ArisInfra Solutions(Aris) a business-to-business (B2B) technology-enabled company operating in a construction materials market, focusing on simplifying and digitizing the entire procurement process for construction materials, delivering an efficient end-to-end procurement experience.

Aris leverages its network of vendors to source construction materials and provide them to real estate and infrastructure developers and contractors, striving to be a one-stop solution for all their construction material requirements. Between April 1, 2021 and December 31, 2024, the company has delivered 14.10 million metric tons (MT) of construction materials, including aggregates, ready-mix concrete (RMC), steel, cement, construction chemicals and walling solutions, utilizing 1,729 vendors and serving 2,659 customers across 1,075 pin codes in various cities, including Mumbai (Maharashtra), Bengaluru (Karnataka) and Chennai (Tamil Nadu). It had registered 2,659 customers and 1,729 vendors as of December 31, 2024.

Aris customers include large real estate and infrastructure developers and contractors, including Capacit’eInfraprojects, J Kumar Infraprojects, Afcons Infrastructure, S P Singla Constructions Private Limited, Real Gem Buildtech Private Limited, Wadhwa Group Holdings Private Limited, Casa Grande Civil Engineering Private Limited, Sheth Creators Private Limited, Puranik Builders Limited, and Transcon Iconica Private Limited. Its vendor base includes manufacturers and wholesale suppliers such as Guardian Casting Private Limited, G S Ispat, Swarajya – Stones LLP, Sun-x Concrete India Private Limited, Bigbloc Building Elements Private Limited, and Normet India Private Limited.

ArisUnitern Re Solutions Private Limited is the company‘s subsidiary that provides value-added services tailored to real estate developers, including advisory, consultancy, marketing, and sales support. Its other subsidiaries include Buildmex-Infra Private Limited, Arisinfra Trading Private Limited, Arisinfra Realty Private Limitedand Alterro finance Pvt Ltd.

Object of the offer

The IPO consists of a fresh issue of Rs 499.6 crore.

Out of the proceeds from the fresh issue, Rs 204.6 crore will be used for repayment/ prepayment/ redemption, in full or in part, of certain borrowings availed of by the company, Rs 177 crore will be used to fund the working capital requirements and the balance for general corporate purpose.

In January 2025, the company raised Rs 80 crore in pre IPO placement.

Strengths

Aris leverages technology to transform the supply chain for construction materials. Powered by advanced tools such as artificial intelligence and machine learning, the company streamlines the supply chain by minimizing the need for multiple intermediaries. Its network enables seamless communication with customers and vendors, facilitating a smooth and efficient purchasing experience for construction materials.

Aris has a scalable operating model that allows it to expand its operations and drive revenue growth with lower incremental costs. Its competitive technology advantage lies in the capability, functionality and scalability of its systems, allowing it to capitalize on large market opportunities by increasing the scale and effectiveness of its operations. Aris digitized approach enables it to enter different geographies with seamless on-boarding of customers and vendors of construction materials in those regions.

In Fiscal 2023, Aris expanded into manufacturing aggregates, RMC and aerate concrete blocks (walling solutions) through third-party manufacturers. This expansion into third-party manufactured construction materials allows the company to ensure a steady and reliable supply while maintaining control over the quality, improving margins and establishing itself as a comprehensive provider of construction materials to meet the diverse needs of the customers. Revenues from the sale of third-party manufactured construction materials amounted to Rs 190.3 crore, Rs 122.4 crore and Rs 18.4 crore, representing 34.81%, 17.57% and 2.47% of its revenue from operations during the nine months ended December 31, 2024, Fiscal 2024 and Fiscal 2023, respectively.

The company’s key value propositions for both customers and vendors are providing them access to a network of partners on the other side of the transaction. As the company attracts more customers, the demand for construction materials increases. This increase in demand incentivizes more vendors to join the company’s ecosystem. Consequently, the expanding pool of vendors enhances the variety, availability and options of construction materials, attracting even more customers. This continuous cycle of increasing customers and vendors reinforces Aris competitive position and fosters continuous growth. In addition, the increased participation of customers and vendors leads to an increase in the number of transactions, which enables the company to gather more valuable data on market trends, customer preferences, and vendor performance. Leveraging this data enables us to make informed decisions, streamline its strategies, and continually enhance user experience.

The company’s technology enables it to generate comprehensive business analysis reports in real-time using the messaging application integrated with its technology. These reports provide crucial insights into key metrics, including sales, margins, cash flow, receivables, receivable days and credit limits (assigned and utilized), which assist its executives in making informed decisions while finalizing deals. In addition, the company’s technology allows it for the creation of a ‘nano report’, which is a streamlined summary of the business analysis report, granting its executives instant access to essential data for swift decision-making. This enhances the efficiency and accuracy in managing its operations.

The company is led by a highly experienced management team with experience in the construction materials industry. Promoter, Chairman and Managing Director, Ronak Kishor Morbia has over 13 years of experience in the construction material supply industry and has been instrumental in shaping the company’s technology and overall business strategy.

Weaknesses

Lower demand for the construction materials from the company’s customers, a downturn in the real estate and infrastructure sectors, increase in competition, and macro-economic conditions in India might result in lower revenues for the company.

The company faces geographical concentration risk as it derived 94.79%, 81.05%, 85.04% and 92.15% of its revenue from operations for the nine months ended December 31, 2024, FY 2024, FY 2023 and FY 2022, respectively from the states of Maharashtra, Karnataka and Tamil Nadu. Also, the company faces customer concentration risk as it derived 48.47%, 45.24%, 39.07% and 47.19% of its revenue from operations for the nine months ended December 31, 2024, FY 2024, FY 2023 and FY 2022, respectively, from top 10 customers.

The company operates in the digital construction material procurement market which is characterized by relatively low barriers to entry which may lead to pricing pressure that may adversely impact the profitability of the company.

The company incurred losses to the tune of Rs 6.5 crore, Rs 15.4 crore and Rs 17.3 crore, in FY2022,FY2023 and FY2024 respectively.

The company has experienced negative working capital to the tune of Rs 4.4 crore in the nine months ended December 31, 2024, Rs 14. 3 crore in FY2023, and Rs 269.1 crore in FY2022.

With operations commencing in April 2021, the company is in its nascent stage of operations.

The growth of the company’s business and revenue will be impacted if it fails to retain its customers and vendors registered with it or fails to add new customers and vendors.

Operations of the company are working capital intensive and may require additional financing in the future. A failure in obtaining such additional financing or on terms favorable to the company could have an adverse effect on the financial condition of the company.

The company’s technology failures and resulting interruptions in the availability of its offerings could adversely affect its business.

Valuation

For the nine months ended December 31,2024, the company earned net profit of Rs 6.53 crore on sales of Rs 546.52crore.

For FY 2024, consolidated sales were down by 6.6% to Rs 696.84 croreon account of a strategic shift in its product mix, with greater emphasis on high-margin products and increased focus on third-party manufactured construction materials. OPM inclined 183bps to 1.84%, which led to the company reporting operating profit of Rs 12.8 crore as against operating loss of Rs 0.68 crore. Other income declined 34.1% to Rs 5.51 crore, while interest cost increased 35.1% to Rs 32.27 crore and depreciation inclined 41.1% to Rs 2.89 crore. Loss before tax stood at Rs 16.84 crore as against Loss before tax of Rs 18.24 crore in FY2023. Tax expenses stood at Rs 0.46crore in FY2024 as against tax credit of Rs 2.84 crore in FY2023. Loss after tax stood at Rs 17.3crore as against net loss of Rs 15.39 crore.

On January 22,2025, the company raised Rs 80 crore by issuing 3603792 equity shares of Rs 2 each at Rs 222 per equity share including premium to Vanaja Sunderiyer, Mukul Mahavir Agarwal, Rishabh Bharatbhai Bagadia, Yashasvi Finvest Pvt Ltd and Varanium India Opportunity Ltd.

The company incurred losses in FY2024 as such P/E could not be calculated. At higher price band of Rs 222, the offer is made at around 164.36 times post-IPO EV/FY2024 EBITDA.

The total outstanding borrowings were Rs 322.8 crore on a consolidated basis as of 31 December 2024. The plan is to repay 63.4% of the debt using the issue proceeds. This will significantly reduce interest cost and boost profits. The FY2024 PAT would be 3.15 crore (as against Loss of Rs 17.3 crore) and EPS would be Rs 0.4 if 63.4% of the interest cost is eliminated, assuming all other factors, including the tax rate, remain unchanged. Debt/Equity of the company will moderate to 0.20x post-IPO as against Debt/Equity of 2.07x pre IPO.

The company does not have any listed peers.