Interarch Building Solutions Limited announces a new order win

Total aggregate manufacturing capacity is 245,000 MT, effective 24 September 2026, up from 221,000 MT after commissioning the 24,000 MT Andhra Pradesh Unit 2 Phase-1 facility ^[1].

Alignment with the RHP capacity roadmap

• Starting utilization: The 70% utilization rate disclosed for the pre-expansion 221,000 MT base was an existing-capacity figure, not a post-commissioning target ^[2].
• Immediate blended effect: If production volumes had remained unchanged, the larger installed base would mechanically reduce utilization to approximately 63.14%, calculated as 70% × 221,000 MT ÷ 245,000 MT. This is a derived scenario, not reported post-expansion utilization.
• RHP operating capacity: The RHP schedule showed approximately 189,500 MT of utilizable capacity against 221,000 MT of installed capacity ^[3]. Utilizable capacity should not be read as actual throughput utilization; the latter was separately reported at 70% before the Andhra Pradesh addition ^[2].
• Ramp-up timing: The RHP roadmap placed an Andhra Pradesh heavy-steel-structures addition of approximately 25,000 MT in Q2 FY27, followed by a further 24,000 MT Andhra Pradesh Phase 2 addition targeted for Q4 FY27 ^[3]. The actual 24,000 MT commissioning in Q2 FY27 is therefore broadly consistent with the RHP’s near-term ramp-up window, although it is 1,000 MT below the RHP’s 25,000 MT line item.
• Interpretation: The expansion initially creates utilization dilution, but provides operating headroom to absorb demand and lift throughput over the subsequent ramp-up period. The RHP’s later Q4 FY27 phase remains a separate planned milestone and should not be treated as already included in the current 245,000 MT figure ^[3].

The disclosed funding mix for the Rs 80 Crore Andhra Pradesh Unit 2 Phase-1 investment is 100% internal accruals; IPO proceeds and project debt are not identified as funding sources. The Rs 80 Crores is also explicitly stated to exclude land. ^[2]

The proposed Rs 250 Crore QIP is a separate future fund-raising proposal, not evidence that the Rs 80 Crore facility was funded through equity issuance. ^[4]

Depreciation and EBITDA-margin treatment

The key accounting point is that incremental depreciation does not reduce EBITDA or EBITDA margin mechanically. It reduces EBIT, PBT and PAT; EBITDA adds depreciation back. Analysts should therefore model the facility in two separate bridges:

• EBITDA bridge: driven by incremental production, revenue, gross margin, operating costs and utilisation of the additional 24,000 MT capacity. The facility became commercially operational on 24 September 2026. ^[1]
• Below-EBITDA bridge: incremental depreciation, with no project-specific interest expense under the disclosed internal-accrual funding structure.

For the depreciation model:

`Incremental depreciation = depreciable asset base × applicable annual depreciation rate × time in service`

The Rs 80 Crore should not automatically be treated as the depreciable base because it excludes land. Use the fixed-asset schedule, the capitalisation or available-for-use date, useful lives and residual values once reported. Q2 FY27 should contain only a partial-period charge if depreciation begins around commissioning; Q3 FY27 onward would represent the first likely full-quarter run-rate.

As a sensitivity, at Q1 FY27 revenue of Rs 459.65 Crores, every Rs 1 Crore of quarterly incremental depreciation would reduce EBIT margin by approximately 0.22 percentage points, or 22 bps, derived as Rs 1 Crore divided by Rs 459.65 Crores. It would not reduce EBITDA margin. ^[5]

One additional modelling caution is that Gujarat Phase 1, commissioned in July 2026 with Rs 60 Crores of capex, will also begin contributing depreciation around the same period. Analysts should therefore avoid attributing the entire sequential increase in depreciation in Q2-Q3 FY27 to the Andhra Pradesh project alone. ^[3]

The Andhra Pradesh facility is a regionalization of manufacturing, not a replacement for the existing network. It adds capacity closer to South Indian and eastern industrial corridors, while the older footprint remains distributed across Uttarakhand, Tamil Nadu and Andhra Pradesh. The intended result is lower dependence on long-haul dispatches from northern plants and faster response for projects in the southern market, although the company has not disclosed quantified freight savings or turnaround-time reductions.

The latest corporate filing confirms that Andhra Pradesh Unit 2 Phase-1 commenced commercial production on 24 September 2026, adding 24,000 MT and taking total installed capacity from 221,000 MT to 245,000 MT. The filing frames the investment around increased manufacturing capability, operational efficiency and the ability to meet demand, rather than reporting a quantified logistics saving. ^[1] The annexure records existing utilization at 70% and an investment of Rs 80 Crores, excluding land, funded through internal accruals. ^[2]

Analytical read: the location strategy should improve service levels most clearly for southern and eastern projects requiring heavy steel structures, because production can be allocated closer to the project site and ports. It also creates network redundancy alongside Tamil Nadu, allowing the company to balance loads rather than route all southern demand through one plant. The benefit is therefore primarily shorter and more flexible supply routes, with cost savings and turnaround improvement as expected operating outcomes—not yet measured disclosures.