Interarch Building Solutions targets growth through accelerated capacity expansion and North American JV

Investment View and Valuation

ICICI Direct Research’s August 10, 2026 result update on Interarch Building Solutions retains a BUY rating and raises the target price to Rs 2,300, valuing the stock at 22 times FY28E EPS. The broker’s thesis is centred on accelerated capacity additions to capture rising demand for pre-engineered building solutions, supported by a strong order book, expansion into heavy structures and a new export-oriented joint venture.

Interarch Building Solutions is one of India’s leading turnkey pre-engineered steel construction solutions providers. The report describes it as the second-largest player in the domestic PEB industry, with capacity of more than 2.2 lakh MT and an approximately 7% market share.

Q1FY27 Financial Performance

In Q1FY27, operating income rose 20.7% year-on-year to Rs 460 crore, driven by 17% growth in volume production. EBITDA increased 24.6% to Rs 39 crore, while EBITDA margin improved by 27 basis points year-on-year to 8.6% despite a sharp increase in steel prices.

Adjusted PAT was broadly flat at Rs 28 crore because other income fell to Rs 3 crore from Rs 10 crore in Q1FY26. PAT margin declined by 131 basis points year-on-year to 6.1%. Revenue was also affected by seasonality, monsoon conditions and project or site clearances.

Growth Outlook and Order Book

Management maintained its FY27 revenue guidance of Rs 2,150–2,200 crore, implying approximately 18% volume growth to around 1,90,000 MT. This includes Rs 100–150 crore from heavy structures. Management raised its FY28 revenue target to Rs 2,700 crore from Rs 2,500 crore and expects EBITDA margin of 9.5–10% as utilisation and operating leverage improve.

The order book stood at Rs 1,864 crore as of July 31, 2026, including a Rs 165 crore order from a major energy company. Management is targeting average order inflows of around Rs 600 crore per quarter for the next three to four quarters.

Capacity Expansion and Capital Expenditure

Gujarat PEB Phase I, with 20,000 MT of capacity, commenced operations in July 2026, while Phase II is expected by October 2026. The 80,000 MT Andhra Pradesh heavy-structures facility is being commissioned in phases, with additional phases expected by March 2027 and December 2027.

Annual capacity is expected to rise from 2,21,000 MT to 3,36,000 MT by FY27. Management plans capex of Rs 129 crore in FY27 and Rs 133 crore in FY28. It is evaluating a Rs 250 crore QIP, increased from Rs 100 crore, to fund the Andhra Pradesh heavy-structure expansion, a new Gujarat plant and the ER Steel joint venture.

North American Joint Venture and New Growth Segments

The 76:24 joint venture with Canada-based ER Steel Inc. will manufacture Open Web Steel Joists for North America. Interarch will handle manufacturing, while ER Steel will undertake marketing, collections and installation.

The facility is planned at a peak capacity of 15,000 MT, with Phase I capacity of 4,000–5,000 MT targeted by July 2027. Management expects peak revenue of US$22–23 million within two to three years, with EBITDA margin above 20%. An offtake arrangement is intended to provide initial commercial visibility.

New-age industries, including data centres, electric vehicles, semiconductors, renewables and lithium batteries, account for around 35% of the order book. Buildings contributed 10% of Q1FY27 revenue. Export revenue was Rs 10–12 crore in Q1FY27, and management is targeting exports at around 10% of turnover over the next one to two years.

Broker Estimates

Key Risks

• Dependence on private-sector end-user capital expenditure.
• Sharp volatility in steel prices.
• Minimal entry barriers in the industry.