Interarch Building Solutions Limited (INTERARCH) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q4 and FY 2024-'25 Earnings Call of Interarch Building Solutions Limited hosted by AMBIT Capital Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Jaiveer Shekhawat from AMBIT Capital. Thank you, and over to you.

Thank you so much, and good evening, everyone. I welcome you all to Q4 FY '25 Earnings Call of Interarch Building Products. From the management side today, we have with us Mr. Arvind Nanda, the Managing Director; Mr. Manish Garg, the Chief Executive Officer; Mr. Pushpendra Kumar Bansal, Chief Financial Officer; Mr. Anil Kumar Chandani, President, Corporate Finance and Strategy. I would now hand over the call to Mr. Nanda for his opening remarks. Thank you, and over to you, sir.

Thank you, Jaiveer. Thank you first to the AMBIT team for yet again hosting our earnings call. And I would like to thank all of you who've taken their time out to join this investor call. So I think what we've been trying to do for the last 3 or 4 investor calls since we went listed is to just explain a little bit overview of the pre-engineered building industry because we feel that it's a pretty unique industry, and we are a pretty unique player in the listed space, while other companies are listed as pre-engineered building, but nobody is with a pure-play pre-engineered building. I think most of you have heard my earlier calls as well, so I'll keep it very brief. So pre-engineered buildings are primarily steel buildings used for any purpose. You can use it for industry, manufacturing, warehousing, your high-rise buildings, stadiums, airports. So these are pretty much building agnostic. You can do any kind of building in it. So there's no limitation as far as that is concerned. So that is one big advantage of a steel building that you can do any kind of building. In pre-engineered building industry, where we are one of the leading players, what happens is that a customer comes to us with only his requirement. He tells us what he needs in overall specs, height, length, width, loadings, where the location will be, what kind of temperature he wants inside, what kind of insulation, et cetera. And all the design and engineering of the building of his requirement, whether it's a plant, warehouse or an airport is done by Interarch's engineering and design team. So as a first stage, we interact with our sales team, which is a very highly qualified engineering sales team and a very highly qualified engineering and design team using very advanced softwares and technology and computers. They work together to close the building which the client wants by value adding because we can, as premier buildings, sometimes add a lot of value to how that building can be done better, speedier as well as cheaper. So a lot of interaction between the client, his consultants, could be his PMC, could be his structural consultant and the Interarch team happen even before we can make a bid. So once the building is more or less closed, how it should be done? Then we design engineers that whole requirement into a building. How will that requirement convert into a building? Because the client doesn't tell us what to do. He doesn't tell us what steel to use or what thickness to use or what should be the color. We just have to follow his requirement and the building codes, which are, of course, essential. So then our design team gets on to it and designs it with as much value add and as much as design skills as they have because it's very critical that we design the building in the best possible manner. Because if we do not design and engineer the building in the best manner, we will be not optimizing the usage of steel or optimizing the production or delivery or erection, and therefore, we will become uncompetitive. Because in this business, you do not quote to a client on a per kilo basis or a per square foot basis, but in a lump sum of a building. So everything from how much steel will be used. Primarily, our buildings use 3 different kind of steels and hardware. Steels are HR plates, hot-rolled plates, which we buy from all the well-known mills in India and galvanized coils, which are used for secondaries, which we roll form into the right items that we need and the roofing and wall cladding, which is the skin of the building, which is again a very highly coated material, very high technology, very strict requirements because that is the 1 item which is exposed to weather and steel being very corrosive in nature, the coatings have to be excellent. So we buy from companies like Tata BlueScope, which are world renowned in this kind of coils. So these are the 3 raw materials, HR coil and HR plates, GP coils and roofing, cladding, color coated or zinc aluminum coated coils. So the whole building is manufactured as per the design approved by the client after we give him the requirement and then he approves the order, it is converted into a building by how are we going to make these columns and beams and secondaries, roofing, cladding, all the closures, finishing. So the whole building is costed in that manner. How much steel will be used of all hardware? How much will it cost us to manufacture in-house because the second stage or third stage of our building is how to produce it. Every item is manufactured in-house in our plants. We do not buy any ready-made items from outside. We do not buy any H-beams, I-sections or purlins, et cetera, from outside. Everything is manufactured in-house or at the site like roofing. Then that costing is done and then how much will it cost to take the material to site. And then, of course, how much will it cost us to erect that building because we have to give him everything from design engineering to a completed building at site. So the design engineering and salespeople work together to do a costing, which has to be competitive, a great value-add design so that we can use the least amount of steel, manufacture it efficiently and meet the schedules that the client requires. And we then give them a lump sum price and a definite date of completion. So this whole exercise is done even before we have got the order. This is to enable us to quote for the building. So this is the specialty of pre-engineered building that we have to be able -- we have to be able to design, engineer, manufacture and erect the building at site and in a very competitive manner and in a very high-quality manner and on schedule for us to even bid to the customer. After that, there are many other factors which come in when we are bidding, talking to the client. It is our past history. It is our ability to do a good job. What does he think of Interarch? Does he think that we are the right people for him to do the building and the erection and give him the right schedule. So it is his belief as will we be the right company for him and the right price, the right date and then he decides the order. These are not price-driven orders in many ways. Of course, there will be ultimately competition between 1 or 2 other competitors, which they feel would be similar. But a lot of the decision-making is already done before we even bid, because it is how much he trust you. This product and this business is more about trust and confidence that the customer has in your engineering, in your design, your ability to deliver and ability to deliver a quality product because don't forget, we manufacture everything in-house. So the quality of the product is also on us. We don't buy any ready-made sections from other people so that, that quality is assured. And of course, then the completion. So after we get the order, which is the decision is taken on many different basis, past history, have we done similar kind of buildings? Have we done work in the similar industry before? Have we worked with their group companies or those companies by themselves? So then and then, of course, there's a final thing about price, but the decision by the customer is already made by the time we reach that stage. And then once we get the order, of course, the design engineering again gets into the act and they have to make the whole building into pieces, which are manufactured by the plant. So then they have to get some shop drawings as we call them, issued to the plant because each building could be hundreds and thousands of pieces. So each piece has to be transportable to site. It cannot be a complete building. So the each piece is manufactured in-house and taken to site completely ready. It is drilled, cut, welded, even final quotes of paint are done in-house and then taken to the site. And at the site, everything is just a nut and bolt assembly. There is no cutting, welding, drilling, painting done at site. Everything is nut and bolt. So these whole process gives you 2 great advantages to the customer. Besides the fact that he's getting a lump sum price of the building like a product, he is no longer dependent on different parts like contractors or suppliers or consultants to be able to give a price and stick to it. But from 1 company, he's getting a complete price. So like we say, it's 1 building, 1 price, 1 date. So only 1 company is responsible, and that is the best advantage that a customer gets that this whole building office is converted into a product. The other 2 major advantages that he gets are very fast delivery of the building and erection because a lot of the work which has to be done at site is done at site parallel to while we are getting all our approvals done and manufacturing all the parts in our plant. So a lot of activities happen parallelly. And the day that the building -- the site is ready to receive the structure, the structure starts arriving and starts getting erected, unlike in a conventional steel building where the material would start coming after all the civil work is done and then the building would start getting manufactured at site. Second big advantage he gets is the quality because everything is manufactured and made in-house on automatic machines by highly trained people and under very controlled conditions. So this gives him the highest quality that he can get. Nothing is done at site compared to traditional buildings, which are actually made on the site itself. So on the site, the quality of labor, quality of welders, quality of the type of the weather that they go through, all this -- the quality is dependent on all this. Whereas now the quality is all dependent on the plant. So these are the major advantages he gets in pre-engineered building. And Interarch, we are pretty much industry agnostic. It doesn't matter to us what the clients and industry is. We have done everything from auto to FMCG to A-grade warehousing to all kinds of paint plants, Grasim, Asian Paints, Berger, HUL, all machinery manufacturers like SMS. So every kind of industry we have worked in. Recently, last 4 or 5 years, a lot of new industry like what we call the new age industry has come up, data centers, semiconductors, renewables and solar renewables, lithium battery, EVs, all these are coming up, and we are participating in every industry there is. Because to us, it doesn't matter what your industry is. We have to have the capability to design and engineer the kind of building you need. And today's building in most of these industries are very complex. They are more or less like a part of the production process. They are as important as the capital goods and the machinery installed inside. In fact, we believe that we are the first capital goods that a customer thinks of, our user thinks of. We are not really a builder or a contractor or a fabricator, but a capital goods partner with the client. So he treats us like that. He will come to us first. So if he cannot design, engineer and make the building as he requires, his machinery or his processes cannot be done accordingly. And of course, if the building is not completed on time of the highest quality, then his whole process and his production will get delayed. So we are more like a capital goods industry and a capital goods partner for these companies. That is why they keep coming back to us again and again, just like most industries like to go back to a reliable and a good, high-quality, high value add, a company which is very, very concerned about the customers' requirement and the customers' ethics and rules and how he want it done. That is the kind of partner they want to choose. We are not like a builder which is chosen on L1 basis or the cheapest price, but as how they would like their building to be done, we can design, engineer, deliver and erect for them on time and the building will work for 40, 50, 60 years without any problem at all. That is how they view us. So the whole pre-engineered building industry is based on that. And of course, we have as Interarch advantage that we've been in the industry for 25 years. We were one of the pioneers and we have now done every kind of industry that exists in India. Nearly every company that is there in India, Indian and foreign, small and big and every kind of building that is possible from high-rise to T3 terminal to process plants for paint lines and FMCG to building manufacturers to A-grade warehousing for Amazon and Flipkart and any -- all these A-grade warehousing companies like IndoSpace, Welspun, LOGOS. So there is no rail industry. Airport T3 terminal was done by us many years ago. So we have been in this industry and therefore, a very trusted player. People believe that if they go to Interarch, Interarch will be able to do their building, design, engineer, manufacture and deliver to them on time at a good value. We would not say we are the cheapest. We don't even want to be the cheapest, but we want to be the greatest partner and value add to the client, to our user. He must get value from us. And that's why he's prepared to pay us because he sees value in Interarch and Interarch Building, which he doesn't see in anybody else. And I think a lot of that is very apparent as we go forward and we see every quarter, every year, we are getting better kinds of building. Recently, we got one of the largest single PEB orders given to any company in India of INR 300 crores plus. And that is again putting us in a different league because there are a lot of very large orders in India, which till last 3 or 4 years were getting split into 2 or 3 PEB players because people didn't have the confidence that one company can do it. But that barrier has been broken by us by getting this order. So I think we are -- every year, every quarter, every day, we are breaking new ground. We are breaking -- getting into new clients. We are doing the microchip plants for Tata-Micron, for Tata Electronics. We are doing a lot of business for renewables from Reliance Solar to Vikram Solar to AMPIN Solar. We have done work for ReNew Power, for First Solar, lithium battery plants. First one set up in India was Exide, we did it. Second one is being set up by Agratas, which is a Tata company. We are doing it. So we are there in every area because we have become a trusted partner with all these people. And that is where Interarch stands today. And I think our results and our quality of clients and the quality of business we do shows that. And the way the economy is growing and the new players are coming in, whether on PLI scheme, on semiconductor scheme, on renewables, on Make in India, manufactured in India, China Plus One, I think this is going to be a big boost going forward. We've also tied up with companies like JSPL and Moldtek Technologies to add unorganically add to our engineering as well as manufacturing capacity. We are trying to add capacity as fast as possible because there's a lot of business available in the market. We are -- I think by end of June, we will finish our AP Phase 2, which we -- Phase 1 was done last year and our new line in Kichha will both be finished and in full production. We have recently bought land in Andhra Pradesh right next to our existing plant to set up another line, which we will start this year and hopefully finish in the next 10 to 12 months. And of course, we have land in Gujarat, which we are preparing for another plant. As soon as we finish one, we want to go into the next one, preparing ourselves. We are preparing our engineering capacities and capabilities through companies like Moldtek and other companies we have tied up with opening a new office -- 2 new offices in the South of India, where there's a lot of pool of people, engineers available besides Chennai, Hyderabad and Noida that we have. So I think we are on the right track. We are doing a lot of right things to be able to expand our capacities and increase our capabilities to deliver to the customer. I think business is the least of the problems right now. It is more how fast we can make all our 4 legs as we call them, sales, engineering, production and project management, how fast can we develop them to deliver to the customer as per the requirements. So I will now end my talk on this. There are a few things that we have done for the first time. I think we have the highest record sales. We have the highest recorded profit. We are issuing our maiden dividend as a listed company of INR 12.5 per share, and we hope we will continue to give a dividend and increase it. Our next year projections are going to be as we had given earlier, and we are still on track to do INR 2,300 crores, INR 2,400 crores turnover by '27-'28. We are building up capacities. We have a very good order book as of 1st of May of INR 1,645 crores. So we are well on our way to achieve the targets and the sort of figures given before. And I think our position is strengthening day by day. I will now request Manish, our CEO, to take you through our company overview, and then we look forward to your questions. Thank you.

Thank you, sir. Good afternoon all. My name is Manish. We are proud to share that Interarch has delivered its highest ever quarterly as informed by Mr. Nanda and annual performance, an outstanding milestone in our journey of growth and excellence. We are the fastest-growing pre-engineered building company in India, currently ranked second overall in terms of installed capacity and revenue. From FY '15 to FY '25 in last 10 years, we have successfully executed and delivered over 700 pre-engineered building projects. Now that explains our deep expertise and strong market presence. The company operates 5 state-of-the-art manufacturing plants and 4 fully integrated pre-engineered building facilities. They are located down South in Sriperumbudur, Tamil Nadu; Pantnagar in Uttarakhand; Athivaram in Andhra Pradesh; and Kichha, Uttarakhand. Our facilities have a combined installed capacity as we speak of 161,000 metric tons, given that the utilizable capacity typical ranges from 80% to 85%, this translates to an effective 135,000 tons metric ton per annum. And to support our future growth, we are currently expanding our facilities in Andhra Pradesh and Kichha, which is nearing completion. And once completed in about a month from now, this expansion will add approximately 40,000 metric tons, taking us to overall installed capacity of 200,000 metric tons. Further to this, to support our growth plans, as explained to you by Mr. Nanda and to enhance our manufacturing capabilities, we have acquired an additional 20 acres adjoining land in our Andhra Pradesh, Athivaram facility, where we plan to establish a heavy fabrication line by end of September 2026 next year. As part of our continued focus on strengthening technical capabilities, we have also decided to set up 2 new engineering offices in India within the current financial year. On the sustainability front, we have installed 1 megawatt of rooftop solar at our Kichha and Pantnagar units and a similar capacity rooftop solar is being installed at our Tamil Nadu and Andhra Pradesh facility. This will entail savings in the power cost. In terms of our order book and clientele, as on 30th April 2025, our total order book stands at INR 1,646 crores, reflecting a strong pipeline and sustained demand. We are pleased to inform that the company has secured the largest ever pre-engineered building order of about INR 300 crores in the Indian PEB industry. We take pride in our diverse customer base with repeat orders contributing almost 82% of our revenue, underscoring the trust and partnerships that we have built over time. Some of our recent key clients include Indospace, Havells, Saint Gobain, Balrampur Chini Mills, Reliance and Vikram Solar. With the organized sector gaining a larger share of incremental orders in our industry, we expect to continue growing at 1.5x to 2x the industry rate of growth. Looking ahead, we are focused on expanding our footprint and diversifying our solutions to tap into emerging growth opportunities, including expanding our operations with a new manufacturing facility in Gujarat, wherein we have already acquired the land. And in Andhra for heavy steel industry, as already explained to you. We are also upgrading our existing facilities to -- as in alignment with our IPO objectives, diversifying into high-growth sectors like EV infrastructure, renewable energy projects, data centers, semiconductors, multistory commercial and residential buildings and institutional buildings. With these strategic initiatives, we are well positioned to drive sustained growth, innovation and market leadership in the year ahead. Just to explain you the major financial highlights. I'm sure you have gone through the investor presentation already. So just a glimpse. In Q4 FY '25, which got concluded, revenue for the quarter stood at INR 464 crores with a growth of 20% on a year-on-year basis. Our EBITDA for the quarter stood at INR 49 crores, growth of 29% on a year-on-year basis. Our EBITDA margins also saw an improvement and stood at 10.5%. Profit after tax for the quarter came at INR 39 crores with a growth of 30% on a year-on-year basis. Our total order book is INR 1,646 crores as on end of April '25. Other highlights include our revenue stood at INR 1,454 crores with a growth of 12% on a year-on-year basis. Business mix of the end user was industry dominating at 77%, followed by infrastructure, 21% and other buildings at 2%. Our EBITDA for FY '25 came at INR 136 crores with a growth of 21% on a year-on-year basis. And for the full year, EBITDA margins were 9.4%. Profit after tax for the year FY '25 came at INR 108 crores with a growth of 25% on a year-on-year basis. And as Mr. Nanda already explained, we have declared our first maiden dividend per share at the rate of INR 12.5, which turns out to be 125% of the face value. With this, I would like to conclude my presentation and open the floor for question and answers. Thank you very much, everybody. Thank you.

[Operator Instructions] We'll take our first question from the line of Yug Jhaveri from Molecule Ventures LLP.

First of all, congratulations on such a good set of numbers. So first question is regarding the current order book stands at around INR 1,650 crores, while the revenue potential at full 2 lakh capacity, assuming 85% utilization is estimated around INR 1,900 crores to INR 2,000 crores. So given that gap, do you see sufficient demand to scale the order book further towards full capacity utilization? And by when do you expect such peak revenue within the existing capacity, we are not including the new capacities which are coming?

You see the capacities which we are adding right now will come into place by end of June, early July. So we would have lost the first quarter. So we are hoping that we can do more order booking primarily on a little bit of a longer. See, there are a lot of large projects also coming up, which are taking in requiring buildings in a little longer period of more than 8 to 10 months, which is a standard for pre-engineered buildings. So we are concentrating on that because with our present capacity to execute, it will be difficult to take any short-term orders. But there are a lot of long-term orders in the market, and I think we are doing that. Plus on the other side, we are trying to grow faster and faster with our capacity organically as well as inorganically. But right now, we can't say much. But I think another 2 or 3 months, we'll have a little clearer picture on that.

Okay. Okay. Got it. And do you see an impact on the demand side due to slowdown in private CapEx, which is current scenario?

Private CapEx has been slowing down for the last 5 years. Every time we have only the private CapEx is slowing down. But I think what happens is that there's always private CapEx going on. And we have to be a participant in that. I think we are not to worry about the overall growth because like I mentioned earlier, we are industry agnostic. We deal with all the top companies in India, all the foreign companies coming into India, all the new industries, new products. So you have to make yourself a relevant player with them. Of course, the kind of business we want INR 2,000 crores to INR 2,500 crores is peanuts compared to what the private investment is. So we don't really concentrate too much on those figures. Of course, we are very happy that if private CapEx actually takes off by whatever criteria we want to judge it, our business should grow. But we do not see any downturn in our business. In fact, we feel that we should build capacity faster that there is so much demand in the relevant sectors we are in. So we are more bothered about the sectors we deal in, the clients we deal with and the people that we are in touch with for future growth.

While we are expanding in Andhra Pradesh and also Gujarat, so there is any specific industry which is gaining a lot of traction in those regions or those -- you said that data centers, renewables, those are sectors are only gaining traction going ahead?

No, there is no such area. See, what is happening is that there's a lot of growth in the Southern part of India, as we all know, whether it is renewables, whether it is batteries, EV, and then there's a lot of growth in the Western sector, Gujarat, Maharashtra. Again, there is -- but we are not setting up plants only because we want to be close to customers. It is very difficult for us to be close to every customer. I mean, we are doing a project right now for Tata Electronics in Assam. We are doing one in Gujarat. So there's a lot of -- but if you were to put on 1 or 2 places, I would say Gujarat, Maharashtra is a very key one and South of India is key. But plant decisions are not taken only on that basis. We are pretty close to the sector. But we are seeing -- you see what happens with us is what we have seen is that -- I mean, we have a lot of traction with certain industries for certain years. And then the industries can also change. Like it was very high with automobile 20 years ago, then with A-grade warehousing, then a lot of FMCG and paint. Now it is a lot with the new age like renewables and batteries and electronics. So it keeps changing. But currently, it is more of these -- what we call these new age, semiconductor, your batteries, your renewables, electronics. This is a very fast growth area right now.

Got it. Got it on that side. And after your partnership with Moldtek recently, so how important will export be going forward? And which countries you will be targeting?

See, we are targeting -- we have started working on exports about 1 year, 1.5 years ago. And I thought -- we thought that a little few tie-ups will help us, like Moldtek has a very large presence in the U.S. and they have a very large presence in India for design engineering. So it's a double partnership with them in that sense that they will also help us in design engineering, sort of expanding our capacities and help us in getting business from their U.S. clients who they were not servicing for the product till now. So we are looking at U.S., Canada to which we have already exported quite a few buildings, Africa, then also the CIS countries. So we are looking at a lot of these areas. Currently, the figures are very low compared to our rest of our turnover, but we are seeing a lot of traction happening from demand side in these countries.

Going ahead, exports would be...

I request you to join back the queue as we have other participants waiting. [Operator Instructions] We'll take our next question from the line of [ Huseain Bharuchwala from Carnelian Capital ].

Congrats on a good set of numbers, sir. Just wanted to understand, you said that you are basically expanding the Andhra facility for doing heavy structures. Can you give us more understanding on what do you mean by heavy structures? And how do you want to scale that part?

In the steel fabrication, as we call it the buildings, see, like we can do building of 10,000, 20,000 tons also, but each piece of those buildings is, let's say, under 4 or 5 tons. Heavy piece in our current pre-engineered building would be 3 to 4 tons per piece. And from that, we can do what we call the light engineering buildings. But then there is a lot of heavy engineering building, which is like a steel plant or it could be a data center or it could be high-rise buildings or even a lot of the new age industries like microchips and renewables also need some part of their building as very heavy structure because they have very heavy loadings on these buildings. So each piece being over 5 to 10 tons, when it goes in the range of 5 to 10 tons, we call it heavy structure. So while the process would be very similar to what we are doing, but the factory requirements, machine requirements, the crane requirement, they change. So we feel that a lot of clients are coming to us with these heavier structure requirements, a lot of them we are refusing because we are not able to take that up productively, even though we have tied up with JSPL for precisely this reason to help us out in production. But still, we are not able to take the requirements which are coming up. See, if you look at the large area like port buildings, steel plants, fertilizer plants, power stations, data centers, these all require heavy structure. So it's just the piece is heavier. It doesn't change anything much. But since we were not making it, we felt that there's a lot of action on this items happening. So rather than just rely on outside sources, we are going to set up a largish first one production line of heavy structure and then hopefully, if the business is there, add a lot -- a few more on that also. So heavy structures gives us a possibility of doing a lot of different kind of buildings, a lot of different sectors, which we currently can't.

Got it. And secondly, sir, you have guided almost INR 2,700 crore of top line by '28. Am I correct?

No, we said about INR 2,400 crores.

INR 2,400 crores by FY '28.

Yes.

Okay. And because of the export mix that you are intending that you will have some exports in the future. So do you see your margins improving because of that also?

Well, I think our margins are going to increase, we feel. We can't promise on a couple of reasons. One is, of course, as we do larger and larger products, you make more money on larger project because the direct costs are not as high as one INR 10 crore -- one INR 100 crore project or 10 INR 10 crore project, invariably, you will make more money in the INR 100 crore project. You will get -- also you'll start getting better prices as you move up the value chain because the clients' requirements and clients' expectations in INR 100 crores or INR 200 crore project is very different than a customer who's setting up a INR 10 crore project. So you can command higher because you are one of the 1 or 2 companies only which can do his projects. Third is, of course, your internal operational leverage and internal economies, which we are constantly working on. How do you save wastage? How do you do better? We are adopting a system called cut to length that we buy material from the mills and ourselves, cut exactly to length, which avoids wastage. How to improve productivity by automating more and more of our -- we have spent a lot of money on our existing plants, automating a lot of the processes that we were earlier doing manually, which improves quality. But also -- so I think these 3 areas will help us improve our exports, I would -- exports does get you more money, that's for sure. But right now, I think for next 1 or 2 years, I don't see it being a major part of our sales. But yes, we want to be a participant because exports gives the company a different image, which is very critical for our company. If you can export to U.S.A. and Canada, you are considered a different level of player than a company which is only doing localized Indian business. And of course, we feel that the more arms like an octopus, the more arms we have in high-rise, data centers, exports, heavy structures, industrial building, the more it helps us in attaining higher targets being a serious player. And also sometimes there's a slowdown in one part of the industry or the other part of some building. So you make it up because you are in the multiple sort of areas. So that is the real reason for exports. But yes, I think to get better margins, we are trying on very different levels constantly.

We take our next question from the line of Jaiveer Shekhawat from AMBIT Capital.

Mr. Nanda, congratulations to you and your team. Sir, my first question is in terms of your average order sizes. So we have seen that, that has increased over the years. So possibly, if you could help us understand on that and also the orders that possibly you would have taken over INR 20 crores, INR 50 crores, what's the overall mix of that in your overall order pipeline?

Okay. I'll request Manish to take that question. Manish?

Yes, sir. So our average order book, that's your first part. Our average order book -- order size rather has increased from an average of about INR 3.5 crores, INR 4 crores 3 years ago to INR 10 crores to INR 11 crores now. So that's the major change. In terms of the mix, we would say that about 50% of our orders are coming from orders which are about INR 20 crores.

Sure. And sir, are you actively bidding for more of these larger sized product orders?

Absolutely. I wouldn't -- I frankly would say that we were not bidding for large projects earlier. I think our hit rate over the last 3 years, we always bid for large projects, but our hit rate was low. And as Mr. Nanda earlier also explained that in last 3 years, we have been able to move the needle is that our hit rate in the larger projects has become much better. And therefore, this change in the order mix and the average order size. So yes, we are getting more orders of those kinds.

Sure. And sir, your order book also is quite healthy. So what will be the execution time line for that?

So execution time, generally, all our orders, I would say, largest order also will never have a time line to execute more than 1 year. So I would say whatever order book we have, maximum orders, maximum orders we would have to complete in about 9 months. Some of the orders, maybe the ones which are very -- the largest like this INR 300 crore plus, they give us about a year. But there is no order that right now sits in my order book, which is more than 1 year.

Sure. Sir, last question. I mean, you alluded that there are a lot of large orders that they are in the market. And you also alluded to the fact that your win rate or hit rate has also gone up. And despite the fact that there has been general slowdown in private CapEx. So what has structurally changed over, say, the last few years, wherein possibly the share towards players like you has been accelerating? Because, I mean, historically, if one were to go back, I mean, the share of unorganized has always remained high. But what has structurally changed over the last few years?

See, I think in terms of the shift of the -- even if we look at MSMEs, for some reason, and I think very definitive reasons because even when an SME or MSME was putting a capital investment, INR 5 crores, INR 10 crores, INR 20 crores, they were very certain that they want it on time, and they want it from a reliable party. That is why the gradual shift to buy, like you see people buying branded goods more than ever before. So I think that has shifted. A lot more people are buying from what I would say, organized sector companies. And then I would say that our track record in the blue-chip companies was so good that a lot more came to us. Our hit rate became much better. And that is why -- and the slowdown that I think a lot of people do keep talking about, we have never really felt it at least for the last 5 years is that there is a slowdown maybe because our share keeps growing and the pie also looks to be bigger because there is also a lot of conversion that happens from the conventional building to the pre-engineered building. So that essentially, I should say, is the reason of our order book and our execution remaining very robust over the last 10 years.

I think I would just like to add one thing to this. You see, Jaiveer, also over the last 2, 3 years, these new age industries which are coming up, their size of their building requirement like microchips or renewable or lithium is very large. They are like automobile plants of the 2010 or 2005. So they are very large sizes, being 10,000, 20,000, 30,000 tons, [ INR 200 crores ], INR 300 crores, INR 400 crores kind of plants. So -- and there were a lot of buildings even in these very large plants, people wanted to do in fabricated steel. They felt that there is no pre-engineered building company in India, which is capable of doing all this, design, engineering, manufacturing, delivering on time. So they wanted to go the conventional way. Let's go for L&T or Shapoorji, give them the building, give them a INR 500 crore order and they will do it. But over a period of time, last 4, 5 years, as we were mentioning, we have tried to build up that faith by doing a lot of development and a lot of work also on the ground to show that, yes, companies like us are capable of doing that. So that has also led to a major shift. It was not that there were no INR 300 crores, INR 400 crores, INR 500 crores orders 5 years ago. But I would say that they were going more to fabricated industry going to a contractor like Shapoorji or L&T rather than a pre-engineered building. So I think pre-engineered building companies have really upped their game in that sense to convince these people. And Interarch has been a bigger gainer in that because we were the leaders in upping that game. And secondly, we have also shown that if it's a INR 500 crore order, earlier, we could be 1 of the 3 players. But gradually, we have become 1 of the 2 players who would get it. And now like we saw in the last order, we got the full order. So both these things are happening. Orders which are changing from fabricated steel to -- see, you must understand that the client feels that how can a company like Interarch do INR 500 crores unless we prove it. See, their normal method was give it to L&T and be done with it. So all these changes have happened. And I think Interarch and I don't want to name our competitors, but some of our competitors have done a great job in this. And we have all together managed to change the whole face of the industry. And I think going forward, even INR 1,000 crore orders will not be something rare. It's all up to us to show it. And Interarch has, of course, built a huge place for itself in this. And you have to show to the customers that you can engineer, design, submit everything on time, do the jobs. And then like a step-by-step business, you do INR 100 crore order, next time you can aim for INR 125 crores, then INR 150 crores. So that way we have been building up. So I think that's what's changed for Interarch.

We'll take our next question from the line of Parikshit Kabra from Pkeday Advisors LLP.

Congratulations on a great set of numbers. I was just trying to understand why has the gross margins gone up this time around? Yes, just trying to -- what is the driver for that?

On the quarter basis or year-to-year?

On this quarter.

See, in our business, we have seen for many years that every quarter is -- like the first quarter is normally the worst for us out of the 4 quarters. First, second quarters are lower, then third quarter starts picking up and fourth quarter is invariably the best for many reasons. Of course, the climate is the best in those regions. A lot of companies want to finish their projects in March. So a lot of our gross revenue also depends on the quarter that we are looking at. And the margins also go up as the sales go up in any of these quarters. Invariably, our fourth quarter is better than third and third is better than first and second.

Okay. So -- but then at an overall level also this year is much better than last year. What would be the reason for that?

I think we have built up our capacity. This is a lot of business to do with your capacity and your ability to take orders and deliver. So I think as we built up, like last year, we added Andhra Pradesh plant, we upgraded the other plants. So we added a lot to our capacity to build up. And it's a plan that we made, we would say, in 2023-'24 when we said that in '28, we will do INR 2,400 crores turnover. So we had to start building our capacities. And in the business environment that exists today, I don't think the orders for us is a problem to get. So we are trying to build our capacity, and that capacity has helped us get more orders. So that is another reason that we have been able to do, and that is what we are banking on, because if we don't have capacity, naturally, we can't take the orders. We have to achieve INR 2,400 crores, yes.

Sorry, sorry. Please continue.

So if we have to achieve INR 2,400 crores by '27, '28, we have to achieve 17%, 18%, 20% growth in the next 2, 3 years to do that. So we are going for capacity order situation, we do not see as a problem right now.

I understand. So actually, my point was that this is not -- this gross margin expansion is not because of steel price fluctuations, and this is purely an operating leverage play that as your capacity utilization is increasing, your gross margin has increased.

Yes. In fact, in this year, the steel prices have gone down. That's why you see our quantity is that -- quantity is a little higher than our revenue. Steel prices have gone down. But steel prices don't really affect us too much in terms of profitability in that sense. But it is definitely not because of steel prices this year, definitely steel prices moved down throughout the year.

We'll take our next question from the line of Rahul Kumar from Vaikarya.

A couple of numbers questions. So for this quarter, what led to the sharp increase in the other expense besides the volumes [ split ] increase?

Other expense, Mr. Bansal, Anil...

Yes, yes. So sir, the other expenses constitute of basically our erection and job work charges, our stores and spares, freight and forwarding. And the growth in the other expenses is almost in the ratio of growth in sales.

Okay. So there are no other...

There is no extraordinary. There is no unusual thing, basically traveling, freight and forwarding, stores and spares. Major chunk of that is erection, installation and job work.

Okay. And second question which I have is more on the volume side. What kind of volume growth do we expect in FY '26? And do we expect a similar seasonality which we had seen in FY '25 to play out in FY '26 as well?

Yes, we are pushing for a growth of about 17.5% in the coming year. And we have the order book for it. So we have to just execute the order book, and I think we should be on track. And of course, with the addition of capacity in Andhra and in North India, that should give us the basis for achieving that turnover. So we are aiming for a 17.5% growth and maybe a similar in the profit before tax and EBITDA. So that's what we are aiming for. And then hopefully, 20% in the following year because then we'll have more capacity in place.

And in terms of seasonality...

Rahul, I request you to join back the queue, please. We'll take our next question from the line of [ Raunaq Sabharwal from PhillipCapital PCG ].

Congratulations on a fantastic set of numbers. Just 2 questions from my end. What was the volumes in Q4 and FY '25 as a whole? How would they compare to FY '24? And second question was under current assets, the line item, other financial assets, which has substantially increased. Can you please share some light on that?

On that second part, Anil, can you do -- -- the volume that we have done in this year is 124,000 tons compared to 109,000 tons last year. So growth of 13.4%.

Right.

Okay. And the other item, Anil, can you answer?

What was the second question, sir?

Yes, sir, what was the second question? Can you please repeat?

Yes. So in current assets, there is a line item, other financial assets, which has substantially increased from INR 43 lakhs to around INR 94 crores. What is that item?

Other financial assets. Unbilled, we have to take care of Ind AS 115 is basically based on completion method. So you book that.

No, no. I think first is that it's increasing of INR 43 lakhs to INR 1.49 crores not INR 94 crores. Right? Other financial assets...

Other financial assets under current assets, financial investments.

Yes, under financial assets. Yes, it's gone up from INR 43 lakhs last year to INR 1.49 crores.

Okay. I'll just recheck that and get back.

So we can give the details after this call because readily, we don't have the micro details in my front. So we can take this immediately after this call.

It's not INR 94 crores, yes.

It's not INR 94 crores. I just saw, but I will give you the breakout of it.

We'll take our next question from the line of Rohan Vora from Envision Capital.

Congratulations on the good set of numbers. Sir, I have 2 questions. The first question was as our contract duration keeps on increasing, we go for larger contracts. How do we plan to handle the raw material price volatility? Are these going to be more variable contracts? Or what is the plan on that? That was one. Sir, second, I see that our gross margin has -- for the full year has gone up by 200-plus basis points. However, not everything has flown down to the EBITDA margin. So other expenses have gone up as compared to the last year, even as a percentage of sales. So what is the reason for that?

Okay. So for the steel pricing, you see, as you get into the larger orders, of course, the idea is to try and let the customer take the risk and get variable pricing. But in more and more cases, the customer is not ready to do it because he feels that prices are not varying too much today. The price variation is very nominal, plus/minus both ways. So we don't want to get into all this hassle of checking prices and then going through audit, et cetera. So the important thing is that, see, in variable pricing, the customer takes the risk for the steel pricing increase and decrease. So he will also demand from you a price accordingly when you bid. If he expects you to take the risk, then you have to sort of plan as to how much price do you want to build into your price to take that risk. Since we are in touch with a lot of the steel companies, we carry 2 months of stock, 2 months of material is always on order with them, 2, 3 months visibility we normally have from suppliers. So we build in a little bit of price increase into our pricing. So like I've mentioned before also to in other investor calls is that, see, raw material -- steel is a raw material for us. And like everything else, we have to learn to manage it. Of course, we can pass on the risk if we can, but sometimes we can't, and we have to manage it. So it's not that steel prices going up will always be hitting us in the prices. We have to manage it. We have to make sure that we have bid for it and built in the prices. Yes, the only time that things can go very bad is like what happened after COVID and Ukraine war that prices shot up by 50%, 60%. So that is very rare in the steel industry. I think it's once in the last 15, 17 years. And that time, even though we had -- did not have variable pricing, but we went to every customer and they all agreed. So there was no question of customer does not expect that you have planned for that kind of a thing. So I think over a period of time, we have learned that if we can plan for it, we bid in the price and we ask the customers to pay that price. And if we ready to take the variable pricing, if we say, no, your price is too high, we say, okay, then you take the risk and we'll give you a lower price. But we have managed it reasonably well, I think, in the last 1 year, while there has been like prices went down and this thing just started going up towards the end of the financial year, I think we have managed it fairly well. But we have stocks and we have orders with them. So 4 to 5 months material is already at a fixed price for any time.

Understood, sir. And sir, on the second question...

Second part is, Anil, did you hear that second part on the other -- while the margins have gone up, why the other expenses have gone up more?

So basically, sir, this major chunk -- the share of that other expenses is erection, installation and job work charges and there are power and fuel and spares, stores and spares. And the benefit of -- and of course, there is an employee cost of ESOP, the other expenses overall. So the percentage increase in other expenses, if I'm not wrong, is around 15%, 16%. The turnover growth is around 13%.

Does that answer your question? Yes.

Yes. So sir, just asking...

Rohan, I request you to join back the queue, please.

Okay.

We'll take our next question from the line of Ninad Sarpotdar from Aditya Birla Money.

I have 2 questions. First is on the capacity and the utilizable capacity side. Sir, since we had land in, I mean, Gujarat, why did we -- I mean, what was the ideology behind buying the new parcel in Andhra itself for the heavy structures? And on the Page #32 of your slide, when you have given the utilizable capacity for the Phase 2 of Andhra and Kichha expansion, ideally, in your historical capacities, the ratio hovers to around 83% to 85%. But for the new capacity, it's around 80%. So being at the same site, I expect more synergies. Why is the ratio lower?

Okay. See, Andhra land came up to us as a very good opportunity a few months ago, because it was a plot right next to our existing plot. So anyway, we had to plan for another -- see, we have to build 2 new plants in the -- one starting this year and one starting next year to meet our target -- targeted sale of INR 2,400 crores of that capacity that we need for that by '27-'28. So we had an option that either we go to totally another location. But because this opportunity came up, we took it. And that has its own advantages because it's already where we are. We know the industry, the labor, our own management is the same. We don't need a new management team. So we felt that it is a good opportunity to take up and buy that land. And I think we are going to start that before Gujarat because it is much easier for us to start there since we do not need a new team at all, and we have to build fast. So that was the primary reason why we went in for this Andhra plant. And -- but anyway, we were looking for another location because we had to plan that where will we start the plant next year. That had to be done because normally, the land acquisition takes a little longest time in the whole plant setup. So that was very critical. See, the lower capacity might be because we are just -- when we set up a new line, we are not sure that -- you are right, 100% right, that it should give us more capacity. These newer plants are a little bit more automated, should be more productive. But we have just been taken it on a little conservative side that in the initial stages, it might take more time to reach the full capacity. So it's not like an on-off switch that we put it on and immediately the full installed utilizable capacity comes into play. It can take a few months or 8, 9 months for it to cross -- it should cross it. What you are saying is 100% right. It should cross it. But we have been a little conservative because it's a new plant.

Understood. So this is not like a hard cap on the utilizable capacity. Just indicative...

No, no. We are always trying to increase it, yes.

Yes. And on the second question, sir, this INR 1,650 crores of approximately -- approximate order book that you have, how are the margins on this? Are these better than what you are doing currently? And do we see some margin pressure when the new capacity comes live? So in the short term, will we see some margin pressure on the operating front?

See, we are trying to make the same margins. No, we don't try to take orders -- I mean, there's a certain margin that we have in mind, which we need to earn. Below that, we would not go out and take the order unless it's a totally some situation where we have no other choice because the customer is very good, customer or something. But normally, we do not accept orders where we are not totally safe with the customer, not safe about our money being coming in and not having a good margin. But we feel that as the turnover goes up, as the order books go up, we should be able to earn a better margin. One is what you aim to make. And one is that due to your operational leverage and your better working and more productive working because the order sizes get larger, we should be able to earn a better margin. That's what we hope that we will earn a better margin rather than trying to make one because the competitive environment is still there. The environment is still very competitive. And therefore, sometimes you can't ask the customer to pay you more. You have to take it at a competitive price. But we are certainly in a position to earn a better margin, I would say, that is our aim.

Sir, about the pressure in the...

Ninad, I request you to join back the queue please.

There is no pressure -- there is no pressure as such at all.

We'll take our next question from the line of Aasim from DAM Capital.

So actually, I had a more basic question around the EBITDA margin, the percentage EBITDA margin number. I think in recent calls, you have talked about 10% EBITDA margin is what you will approach soon basis the current unit economics. I just want to know what potential levers are there with you today or whether once the new plants come in to take that percentage number above the 10% mark?

I think I mentioned this earlier also in my -- one of the questions that we always try 3 levers. Besides the customer, I mean, getting money -- more money from the customer is, of course, a lever, which everybody wants, but it's not in our hands. See, number one is that the larger the orders that we do, we can earn more money because the kind of effort and cost involved in a, say, 10 INR 10 crore orders is more than a single INR 100 crore order. So you can earn more because you can finish it faster, the customers are better, production is better. So one is, of course, that the larger the orders you get, you -- hopefully, you will earn a better EBITDA margin going forward. Second is your own internal economies that, again, as the orders get bigger, the internal economies also become more into play because you can again use your production, cash flow, getting money from large customers becomes easier. So scrap, you can order material to sizes, as we call cut to length so that you can make more -- less wastage, et cetera, et cetera. And on the third side, what we are doing is for the other, our production processes, et cetera, to automatize and to do better bargaining with our suppliers to have more strength. The more orders we do, the larger ones business we have, our power to get better pricing from our suppliers, whether it is steel, whether it is paint gets better. So these 3 things help us when we do more business.

So then basically, you should be -- since you are now getting larger orders and you are like technically almost the second largest player maybe in the Indian market, you should be crossing that barrier of 10%, maybe in the next 2, 3 years, but should definitely cross, right? That 10% won't be like a cap kind of a thing.

Well, if you look at -- I mean, EBITDA is somebody -- everybody's favorite word. But if you look at our profit before tax, it is higher than the EBITDA because we have -- we earn money, we don't have any debt. So it is more or less pretty similar. We are, I think, crossing the 10%. If I'm not mistaken, I think EBITDA, we have crossed -- we have touched 9.3%. We've got 9.3% in March '25 and 9.8% profit before tax. So I think more relevant for us would be profit before tax. So it's already 9.8%, and in the quarter, we did do about 10.8%. So yes, we are aiming for it, and we break the single-digit barrier.

Sorry, may I give the right number, sir? EBITDA margins for latest quarter is 10.5% and PBT margin is 10.9% for the Q4 FY '25. We crossed -- we have done better...

That what I've said. For the year, it is 9.8%. And for the quarter, it has already crossed 10%. So we are very hopeful that it will cross, but you want to be in that ball game until we actually start achieving it because we have to achieve it. We are not going to get it from our customers. That is what we are trying to do. But certainly, our aim is to go much higher.

Sure. Got that. And just 2 follow-ups around this bit only. One, does having...

Aasim, I request you to join back the queue, please, as we have other participants waiting for their turn.

This was just one question. I continue to ask my second question. Can I go ahead with that?

Okay. Go ahead, go ahead.

Sorry, I'll just be very brief. So within the margin opportunity, so right now, does erection and installation also helps you boost that margin bit? And secondly, whenever you do exports, especially the U.S. and Canadian market, we did talk about turnover being higher, but does that also help move the margin lever higher?

For exports, the volumes are very low. Margins are higher per order, but the volume is very low to make an overall effect right now. But like I said, it's an area we are getting into. And hopefully, it will have a substantial revenue turnover in a few years going forward. We are trying to break through in some large orders there also, but I can't say anything about it in that sense. And sorry, your first part was?

Erection and installation, be part of the order...

Erection and installation is normally a pass-through. We just earn enough to cover our costs, internal cost and the outsourcing. We try to make our margin on the totality of the project rather than on each bit because the customer gives us the order on a full building. He doesn't give us a breakup that this is what I will do. So we try to make an overall margin. But do our costing -- when we do our costing, erection is more or less an erection plus x percentage to cover our internal cost as a cost.

We'll take our next question from the line of Nikhil Purohit from Fident Asset Management.

Congrats on a great set of numbers. My first question is, sir, what was the FY '25 CapEx amount? And what is the guidance for the FY '26 CapEx?

See, I think we have spent, if I am not mistaken, about INR 65 crores on CapEx in this financial year. And in the coming year, I think we are aiming because it will overlap the year, out of the INR 65 crores, some was work in progress. Some will be spent this year to finish Andhra Phase 2 and the Kichha last -- the latest line. The new plant, which will straggle the financial year, but will probably -- we will start in July, August, and it should go up to next July and August, will be about another INR 80 crores we are anticipating. So it could be mostly in this year, some in the next year, but that is our plan to spend another INR 80 crores besides the INR 70 crores, INR 80 crores we have spent.

Okay. So FY '26 will be around INR 80 crores?

Yes, because some will straggle from last year coming forward and some will come from -- yes. So it will straggle the year, but plan is this. Each one of our new plants cost us approximately INR 70 crores to INR 80 crores in capital cost.

Got it. And just one another question. So we've mentioned doubling of revenue by FY '28 from the base of FY '24. Yes, '24 to '28. So based on that, the revenue guidance comes to around INR 2,600 crores. So are we revising it downwards or...

So no, we were saying that approximately, but we were mentioning a figure of INR 2,400 crores to INR 2,500 crores because steel prices can also change. We said that is our aim. So we are aiming for about INR 2,400 crores to INR 2,500 crores. And I think we are building out capacity for that to achieve it. We should be able to achieve INR 2,400 crores to INR 2,500 crores by '27-'28.

Got it. Okay. And just one last bookkeeping question. What were the bank guarantee charges for this quarter?

Bank guarantee?

Bank guarantee charges for quarter 4 FY '25.

Anil, do you have any separate figures for bank guarantees?

Yes. So the weighted average bank guarantees, which we take is 0.7% per annum, 0.7% per annum. These are the charges which we pay to the banks, weighted average.

Ladies and gentlemen, due to time constraints, we'll take that as the last question for today. I now hand over the call to management for closing comments. Over to you, sir.

Thank you very much, everybody. Thank you for joining. And if anybody has any more questions, you can always reach out to us. I think most of you know us our CFO or Anil. Please reach out to us if we can help you in any other way, give you more questions, answers to more questions, clarifications, host you to any of our plants to visit our sites. Please call to SGA or to AMBIT, and we'll be very happy to host you and give clarifications for any queries that you may have left still. Thank you very much for joining, and thank you for all your good wishes and congratulations. We look forward to future good investor calls. Thank you very much.

Thank you, everyone.

And then thank you, SGA.

Thank you, sir. On behalf of AMBIT Capital Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.