Reading the thread, I think, the company which should have deserved a multiple of typical steel pipe supplier (could be 10-12) was carried to great heights during the frenzy (partly due to DMart’s listing when most other junk retail companies also got re-rated).
Another fundamental question that I have is that in future most of the construction would be in high-rise or apartments. Would any builder/person in charge visit a retailer like Shankara or directly get deals from companies?
As acknowledged in the AR, the business seems fragile with multiple risks.
From the AR
"The year started off on a positive note. The first half of FY 2018-19 was in fact good. There was a revenue growth of 23% which is commendable. However, there were sudden and strong headwinds in the second half.The sharp increases in raw material prices, especially steel coupled with an inability to increase end user prices was a double whammy. This had impact on margins as well as inventory.
Overall, we delivered a revenue growth of 4%. We recorded EBITDA margin of 4.7% (vs 6.9% last fiscal) and PAT margin of 1.2%.
While the company is increasing its focus on diversifying into building products, there is still a large dependence on steel which hit us last fiscal. Further, our business has legacy elements which impact us in our journey to be a retail building products chain. That resulted in a y-o-y fall of 11.6% in sales vs last year in the second half of the year."