Preponing expansions anticipating high demand
About the stock: Interarch Building Solutions (INTBUI) is one of leading turnkey pre-engineered steel construction solutions (PEB’s) providers in India. It commenced its operation in 1983, subsequently got listed in 2024.
• It is the 2nd largest player with capacity of over 2 lakh MT with a market share of ~7% in the PEB industry in India.
Q3FY26 performance: Interarch Building Solutions reported 44% YoY growth (up 6% QoQ) in revenues at ₹ 523 crore for Q3FY26. Gross margins contracted 68 bps YoY (down 114 bps QoQ) at 38.1%. However EBITDA margins improved 114 bps QoQ (flattish YoY) at 9.6% led by better absorption of fixed costs led by higher revenue growth. Consequently, EBITDA was up 43% YoY (up 21% QoQ) at ₹ 50 crore. Adjusting for one-off exceptional items of ₹ 3 crore, adjusted PAT was up 44% YoY (up 26% QoQ) at ₹ 41 crore.
Investment Rationale
• Facilitating capex with QIP to fast-track capacity expansion in lieu of strong demand: With current capacity utilization near peak (~10% headroom), Interarch is accelerating expansion in Gujarat and Andhra Pradesh through a ₹ 100 crore QIP aimed solely at preponing capex. Heavy structures capacity is slated to double from 20,000 MT to ~40,000–45,000 MT by FY27, while PEB capacity will increase from 160,000 MT to 240,000 MT with the commissioning of two Gujarat plants. Consequently, the company’s annual capacity in terms of revenues is slated to increase from current ~₹ 1900-2000 crores to ~₹ 3400-3500 crore by Q1FY28. Hence, the company is comfortable placed in achieving ₹ 2500 crore revenue guidance for FY28, while it has upped for FY26 (~₹ 1900 crore from ₹ 1720+ crore) and FY27 (₹ 2100+ crore from ₹ 2060 crore).
• Healthy order with strong pipeline: The company has maintained a healthy order book of ₹ 1685 crore (as on January 31, 2026) despite strong execution during 9MFY26 (revenues up 41% YoY at ₹ 1394 crore). It has a robust order pipeline with a P1 (advance stage) pipeline of ~₹ 1,200 crore (20-22% hit rate) and P2 pipeline of ~₹ 1,000 crore. The pipeline is well diversified across various sectors with data centres and multi-storey institutional buildings contributing ~15% of the pipeline. It is also focusing on exports (two orders bagged from Myanmar and Ghana) eyeing African and North American continents, which typically offer higher margins and lower execution risk.
Rating and Target Price
• We retain BUY rating with a revised Target Price of ₹ 2850/- i.e. 25x P/E on FY28E.
