Interarch Building Products Ltd shares declined sharply on Thursday, May 14, with the stock falling nearly 9% to ₹1,858.40 on the NSE despite the company reporting healthy revenue growth in the March quarter.
The stock came under pressure as investors focused on the lack of operating leverage and margin expansion even as revenue continued to grow at a steady pace.
Interarch Building reported Q4FY26 revenue of ₹504 crore, up 8.7% year-on-year from ₹464 crore in the corresponding quarter last year.
EBITDA for the quarter rose 8.2% to ₹53 crore from ₹49 crore, while EBITDA margin remained flat at 10.5%.
Net profit, however, slipped 5.4% year-on-year to ₹37 crore compared to ₹39 crore in Q4FY25.
Market participants appear to be concerned that while topline growth remains healthy, operating profitability has not yet improved meaningfully.
Analysts tracking the company noted that outsourced execution costs, including erection expenses, job work and other operating expenses, increased at a faster pace than revenue growth during the quarter. This has limited operating leverage benefits despite higher business activity.
The pressure on margins is largely attributed to the company’s ongoing capacity expansion phase, with newer manufacturing facilities still under development.
According to analysts, margin improvement could become more visible once the Gujarat and Andhra Pradesh plants become operational and more execution shifts in-house. This is expected to reduce dependence on outsourced activities and improve cost efficiencies over time.
The company operates in the pre-engineered buildings and steel structures segment, where execution costs and project mix can significantly influence quarterly margins.
Despite the near-term pressure on profitability, analysts continue to see long-term growth potential for organised pre-engineered building players due to rising industrial capex, warehousing demand and infrastructure-led construction activity.
At 9:30 AM, Interarch Building shares were trading 8.79% lower at ₹1,858.40 on the NSE, compared to the previous close of ₹2,037.60.
Disclaimer: This article is for informational purposes only and should not be construed as investment advice.