Shankara Building Products Ltd. share price target

Closure of loss making stores to improve profitability For H1, retail business revenues de-grew ~30% YoY to | 492 crore with Q2 witnessing ~18% YoY decline at | 283 crore. The company, which reported EBIT losses in Q1, returned to the black with EBIT margins of 6% in Q2 (down 200 bps YoY. We highlight that Shankara has rationalised its stores with strong focus on higher revenue share and healthier margin. The process has reduced the store count (to 115 at the end of Q2FY21 vis--vis 129 at the end of Q2FY20) but increased the average ticket size (to | 30,640 in Q2FY21 vis-vis | 28,156 reported in Q2FY20). Post an expected decline of ~18% in...

Retail business revenues de-grew 10.5% YoY to | 359.6 crore (~56% of overall revenues) in Q1FY20. EBIT margins of the business segment expanded 83 bps QoQ to 8.1% in Q1FY20. As of Q1FY20, SBP has 129 stores (111 stores on lease basis), with total area of ~5.56 lakh sq ft. The average rental cost for the stores was at | 20.2/sq ft/month. The company is currently not looking at any immediate expansion/addition to its overall retail store count as its near-term focus is to increase retail business at each store level. With this, the management expects revenue growth to remain flattish in...

Retail revenues de-grow 6.9% YoY in Q4FY19 Retail business revenues de-grew 6.9% YoY to | 351.9 crore and contributed ~57% to overall revenues in Q4FY19. EBIT margins for this business contracted 350 bps YoY to 7.3% in Q4FY19 on account of volatility in steel prices. Shankara currently has 134 retail stores and is looking to close down six stores (~21,300 sq ft) mainly in Gujarat as the management does not see Gujarat as its strategic focus. Overall, the company reported same store sales (SSS) de-growth of

Shankara Building Products' (SBPL) topline de-grew 3.1% YoY to | 605.3 crore, much less than our expectation of | 696.4 crore on account of revenue de-growth in the channel & enterprise division...

NEGATIVE SURPRISE: Change in company's business strategy Shankara building products in its conference call has updated on the business strategy of achieving higher revenue growth in retail segment but at much lower margins which came as a negative surprise. It is transitioning into a low price retailer with focus on plumbing and sanitaryware as key growth drivers in the retail segment. Company expects healthy growth in the retail segment and...

Management's sharp reduction in retail business margin guidance drives another steep cut in our earnings estimates. It expects margins to be lower due to its strategy to offer best prices, shift to cash sales, and weakness in processing margins. Despite the focus on aggressive pricing, retail growth guidance of 25% does not indicate any material benefits, which results in the sharp reduction in our estimates....

The management of Shankara Building Products Ltd (SBPL) now believes that the company's strong future prospects lies in consolidating its position in the industry rather than aggressive store expansions. It has hence cut its store expansion target to 8-10 stores in FY19 (v/s 15-20 stores guided earlier) and aims for a payback period of 3 years. Also, SBPL shall be putting its core focus on select product categories like plumbing & sanitaryware products to achieve growth ahead. It is also bringing strict financial discipline measures like reducing debtor days,...

Shankara reported a weak set of Q2FY19 numbers The topline grew 12.6% YoY to | 643.9 crore on account of 25.8% YoY growth in retail division revenues to | 343.3 crore in Q2FY19 EBITDA margin contracted 235 bps YoY to 4.8% mainly due to a sharp contraction in EBIT margins of channel & enterprise division (1.7% EBIT margin in Q2FY19 vs. 5.5% in Q2FY18). However, EBIT margin for retail division was at 9.7% in Q2FY19 vs. 10.5% in Q2FY18 The bottomline de-grew 47.2% YoY to | 9.1 crore mainly on account...

Shankara has reported its worst results since its listing on account of poor performance across all segments.

Sales at INR 785 cr grew by 33% YoY and were ahead of our expectations of a 24% growth YoY.

Shankara Building Products Ltd revenues were much ahead of our estimates but margins came lower than expectations due to sharp decline in enterprise and channel segment margins. Company is looking at higher revenue trajectory and in this process, margins may get impacted to some extent in the interim. However, more clarity would emerge in coming 1-2 quarters on the trade-off between higher revenues and slightly lower than expected margins. Though Q1FY19 was a strong quarter, company has mentioned that...

Sales at INR 760 cr grew by 27% YoY and were way ahead of our expectations of a 10-15% growth...

Sales at INR 624 cr grew by 15.5% YoY and were in line with our expectations of a 15-18% growth YoY as the base was low. However adjusted for excise, revenue has grown by 30% on a low base, led...

Shankara Building Products' (Shankara) topline grew 15.5% YoY to | 624.6 crore and was above our estimate of | 585.8 crore mainly on account of higher-than-expected revenues in the retail division Retail division revenues grew robustly at 32.2% YoY to | 298.9 crore (our expectation: 23% YoY growth to | 278.2 crore). Furthermore, same stores sales growth in the retail division was at 22% while adjusted for GST/excise impact, it was at 37% EBITDA margin contracted 30 bps YoY to 6.5% and was below our...

Shankara Building Products (SBPL) recently opened its 123rd store under its Shankara BuildPro' brand in Bangalore. The store admeasures ~8399 sq ft and houses a diverse basket of product offerings. With this store, the company has opened its 17th store in YTDFY18 and is in line with its target of opening 15-20 new stores every year. Over the next four to five years, the company aims to almost double its store count to 200 stores vs. 106 in FY17. Additionally, the company also aims to upgrade its old stores. Currently, the company has already upgraded 40 old stores and aims to...

Sales at INR 571 cr optically degrew by 5% YoY. However, adjusting Q2FY17 for excise, growth was 7% in Q2FY18 led by a 15% growth in retail. While optically EBITDA margins look to have...

Our experts provide an insight on how - Shankara Building Products is steadily utilising the opportunity present in home improvement and building products and emerging as a retail channel leader

Shankara Building Products (Shankara) is a leading organised retailer of home improvement and building products with presence across retail network of 114 stores in 9 states. The...

We recently met Sukumar Srinivas (MD) and Siddhartha Mundra (CEO) of Shankara Building Products (SBPL) to gain an insight into the business model and long term prospects. SBPL is one of the leading organised retailers of home improvement and building products in India based on number of stores, operating under trade name Shankara BuildPro'. As of June 2017, the company operated 112 stores across nine states and 1 union territory. SBPL serves home owners, professional customers and small enterprises through retail stores. Under retail operations, the...