Capacity expansion by Interach with my estimated growth of 18 to 24% in revenue, approx .1800 cr. order book with possibility of Operating leverage visible in next two years, It will be interesting to see who will lead this small sector.
TAM itself is expected to increase with increase manufacturing activity.
Source: Moneycontrol
Disclosure: Invested.
PEB is an undifferentiated, 5-10 rs/kg spread business in India. Client is not going to pay you for âqualityâ when everyone, at least all top players (which are quite many) deliver steel-framed buildings with same quality and efficiency. For e.g. Interarch did 1450 cr revenue on 135000 MT utilized capacity in FY25 (~110 rs/kg finished product). All top PEB players are doing business in this range given largely commoditized nature of the product. If you bid for a job quoting 1000 MT (11 cr) and the lowest bidder quotes 900 MT (10 cr), client will almost always choose the latter, regardless of whether you call yourself Mercedes or Maruti. So there is a race to the bottom which encourages unsafe âoptimizationâ techniques. Companies shave steel tonnage to undercut rivals and quite often, compromise with structural integrity. Its funny and scary at the same time: an industrywide practice is to selectively apply American design standards to Indian projects when it results in lighter sections (lower tonnage) and ignore critical provisions that would require more steel, despite vastly different load conditions (e.g. wind, seismic) in India vs US.
Many PEB structures collapse during erection stage due to:
a) Incompetent design by unqualified engineers/BIM detailers.
b) Subpar fabrication standards
c) Inept erection procedures by under-trained site crew
Here is an example of a PEB collapse during installation:
Granted, top tier PEB companies maintain better controls and such instances are rare but quality of design & fabrication in PEB, in general is still quite poor in my view.
Second is reliance on HR steel coil prices which is about 3/4th of the fixed cost generally.
HR steel coil prices currently are ~50-55 rs/kg ex-mill, 20-25% below 2021-22 peak of 65-70 rs/kg. Processing cost (cutting, fabrication, painting/galvanization) and wastage (~5%) elevate the cost up to 65-70 rs/kg as of today.
Then youâve power, freight, erection and other overheads adding 20 rs/kg.
Employee cost is about 10 rs/kg.
This makes a spread of ~10 rs/kg i.e. ~10% operating profit, at a time when HRC prices, adjusted for inflation are at pre-Covid levels after a massive energy price shock. They chose IPO timing wisely ;)
Outlook for HRC prices appears to be stable in near to medium term but what happens when HRC prices go up? Orders are generally at fixed cost but most PEB companies nowadays are putting in their contract that theyâll bear 5-10% of steel price fluctuation and pass rest to the client. As steel prices rise, PEB contractorâs margins erode, then order volumes may also decline. But capacities are high fixed cost in nature so companies may have to undercut the prices further to get the job and keep the plants running. In essence, a typical price taker industry. Some may find it surprising that Interarch was selling finished PEB at 100 rs/kg a decade ago (HRC prices adjusted for inflation were similar to where they are today).
Having said that, Interarch remains the best business in this space. Management is prudent and follows âfix it at any costâ approach. Key-man risk remains as the next generation lacks the technical depth of Arvind Nanda and Gautam Suri.
Separately, I was surprised with 13% margins from M&B engineering given how tight unit economics are. Turns out, they are indeed doing small 2000-5000 sq mtr warehouses in USA under technical collaboration with Varco Pruden. Again, these are very small projects, they can command higher spreads but unlikely to move the needle significantly in my view.
P.S: I have no intention to criticize the industry without reason. I am a structural engineer by profession and understand a bit about steel structures. I also happen to know structural engineers working in PEB industry. If you ever visit Helsinki, check out the T2 terminal, which is 100% steel structure. I designed that back in 2020 
Nice contrarian view would like to apolize if i seem to be very citicizing but here is my view.
âItâs a strange but true thing that the people who know an industry best are often the most afraid to invest in it. Think of it like this: a great car mechanic knows every single thing that can break in a car, so when they look at a new model, they donât just see a cool vehicle; they see a hundred potential problems. In the same way, a software engineer knows how easily a project can fail, so theyâre hesitant to buy tech stocks. A builder who deals with constant delays and problems wonât be excited about real estate investments. And a doctor who sees the long, expensive, and risky process of creating a new drug will be very skeptical of healthcare stocks. They know too much about all the things that can go wrong, which makes them overly cautious, while an outsider just sees the potential for growth.
Sample i am into hospitality and real estate and i find very hard to invest into hotels or realty stocks
Thank you. Itâs always insightful to learn from people directly working in the industry.
From my understanding through concalls, presentations, etc., the order flow works in the following way:
A large portion of business comes from repeat orders, where prior experience and trust matter more than cost.
For new or first-time projects, the process usually starts with initial discussions, followed by cost estimations which are refined as the work progresses. In one call the founder of Interarch highlighted, providing accurate cost estimation and design is a key part of their role. PEB co may incur loss for wrong design which escalates estimation.
Client companies prioritize quality over just cost savings, since the structures are critical for them. Specifically for Interarch, the bigger challenge lies in managing supply rather than demand, which gives them the flexibility to let go of low-margin clients when needed.
Above âpoints indicate more value-driven than simply competing on price per kg. My pov.
Disc: Invested and views are biased
Yes, itâs true that PEB players get a significant share of repeat orders. In fact, if a client is keen to work with you, they may even disclose that your quote is x% higher than L1. This gives you a chance to rework the numbers, present an âoptimizedâ cost estimate and still win the project. In any business, trust matters. Itâs even more critical in PEB because clients are relying on you to design and deliver a safe structure. But no one will willingly pay a 10-15% premium on project costs, no matter how much they trust you.
Look at common clients that top PEB players have served over time, you will find an overlap. Reason is, large industrial clients have simultaneous projects going on across different geographies, and they canât rely on a single vendor. They might need to -
a) diversify suppliers to optimize pricing
b) manage capacity constraints
c) reduce supply risk
d) leverage regional or sometimes technical strengths (some may have strong presence in a state, some may have a better experience of executing certain type of projects).
So it would be wrong to say itâs not a price sensitive industry, yes it requires technical know-how and execution capabilities but itâs ubiquitous among top players. Interarch recently won the largest ever PEB order of 30000 MT for 300 cr (Phenix says it has done 275 cr, I am sure Kirby has executed much bigger projects). Thatâs 100 rs/kg. Now, you know the cost structure. Do the math on how much theyâre making on this one.
Thank you for your comments. This is also a reason why i donât understand the margins of M&B Engineering and their commentary. Time shall show the true colors.
Q2 FY2026 Conference call Highlights:
Investor Presentation: https://www.interarchbuildings.com/frontend/pdfs/Investor-Presentation-Q2-FY26.pdf
Conference Call Audio: https://www.interarchbuildings.com/frontend/pdfs/Earning-Cal-Q2-FY26.mp3
How Pre-engineered buildings are different than fabricator, civil contractor?
Customer only give requirements, company design and engineer it in house. It can be semiconductor plant, data centre, li-on battery plan, houses, villas, resorts, airport, Pre engineered building is industry agnostics, geographic agnostic, building agnostic.
It is offered as one lump sump price.
99% items are produced in companyâs factory. Each building is unique.
Each component has to produce in factory and transported to site for joint.
It is like capital good company, company design, produce, so whole building become product that perform as intended.
Broadening presence in new age industry.
Expansion Plans:
The commissioning of Phase II at our Andhra Pradesh facility making it our fourth fully integrated PEB plant.
Total installed capacity to 2,00,000 MT.
The groundbreaking of our Gujarat facility marks another major step in our journey. this new plant will play a pivotal role in our next phase of capacity expansion and market reach. It can be built in 10 months. Asset turn is same as other plants, 6 times.
Groundbreaking at Athivaram, Andhra Pradesh for our heavy steel structures plant further consolidates Interarchâs leadership in the high-rise steel building segment.
CAPEX will 70 crores this year, 70 crores in next year.
Orderbook:
Total order book on 31 October 2025 is 1634 crores.
463 crores order between 1st August and 31st October.
80-85% repeat customers.
Orderbook shall pick up.
Guidance:
Increase from 17.5% to 20% revenue for this year. Next two years also at 20%.
EBIDTA margin shall reach at double digit. May be next year. Not happy with margin. It can be achieved by absorbing overhead cost, large orders,
Others:
Speed of executions increased. 1st Haft generally is not so fast, as it is this year.
Lot of business and lot of competition.
Adding capacity faster, but engineering, sales, marketing, payment etc also need to move faster.
With new plants, company can do 2000cr+ in revenue in 2026-2027.
Company is careful in picking orders, in prices, scheduling, quality etc.
Margin not improved due to investment in people, export planning etc. It will improve.
TAM is very high. More company comes; it is good for industry.
Volume done in Q2 is 41215 tons. Utilization capacity at 80-90% in industry. Some work done by satellite plants, based on need.
Mold-tek is collaborating on export order. No order as of now. Inquires are there.
Heavy structure unit
It is not only for high rise building, but it can also be used in power, oil & gas sector. It can be used in very heavy structure require. Margin will be at 9 to 10%, similar to pre engineered building. Turn around time is also similar to pre engineered building. Requirement for company is less in this segment. Volume is higher, but commoditized building, not niche like pre engineering building. Asset turn can be higher.
Disclosure: Invested
My 2 cents here:
Trying to alert fellow investors here, sharing my Engineering Experience:
(from a qualified Structural Engineer worked in Oil & Gas, Power, Cement industries with 20+ years of Experience in Major MNCs in India, Middle East and South East)
If interArch wants to execute above industry projects, U require multi discipline Engineering team - Mechanical, Piping, Electrical, Instrumentation, Telecom teams, but they have majorly Structural Engineers only, from their investor Presentation.
They have 90+ Project managers for 150+ Structural Engineering team.
Probably this is the reason they tie-up with moldtek-tech Engineering - They used âin-houseâ word 5 times in the Presentation.
They say in house and then - Tieup with Moldtek Tech( These guys are doing Engineering design for PEB STRUCTURES for USA projects from last 3 decades)
If Interarch wants to do the all above (on going fancy /trendy âdata centers/EVâ words) - They simply cannot be PEB - They will become another EPC CONTRACTOR - May be specialized in Steel Structures -Directly in Competition with LnT like Contractors.
Another important aspect is for any PEB or Steel Structures is
- foundation construction/design - itâs the starting point
- Generally PEB companies wonât do this, they bid with others or Client will have to give other Engineering contractor.
- Interface & co-ordination between them, here is major headache in all PEB projects. No major clients in any industry wants this headache. Steel being commodity its price variations should have impact for any delays.
The biggest risks
They may do very well and deliver, request fellow investors to see risks involved.
PS: PEB concept/companies is not new they are there from Decades - They are best for single or double story, ware houses industrial projects. May be because of India faster Economic growth and market enthusiasm about the data centres and EV themes - PEB theme is also in uptrend.
Hope this helps.
Thanks for bringing this up. Iâve pointed out similar risks earlier. Itâs astonishing that investors are willing to pay 35-40x earnings for what is essentially a commodity business. Yes, the earnings are real at the moment, but the valuation multiple being assigned is completely detached from the economics of the business.
Letâs be clear, PEB has nothing to do with data centers. A PEB structure is just the outer shed that encloses the real work happening inside. Real value addition in data centers lies in MEP services, which demand genuine technical expertise. PEB vendors donât do that, itâs a fabrication and assembly activity with limited value addition. Associating PEB demand with the data center capex is like saying that if a vendor builds an aircraft hangar, theyâre part of the aviation industry.
At the end of the day, this remains a low margin, cyclical, extremely price competitive business with no product differentiation. Paying premium multiples for such businesses usually doesnât end well.
I will not comment on the business valuations of PEB businesses. But I do think valuations do not exist in a vacuum but depend on the country/ sector economic context. E.g., transformers are a commodity business. But recently, their business valuations have been rerated in the broader power sectorâs context. At that time, some investors were incredulous about how the markets were valuing transformer companies. However, in hindsight, it can be appreciated that the markets were right.
D: Not invested
I agree with you, valuation are decided by the market for a reason, one could be contrarian but would either be happy or have a feeling of missing out later. PEBs companies wouldnât find a place in my core portfolio but certainly a sector I would like to ride as itâs a direct proxy to Indiaâs Capex cycle; and it is just getting started.
I did some research wrt. PEG ration in this industry. PEG ration of 1.0 to 1.4 is quite fine for âSpecialty prefab / niche industrial constructionâ. Honestly, I am invested not in the Interarch but in one of itâs newly listed peer Epack Prefab. A company growing at 40% could get a PE valuation of 40 easily and can stretch up-to 50, more than that would be unsustainable.
Someone in the above messages highlighted that the industry is working on a thin margin and they do not have any moat, other than fast execution.
This is half a truth from my perspective. For instance Epack Prefab has EBITDA margin of 10.5 - 11.5% and PAT around 6%; this is when they are bidding aggressively to capture the market share. They are unlike a contract manufacturer who add very minimal value such as Dixon (diff. industry, just for example). They really design the entire building with the vendor, that needs good understanding of structural engineering. Needless to mention that most of the players have ROCE >25%. Of-course anyone or everyone can do that, hence, their is no strong moat per-se but the early movers/big organized players will always be better off than new entrants. One other point is that this industry is free cash flow generative. So these metrics are for real.
Industry size and growth:
Industry itself is growing at 11% at-least until 2020 and it wonât be surprising to see the established players growing at double or even triple that rate (by capturing more market share). Indian is in a decadal long capex cycle and it is for real. Country is growing, industries are growing new capex are getting announced every now and then, huge boost from government; Everything is signaling towards strong erection of industrial infrastructure. Certainly due to the speed of execution significant chunk of this growth will flow to Prefab companies.
Much has also been said about the role of Prefab companies in Data center theme, of-course they wonât add any value wrt. the digital infrastructure, neither do any wires and cable companies. However, all of them are contributing to the ecosystem itself. When a DC being built, huge amount of capex would be incurred and some chunk of that will flow towards Prefab companies. Companies with more expertise will get bigger wallet shares. For instance, DCs require a floor with extremely high load bearing capacity, high quality thermal insulation panel etc.. Prefab companies that can produce very high load bearing Steel floor structure, would get even more wallet share. So, there is huge growth potential. IMHO, this sector can not be avoided; given the country is still growing and will grow for many decades and need not say that when a country grows so does the infrastructure (airport, metro, logistics..!)
Disc. invested in the sector and biased. Please do your own research.
We are missing out on main thing i.e Reinforced Concrete versus steel structure. If the structural elements of building can be made in factory with quality control unlike bothering about the compressive strength of concrete, chemical properties etc and the structure can be made ready before say 5-6 months , the industry will generate the additional revenue and the benefit cost ratio will be in favour of the PEB buildings. It is not the shell only, they are designing teh complete building in house, fabricating it and then erecting it, be it the structural elements or the floor slabs.
The MEP services will always be done by others in case of PEB Vendors but with Good PEB vendors you may be able to start the MEP services earlier than Reinforced concrete buildings. They will be getting premium on doing timely, quality works and hence the repeat orders.
With the water quality becoming bad to very bad and labour shortage it is difficult to make good, durable reinforced concrete building in present time and hence PEB is being tried by once and all. It is there to stay
ROE<ROCE any idea why?
ROE is 18% and ROCE is 24.8%.
Not sure if it can be attributed to debt at high rate or tax.
I guess, That just shows that their Equity base (Ownerâs Equity + Reserves ) is larger than the total Capital Employed.
To gauge a business, ROCE is a better metric as it shows companyâs ability to generate profits from money which is specifically intended to be used in business, whereâs ROE shows profitability on Equity base which is like FD in a bank. You are assured that you have enough money to survive incase crisis happen, but you generally donât use your FD for running day to day operations or business.
What is the differentiator in this industry, I am not understanding. Is it fast execution, or superb finishing, or are there any other facets? (I am studying this industry for the first time).
Trust, reputation & client stickiness. A large number of their orders are from repeat customers. PEB is all about speed and execution, If a company wants a new factory, they are less likely to go to a new player to save 1-2% on the cost and would rather stick with someone whom they trust and has a long track record with them.
Approx âš70 Crore domestic PEB order; 8-month completion; design, manufacture, supply and erection.
Though definitely a good Manufacturing proxy play, below Income Tax Raid news is something to be monitored for final conclusion. Does anybody have further info on this?
Interarch_Income Tax Raid.pdf (794.4 KB)
Interarch Building Solutions surged 15.16% to Rs 2,526.95 after the companyâs standalone net profit soared 56.12% to Rs 32.27 crore on 51.91% increase in revenue from operations to Rs 491.08 crore in Q2 FY26 over Q2 FY25.
Profit before tax (PBT) jumped 58.59% YoY to Rs 43.50 crore in Q2 Sept 2025.
EBITDA (excluding other income) increased 65.1% to Rs 41.7 crore in Q2 FY26 compared with Rs 25.2 crore in Q2 FY25. EBITDA margin improved to 8.5% in Q2 FY26 as against 7.8% in Q2 FY25.
As on October 31, 2025, total order book stood at Rs 1,634 crore.
On half-yearly basis, the companys standalone net profit jumped 48.11% to Rs 60.65 crore on 39.12% rise in revenue from operations to Rs 871.86 crore in H1 FY26 as compared with H1 FY25.
Arvind Nanda, managing director, Interarch Building Solutions, said We are pleased to report that Interarch achieved its highest-ever quarterly revenue in Q2 FY26, with total revenue increasing by 51.9% YoY to Rs 491 crore, nearing the Rs 500 crore milestone. EBITDA and PAT grew by 65.1% and 56.2% YoY, respectively. Backed by a robust order book and strong project pipeline, we are confident of sustaining this growth in the second half of the year.
This quarter has been transformational for Interarch as we continue to expand and strengthen our manufacturing footprint across India. The commissioning of Phase II at our Andhra Pradesh facility marks another key milestone, making it our fourth fully integrated PEB plant and taking our total installed capacity to 2,00,000 MT. This expansion reinforces our leadership in PEB Industry and our commitment to supporting Indias next wave of industrial growth.
The groundbreaking of our Gujarat facility marks another major step in our journey. Located in a state renowned for its world-class infrastructure and thriving semiconductor, EV, and allied industry clusters, this new plant will play a pivotal role in our next phase of capacity expansion and market reach.
Simultaneously, the groundbreaking at Athivaram, Andhra Pradesh for our heavy steel structures plant further consolidates Interarchs leadership in the high-rise steel building segment, as we aspire to continue investing in capacity, driving innovation, and shaping the future of PEB Industry in India.
Interarch Building Products provides pre-engineered steel building solutions in India. The company possesses integrated capabilities encompassing design and engineering, manufacturing, and on-site project management for the installation and erection of pre-engineered steel structures.
