressed from one phase/year to all three in 18 months), ₹50-60 crores for Gujarat Plant 2 (land already acquired), ₹50-60 crores for Open Web Steel Joists 100% export unit; company is zero-debt; timing of fundraising undecided (next quarter or within 4 months).
- Canada Export JV: MoU with Canadian partner for Open Web Steel Joists system (widely used in North America, not in India); Interarch handles manufacturing, partner handles sales/engineering/collections in North America; Phase 1 of 4,000-5,000 tonnes generates ~₹70-75 crores revenue at ~20% EBITDA margin; full 15,000 tonnes capacity = $22-23 million; production targeted by end-July 2027 with 2-3 year ramp-up.
- Financial Discipline: IPO proceeds of ₹180 crores fully deployed into ₹230-240 crores capex since April 2024; management prioritizing profitability over revenue growth, with focus on better purchasing, reduced wastage, and cost recoveries.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| FY27 Revenue | ₹2,150-2,200 crores | Maintained; requires ~₹600 crores/quarter for remaining 9 months with quarterly variation (₹550-620 crores range); management keeping guidance conservative, may revise in 3-4 months |
| FY27 Volume | ~190,000 tonnes | +18% YoY vs 162,000 tonnes in FY26; supported by Andhra Phase 2 and Gujarat Phase 1 capacity additions |
| FY28 Revenue | ₹2,700 crores | Revised up from ₹2,500 crores; includes ₹100-150 crores from heavy structures; could be revised again in 1-2 quarters |
| FY28 EBITDA Margin | 9.5-10% | Driven by operational leverage, internal cost controls, higher export margins (20%+), and heavy structure mix; FY27 margin kept at current projected level |
| Capex | ~₹129 crores FY27; ~₹133 crores FY28 | QIP-funded; enables heavy structure phases, Gujarat Plant 2, and export unit |
| Export Mix | ~10% of total turnover in 1-2 years | Short-to-medium term target; driven by Canadian JV and growing US/Canada demand |
Risks & Constraints
| Risk | Context |
|---|---|
| Seasonality | Q1-Q2 structurally softer due to monsoon and site clearance delays; management sees this as standard industry trend, but creates quarterly lumpiness (Q1 at ₹460 crores vs ₹600 crore quarterly run-rate target) |
| Execution Risk | MD emphasized PEB companies fail from delivery failures, not lack of orders; precise sequencing critical for large projects - company remains selective on order intake to protect reputation |
| Input Costs | Steel prices spiked with Iran war-driven shortages; freight and erection labor costs rising; management working on better purchasing and internal cost controls, but new plant startup costs may delay margin improvement this year |
| Manpower | Site manpower (certified builders) remains a challenge; factory manpower relatively controlled; labor and erection prices up |
| Heavy Structure Ramp-Up | New plant with new machines and processes; management taking conservative 5-6 month ramp-up period; utilization clarity expected by March 2027; FY28 guidance assumes ₹100-150 crores contribution |
| Working Capital | FY26 cash flow strained by large work-contract orders; normalized in Q1 FY27 with +₹26.83 crores OCF and standard advance terms intact; larger order sizes will continue to test discipline |
Q&A Highlights
Q1 Revenue Softness
- Question: Q1 revenue (₹460 crores) was lower than Q2/Q3 FY26 despite new capacity - what was the reason? (Sudeep Bora)
- Answer: MD cited seasonal factors - monsoon and site clearances delay dispatch of customized materials; standard trend where Q1-Q2 are slower with variation by project location; order book and capacity in place, expecting ₹550-620 crores per quarter in remaining quarters; nothing unusual. (Arvind Nanda)
QIP Utilization
Question: What is the envisaged utilization of ₹250 crore QIP proceeds? (Sudeep Bora)
Answer: MD detailed ~₹140-150 crores for heavy structure Phases 2 & 3 in Andhra (accelerated to complete in 18 months instead of one phase/year); ₹50-60 crores for Gujarat Plant 2 (land already bought); ₹50-60 crores for Open Web Steel Joists 100% export unit with Canadian partner. (Arvind Nanda)
Question: Why raise QIP when internal accruals plus existing cash seem sufficient? (Vineet Mehta)
Answer: MD explained working capital requirements for scaling order sizes plus need for speed; advised to raise two years' needs once rather than returning to market repeatedly; own funds will be needed for working capital as business grows; fundraising timing undecided - could be within next quarter or 4 months. (Arvind Nanda)
Canada JV / Exports Strategy
Question: Rationale and revenue potential from ER Steel Canada JV? (Ankur Shah)
Answer: MD explained Open Web Steel Joists system is common in North America but not used in India; Canadian partner handles sales/engineering while Interarch manufactures - partner covers collections and installation too; Phase 1 (4,000-5,000 tonnes) = ~$7.5M or ₹70-75 crores at ~20% EBITDA margin; full 15,000 tonnes = $22-23 million; production by end-July 2027 with 2-3 years to reach full capacity. (Arvind Nanda)
Question: Current export contribution and medium-term export mix target? (Akshay Korlekar)
Answer: CEO confirmed Q1 exports at ₹10-12 crores out of ₹460 crores; exports give somewhat better margins than domestic; JV targeted at 20%+ EBITDA; short-to-medium term export mix target of ~10% of total turnover. (Manish Kumar Garg)
Capacity Utilization
- Question: Current capacity utilization levels? (Ankur Shah)
- Answer: CEO reported FY26 volume of 162,000 tonnes on 200,000 tonnes capacity = 80% installed (88% of utilizable capacity since utilizable is 85-90% of installed); capacity now 221,000 tonnes with Kheda Phase 1; Q1 volume of 38,499 tonnes = ~80% of quarterly capacity of 50,000 tonnes. (Manish Kumar Garg)
Margin Outlook & Revenue Guidance
- Question: Confidence in margins returning to 9-10% band and conservative revenue guidance? (Ankur Shah, Nitin Jain)
- Answer: MD targeting margin expansion via more complex jobs, internal economy (better purchasing, less wastage, better recoveries) and exports; new plant startup expenses in Gujarat and heavy structure may delay results this year, but substantial improvement expected in FY28; on revenue, management prioritizing profitability over top-line growth - selective on client profile, delivery schedules, and payment terms; will reconsider guidance revision in 3-4 months after Gujarat and Andhra plants prove out. (Arvind Nanda)
Working Capital & Cash Flows
- Question: Does the working capital issue persist and why is treasury income lower? (Ronak, Devang Patel)
- Answer: MD confirmed normalization - last quarter's issues (large project billings pending, extra steel stocking for price increases, advance payments to suppliers) are resolved; lower treasury income is because IPO funds have been spent on capex (₹230-240 crores deployed of ₹180 crores raised), which is a positive signal for future operational profit; CFO confirmed +₹26.83 crores positive operating cash flow in Q1, nearly equal to PBT, with better conversion expected through the year; standard advance payment terms intact. (Arvind Nanda, Pushpendra Kumar Bansal)
New-Age Industries & Segment Mix
- Question: What changed in the industrial landscape and what share of order book is from new segments? (Shubhamkar Gupta, Aasim Bharde)
- Answer: MD cited two structural shifts: (1) large projects coming to India via PLI schemes - semiconductor, renewable, lithium battery, EV, auto revival - requiring very large plants that strain industry capacity, with orders split between only 2-3 capable companies; (2) steel usage expanding into data centers and high-rise buildings; CEO confirmed ~35% of order book is from new-age industries plus new segments (multi-story, data centers, hotels); buildings segment at 10% of Q1 revenue vs 2% earlier, including the RailTel data center in Noida. (Arvind Nanda, Manish Kumar Garg)
Heavy Structure Ramp-Up
- Question: What gives confidence to expand heavy structure capacity before commissioning, and how will FY28 volume split? (Aasim Bharde, Rahul Kamdar)
- Answer: MD cited 3 years of market research before capex - in-house team and consultants built design capability and business development; hybrid orders taken earlier (Tata Electronics, semiconductor, lithium battery plants) with ~15% heavy structure outsourced; first data center order secured for new plant trial production; conservative approach to learn new machines and processes; FY28 includes ₹100-150 crores heavy structure. (Arvind Nanda)
Competitive Environment
- Question: How intense is competition from expanding players? (Rahul Kamdar)
- Answer: MD views market as highly segmented - like autos from two-wheelers to planes; pie growing dramatically (300 companies today vs 3 in 2003-08); healthy competition from top 5-6 players expands steel acceptance and market size; price is secondary when partnership relationships and delivery capability matter; history shows PEB companies close from delivery failures, not lack of orders. (Arvind Nanda)
Finance Cost
- Question: Why did finance cost jump 20-30% faster than revenue? (Nitin Jain)
- Answer: CFO clarified one-time bank processing fees on enhanced non-fund limits to support growing business needs; additionally, lower interest income as IPO surplus cash was deployed into capex; company remains zero-debt with no debt repayment obligations. (Pushpendra Kumar Bansal, Manish Kumar Garg)
Key Takeaway
Interarch delivered steady Q1 FY27 results with revenue of ₹460 crores (+20.7% YoY) and EBITDA of ₹39 crores (+24.6%), though PAT remained flat at ₹28 crores due to lower treasury income as IPO funds were deployed into capacity. Order book rose ~9% sequentially to ₹1,864 crores by July 31, 2026, with ~35% from new-age industries (EVs, data centers, renewables, semiconductors), underpinning maintained FY27 guidance of ₹2,150-2,200 crores and a revised FY28 revenue target of ₹2,700 crores (up from ₹2,500 crores). The company is accelerating capacity: Gujarat PEB plant Phase 2 by October 2026, Andhra heavy structure plant (75,000-80,000 tonnes at full build) entering commercial production, backed by a ₹250 crore QIP for heavy structures, Gujarat Plant 2, and a Canada JV exporting Open Web Steel Joists at 20%+ EBITDA margins. Management remains cautiously selective on orders, prioritizing profitability (FY28 EBITDA target of 9.5-10%) over revenue growth, with heavy structure ramp-up execution and input cost inflation as key watch points.