Arisinfra Solutions Ltd. IPO: Key Details

Arisinfra Solutions

• Arisinfra Solutions is coming out with a 100% book building; initial public offering (IPO) of 2,37,90,285 shares of Rs 2 each in a price band Rs 210-222 per equity share.
• Not more than 75% of the issue will be allocated to Qualified Institutional Buyers (QIBs), including 5% to the mutual funds. Further, not less than 15% of the issue will be available for the non-institutional bidders and the remaining 10% for the retail investors.
• The issue will open for subscription on June 18, 2025 and will close on June 20, 2025.
• The shares will be listed on BSE as well as NSE.
• The face value of the share is Rs 2 and is priced 105 times of its face value on the lower side and 111 times on the higher side.
• Book running lead managers to the issue are JM Financial, IIFL Capital Services and Nuvama Wealth Management.
• Compliance Officer for the issue is Latesh Shailesh Shah.

Profile of the company

Arisinfra Solutions is a business-to-business (B2B) technology-enabled company operating in a growing construction materials market, focusing on simplifying and digitizing the entire procurement process for construction materials, delivering an efficient end-to-end procurement experience. It utilizes a blend of technology and human expertise to simplify the procurement process for purchasing bulk quantities of various construction materials. It 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.

The Indian construction materials market presents a significant opportunity as it is highly unorganized and fragmented, coupled with the absence of many large organized players, creating numerous challenges for both vendors and customers. It is transforming the B2B construction materials ecosystem by minimizing the need for multiple intermediaries involved in the procurement ecosystem. Further, B2B technology-enabled companies like itself, have the potential to enhance margins by eliminating intermediaries and inefficiencies within the ecosystem, positioning it as a cost-effective, technology enabled alternative to the traditional approach to B2B procurement for construction materials.

It leverages technology and human expertise to streamline and manage the process of purchasing, selling, and delivering construction materials. In particular, it has reshaped the traditional procurement process for customers by eliminating the need for them to individually contact multiple vendors and wait for separate price quotations. Instead, when customers submit a request for quotation (RFQ) with the company, it leverages technology to generate a list of suitable vendors from its network based on factors including their location, proximity to customers, credit terms and previous order fulfillment performance. It seamlessly communicates with the shortlisted vendors and solicit bids from them.

Proceed is being used for:

• Repayment / prepayment, in full or part, of certain outstanding borrowings availed by the company
• Funding the working capital requirements of the company
• Investment in its subsidiary, Buildmex-Infra Private Limited (Buildmex), for funding its working capital requirements
• General corporate purposes and unidentified inorganic acquisitions

Industry Overview

The B2B market for infrastructure in India is approximately $105-115 billion in 2024 and is projected to grow at a 10-12% CAGR to reach $175-200 billion in 2029. Infrastructure majorly includes capital expenditure in the sectors of energy, transport infrastructure, urban and rural infrastructure, irrigation, social infrastructure and digital communication. Energy and Transport infrastructure estimated to contribute approximately 60-65% of the total infrastructure market in 2024, projected to become 70-75% by 2029. The B2B market for real estate construction is segmented into residential and commercial real estate. The total B2B real estate construction market is estimated to be approximately $170-180 billion in 2024, projected to grow at 6-8% to reach $235-255 billion by 2029.

The Indian construction materials market presents a significant opportunity as it is highly unorganized and fragmented, coupled with the absence of many large, organized players, creating numerous challenges for both vendors and customers. On the demand side, customers encounter various issues such as inconsistent material availability, quality concerns, lack of transparency, limited competitive pricing options, and access to only a handful of vendors. This results in reduced control and visibility within the procurement supply chain. On the supply side, vendors struggle to expand their reach and scale their operations profitably. The involvement of multiple intermediaries complicates the buying and selling process, leading to delays and diminished profit margins for vendors.

Further, Indian government is pushing for large-scale infrastructure projects, including initiatives like the NIP, PMAY, Bharatmala Pariyojana, etc., which will result in infrastructure development. Increasing urbanisation nationwide is also driving significant growth in the construction sector. The construction materials supply market remains highly fragmented and unorganised, leading to inefficiencies and increased costs for builders and contractors. Addressing these inefficiencies presents substantial opportunities for digital procurement companies. Digital platforms can streamline procurement processes, improve transparency, and reduce costs. However, the construction industry's complexity necessitates advanced technological solutions and a deep understanding of industry-specific needs. Companies that can offer end-to-end solutions and cater to specialised requirements will have a competitive edge. Maintaining a wider reach among suppliers and building relationships with them and buyers are crucial for success in this sector.

Pros and strengths

Leveraging technology to transform the supply chain for construction materials: The company is a B2B technology-enabled company, simplifying and digitizing the procurement process for construction materials. Powered by advanced tools such as artificial intelligence and machine learning, it is streamlining 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., the Indian construction materials market is highly unorganized and fragmented, creating numerous challenges for both, vendors and customers. The company has leveraged its domain expertise to streamline the procurement process by enabling seamless communication and negotiation, improving price discovery, expediting informed decision-making by its executives, and simplifying documentation through digital automation.

Well positioned to capitalize on market opportunities: The company is a technology-enabled company with 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. Its digitized approach enables it to enter different geographies with seamless onboarding of customers and vendors of construction materials in those regions.

Growing third-party manufactured construction materials: There is an opportunity in the fragmented and unbranded construction materials markets. In Fiscal 2023, it expanded into manufacturing aggregates, RMC and aerate concrete blocks (walling solutions) through third-party manufacturers. This expansion into third-party manufactured construction materials allows it 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 its customers. It also allows it to increase its revenue, improve its financial performance, enhance its cash flows and reduce the number of intermediaries and dependence on external vendors.

Network effects ensuring long-term strategic benefits: One of its key value propositions for both customers and vendors is providing them access to a network of partners on the other side of the transaction. As it attracts more customers, the demand for construction materials increases. This increase in demand incentivizes more vendors to join its 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 its 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 it to gather more valuable data on market trends, customer preferences, and vendor performance.

Risks and concerns

Maximum revenue comes from few customers: The company is dependent on certain key customers for a significant portion of its revenues. The company’s top 10 customers contributed 48.47%, 45.24%, 39.07% and 47.19% of its revenue from operations for the nine months ended December 31, 2024, Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively. It does not execute long-term agreements with its customers and its inability to procure new orders on a regular basis or at all or any decrease in revenues from any of its key customers or any loss of any of these customers or its inability to diversify its customer base could have an adverse effect on its business, results of operations, financial condition and cash flows.

Geographical constrain: The company derives substantial portion of its revenues from the states of Maharashtra, Karnataka and Tamil Nadu, which accounted for 94.79%, 81.05%, 85.04% and 92.15% of its revenue from operations for the nine months ended December 31, 2024, Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively. Consequently, any unfavourable developments in these states could adversely affect its business, results of operations, financial condition and cash flows.

Limited operating history: The company was incorporated on February 10, 2021, and it therefore has limited operating history of around four years. Its limited operating history at this scale may make it difficult to evaluate its prospects as well as the risks and uncertainties associated with its business. It may experience a decline in its revenue growth rate, EBITDA margin or profitability on deals as a result of a number of factors, including slowing demand for its offerings, insufficient growth in the number of customers and vendors that utilize its offerings, increasing competition, a decrease in the growth of its overall market, its failure to continue to capitalize on growth opportunities, change in its strategy among others, all of which would have an adverse impact on its business, results of operations, financial condition and cash flows.

Dependent on vendors to fulfil the procurement requirements of its customers: The company relies on its vendors to fulfil the procurement requirements of its customers for a diverse range of construction materials. Its top 10 vendors contributed to 47.17%, 38.25%, 32.58% and 43.78%, respectively, of total purchase stock-in-trade in the nine months ended December 31, 2024, Fiscal 2024, Fiscal 2023 and Fiscal 2022. Any disruption in the vendors’ ability to supply construction materials or their failure to meet the quality standards or delivery timelines could adversely affect its business, results of operations, financial condition, cash flows and reputation.

Outlook

ArisInfra Solutions is a modern platform that helps construction and infrastructure companies buy materials easily and manage their finances smartly. The company is a B2B technology-driven company in the expanding construction materials market. The company focuses on digitizing and simplifying the procurement process, delivering an efficient end-to-end customer experience. It is well-positioned to capitalize on significant market opportunities. On the concern side, the company depends on certain key customers for a significant portion of its revenues. It does not execute long-term agreements with its customers and its inability to procure new orders on a regular basis or at all or any decrease in revenues from any of its key customers or any loss of any of these customers or its inability to diversify its customer base could have an adverse effect on its business, results of operations, financial condition and cash flows. Moreover, the company derives a substantial portion of its revenues from the states of Maharashtra, Karnataka and Tamil Nadu. Any unfavourable developments in these states could adversely affect its business, results of operations, financial condition and cash flows.

The issue has been offering 2,37,90,285 shares in a price band of Rs 210-222 per equity share. The aggregate size of the offer is around Rs 499.60 crore to Rs 528.14 crore based on lower and upper price band respectively. Minimum application is to be made for 67 shares and in multiples thereon, thereafter. On performance front, the company’s revenue from operations decreased by 6.60% from Rs 7,460.71 million in Fiscal 2023 to Rs 6,968.42 million in Fiscal 2024. Moreover, the company’s restated loss for the year was Rs 172.98 million in Fiscal 2024 compared to Rs 153.92 million in Fiscal 2023.

Going forward, one of the company’s core strategies is to optimize the mix of construction materials sold by diversifying its offerings to better align with market demand and customer preferences. It will continue to select and promote a mix of construction materials including those that offer it high margins. It intends to leverage its technology-enabled ecosystem and ease of business that it offers to increase its share of wallet from customers by driving the sale of additional construction materials to improve its financial performance. Further, it intends to enter into additional strategic partnerships with third-party manufacturers and leverage their underutilized capacities to improve its supply chain and increase its portfolio of third-party manufactured construction materials. Such partnerships help it to obtain greater control over production and quality, streamline the supply chain, increase its revenue, improve its margins and expand its reach.