Company Overview

Shankara Building Products is among one of the leading organised retailers of home improvement and building products in India based on a number of stores. It operates under the trade name Shankara BuildPro. As on December 06, 2017, the company has operated 124 Shankara BuildPro stores spread across 9 states and 1 union territory in India. Further, the company looks to grow its retail store network by 15-20 every year.  The company cater to a large customer base across various end-user segments in urban and semi-urban markets through its multi-channel sales approach, processing facilities, supply chain and logistics capabilities.


The company is involved in unique kind of business which mainly involves the selling of home improvement and building products.

The company work in 3 different segments

  1. Retail: The company sell a wide range of manufactured products such as structural steel, cement, TMT bars, hollow blocks, pipes and tubes, roofing solutions, welding accessories, primers, solar heaters, plumbing, tiles, sanitary ware, water tanks, plywood, kitchen sinks, lighting and other allied products were offered in different brands (Johnson, Sintex, Uttam Galva, Uttam Value, Futura, APL Apollo, Astral Pipes and Alstone). Some other products include steel pipes, colour coated roofing sheets, bright rods, galvanized strips and cold rolled strips under its own brand CenturyRoof, Ganga, Loha, Taurus and Prince Galva.
  2. Enterprise: The company also offers enterprise sales to large end-users, contractors, and OEMs and also provide customized solutions to enterprise customers through their bespoke steel products such as bus bodies, scaffolding solutions and other allied products.
  3. ChannelCompany is backwards integrated into its processing facilities in select building products like steel pipes, colour coated roofing sheets, bright rods, galvanized strips and cold rolled strips. They sell these products under their own brands like CenturyRoof, Ganga, Loha, Taurus and Prince Galva through their retail and branch network. The company own processing facilities help them to offer customised solutions and meet quality standards as well as timely delivery requirements of their customers.

Distribution Channel

To cater to its customers, the company own a robust logistics network. The company have a warehousing network spread over ~585,000 sqft. Each warehouse has the capacity to serve over 10 stores. This further helps to deliver cluster-based retail strategy in a more
efficient manner. In addition, The company has own fleet of 44 vehicles which enables it to meet timely local delivery requirements. 
A large part of the company warehousing backbone is owned which ensures the stability of operations. It also helps in catering to the requirements of its retail outlets.

Company processing plants

The company current processing capacities stand at ~324,000 tons operating at a capacity utilization of ~94%. The processing facilities are spread over 12 locations – Hyderabad (two), Bengaluru (four), Hubli, Surat, Chennai, Coimbatore, Pune and Vijayawada. Hyderabad and Bengaluru house the key processing facilities. Most of these facilities can be scaled in a modular fashion with a limited capital
requirement. With little investments and some process and equipment fine-tuning, the company can achieve ~10-20% increase in volumes.

Growth & Investment in the sector

Low interest rate environment coupled with government’s initiatives towards housing through schemes like Smart Cities Mission, Atal Mission for Rejuvenation and Urban Transformation (AMRUT), Pradhan Mantri Awas Yojana (to provide over 2 crore affordable houses by 2022) and interest rate subsidy of 3-4% for middle income groups on housing loans bode well for the building products sector. Home
loans of quantum less than ` 10 lacs have shown a robust annual growth rate of 23% over the last five years. Even more encouraging is the fact that this growth has come without deterioration in asset quality. Maharashtra, Madhya Pradesh, Gujarat, Tamil Nadu and Andhra Pradesh are the top five states with the highest number of loan accounts meant for affordable housing.

The Indian building products industry is estimated to be approximate ` 5 lac crore in size for some of the key identified segments. It is expected to grow at a CAGR of over 8% over the next few years. India has a significant shortage of over 100 million housing
units. Increasing population, young demographic profile, rising affordability with higher income levels, a trend of nuclearisation and increasing frequency of renovations is fuelling the fundamental aspirations of households towards housing and housing upgrades.

The growth outlook for the coming year looks positive with banknote remonetisation nearly complete and a number of government initiatives to boost output, especially in the housing sector. Credit growth in the affordable housing sector has been strong. The political situation domestically looks stable and the fiscal consolidation path is being adhered to. The capital markets are buoyant and the Indian rupee has appreciated in the last few months of the fiscal. Global growth prospects are also improving and should further boost Indian growth prospects.

Financial Statements

Balance Sheet

Profit and Loss

Cashflow statement


  1. Company Profits has been increased over last 3 years with a CAGR of 28%.
  2. The company is able to get money from its customers on time as debtor days have been constant during last 3 years.
  3. The company is consistently increasing its operating margins.
  4. The company is reducing its debt and currently, debt/equity is 0.56.
  5. The company is consistently investing in itself.

Promotor holding

As the company is recently listed, there is not much of information in public domain. Here is a snapshot of the shareholding of 3 quarters of 2017. Since IPO, promotors have not changed their stake in the company, which is a good thing.

Institutional Holdings

A lot MFs have invested heavily in the company. There are very bullish on the stock as given the niche sector in which company works.

IPO response

The company received tremendous response from investors as its IPO was subscribed 41 times.


Currently stock hovers around Rs 1800. The stock came down 20% after reaching 52 weeks high of Rs 2270. We see great future prospects of affordable housing and the same has triggered the stock to deliver the maximum of 219% return in less than a year. The stupendous rise in the price of stock difficult to explain with the growth of the company. But the brokers are quite bullish on the stock. Edelweiss has given a buy call with a target of 1575 in 06, Sep 2017. ICICI Direct also has given guy rating with a target of Rs 1725.  The stock is trading with a P/E of 61.22 whereas Industry P/E is 58.28.

It is very important we should know what we are willing to pay for the stock. The company has shown a stagnant sales growth, a net profit less than 3% of sales and a debt/equity of 0.66, there is nothing too exciting about the financial performance.

The stock has already factored in 292% increase in price since IPO. It is very difficult to say where the stock price will span out in future.  I would recommend you to keep an eye on future earnings growth of the company and judge based on that growth.

Also to add, a lot of mutual fund houses has invested in Shankara because of its niche dominance. There are no listed peers in the same space and it is added advanage for this company.

Read: Interested in a Multibagger stock

Stock performance

I hope this article gives you an idea about the company and its future prospects.



ICICI Direct Research Report

Shankara RHP

Shankara Screener Excel

  • 1