Shankara Building Products hits new high; zooms 110% against IPO price

The stock was up 7% at Rs 968, extending its Wednesday's 8% rally on BSE on back of heavy volumes

Shankara Building Products (SBPL) was up 7% at Rs 968, extending its Wednesday’s 8% rally on BSE on back of heavy volumes.

The stock of retailer of home improvement and building products is trading at its highest level since listing on April 5, 2017. It has zoomed 110% against its initial public offer (IPO) price of Rs 460 per share. The company had raised Rs 345 crore through public issue.

A combined 202,745 shares have already changed hands on the counter in first 10 minutes of trading against an average sub 200,000 shares were traded daily in past two weeks on BSE and NSE.

SBPL is one of India's leading organised retailers of home improvement and building products in India, based on number of stores operating under "Shankara Buildpro".

SBPL operates under three segments, retail, enterprise and channel, each contributing 39.7%, 32.2% and 28.1%, respectively to the net revenue. Through its subsidiaries, it also has processing facilities of 0.3mn tonnes and produces various steel products. Output from these facilities is monetized via the three operating segments.

SBPL has built a robust logistics network of 56 warehouses aggregating 0.59 million square feet and also operates a fleet of 44 owned trucks ensuring stability of operations. The robust back-end infrastructure has resulted in minimising inventory cost and maintaining optimum in-stock levels.

“The Company’s operating margin has increased from 4.6% in FY2014 to 6.4% in 9MFY2017 due to a change in revenue mix towards retail business, which is a higher margin business (margin of 9-10%) compared to institutional business like channel sales and Enterprise segments, which has low margins (around ~5%). Going forward, we expect margins to improve on the back of higher revenue from retail sales,” Angel Broking said in IPO note.

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