Sabari Construction Technologies Limited IPO

01At a glance

What the company does: builds hospitals, residential projects, educational buildings, railway stations and commercial and industrial buildings as an engineering, procurement and construction (EPC) contractor, and makes ready-mix concrete and concrete blocks at plants in Coimbatore and Chennai (DRHP p.131).

Who pays it: private clients brought 52.88% of FY26 revenue, government bodies 32.03% and the company's own projects 15.09% (DRHP p.145). The single largest source is a related party, Royalcare Super Speciality Hospital Limited, at ₹208.9 crore or 44.32% of FY26 revenue (DRHP p.59). Government clients named in the order book include NCERT's Regional Institute of Education, JIPMER Karaikal, SIDBI and railway and metro station works in Tamil Nadu (DRHP p.141, DRHP p.142).

Why it is raising money: up to ₹160.0 crore of the net proceeds goes to working capital in FY27 and FY28, and the rest, capped at the lower of 15% of the amount raised or ₹10.0 crore, to general corporate purposes (DRHP p.90). There is no offer for sale (DRHP p.1).

How fast it has grown: revenue from ₹181.9 crore in FY24 to ₹471.4 crore in FY26, about 61.0% a year, and profit after tax from ₹11.2 crore to ₹56.6 crore, about 124.9% a year (our arithmetic, DRHP p.52).

The one thing to understand: most of the revenue comes from entities connected to the promoters. Related parties brought ₹291.7 crore, 61.88% of FY26 revenue, and 61.52% and 41.08% in the two years before (DRHP p.24). Operating cash flow was an outflow of ₹14.4 crore in FY26 while profit after tax was ₹56.6 crore (DRHP p.53, DRHP p.52).

02The business, in plain words

What Sabari Constructions Technologies does

Sabari Constructions Technologies is a building contractor. It bids for government work through tenders and takes private work through architects, project consultants and repeat clients, then builds the structure with its own staff, sub-contractors and hired labour (DRHP p.139, DRHP p.148). It started as a partnership firm, Sree Sabari Constructions, on February 3, 1998, became a private limited company on October 13, 2011 and a public company on August 13, 2026 (DRHP p.2).

A hospital owner, developer, government department or railway body needs a building → it awards the company a contract by tender or by negotiation → the company plans, procures cement, steel and concrete, brings in sub-contractors and labour and builds on site, using concrete from its own plants → it bills the client as work progresses and is paid against certified bills, less retention money held until completion (DRHP p.131, DRHP p.139, DRHP p.225).

The work spans healthcare, hotels, residential, educational, railway, industrial and commercial buildings (DRHP p.131). Completed work the document lists includes the Royal Care Super Speciality Hospital phases I and II in Tamil Nadu (₹269.7 crore contract value), a TCS office building at Adibatla, Hyderabad (₹53.1 crore) and cancer hospitals in Mangalore and Tirupati (DRHP p.174, DRHP p.143). It also builds villas on its own account, such as "Royal Nest" at Sulakkal (DRHP p.143).

A railway station redevelopment at Rameswaram is executed through Sabari URC JV, formed on August 5, 2022 with URC Construction Private Limited, in which the company holds 74% (DRHP p.175, DRHP p.176). The two concrete plants, Coimbatore (set up in 2018) and Chennai (set up in 2023), supply the company's own sites and some outside customers (DRHP p.131). Third-party product sales were only ₹1.3 crore in FY26 (DRHP p.227).

At March 31, 2026 the company had 19 ongoing projects (DRHP p.27). It had 270 permanent employees and 1,182 contractual workers in August 2026 (DRHP p.150).

Earnings equation: Revenue = value of contracts in hand × share of the work completed and billed in the year. The document gives each project's cost and the amount billed to March 31, 2026, but not the margin on any project, so the equation stops at revenue (DRHP p.140 to DRHP p.143).

03Where the money comes from

Source: DRHP p.145, DRHP p.24, converted from ₹ lakh. By activity, construction was 99.08% of FY26 revenue, products 0.26% and services such as hire charges and water supply 0.66% (DRHP p.144). Outside Tamil Nadu, Pondicherry brought ₹52.0 crore (11.03%) and Andhra Pradesh ₹34.1 crore (7.23%) in FY26 (DRHP p.24). The company bid for 13 government contracts in FY26 and won five (DRHP p.26).

Sabari Constructions Technologies customers: how concentrated the revenue is

Source: DRHP p.26 for the top two, five and ten; DRHP p.57 to DRHP p.59 for sales to Royalcare Super Speciality Hospital Limited. The document does not label any customer "largest". Read from the filing: sales to Royalcare Super Speciality Hospital Limited alone exceed half of the top-two share in each year, so it was the largest customer in all three years (our arithmetic, DRHP p.26, DRHP p.59).

Revenue depends on a few customers: the top ten were 92.62% of FY26 revenue (DRHP p.26). It also depends on related parties. Royalcare Super Speciality Hospital Limited, Royal Habitat (a firm in which two directors are partners) and Royalcare Trust (of which the Managing Director is chairman) together brought ₹291.7 crore, 61.88% of FY26 revenue (DRHP p.24, DRHP p.59, DRHP p.60). The customer count rose from 47 in FY24 to 122 in FY26, with repeat customers 27.33% of the FY26 count (DRHP p.149). On the supply side, the top ten suppliers were 57.03% of FY26 purchases, down from 97.47% in FY25 (DRHP p.34).

04The growth record

Sabari Constructions Technologies financials: revenue, profit and margins

Source: DRHP p.52, DRHP p.53, DRHP p.51, DRHP p.104, converted from ₹ lakh; borrowings are long-term plus short-term borrowings (DRHP p.51). The company computes EBITDA margin on total income rather than revenue (DRHP p.104). Revenue went from ₹181.9 crore in FY24 to ₹471.4 crore in FY26, and profit after tax from ₹11.2 crore to ₹56.6 crore (DRHP p.52).

Our arithmetic over FY24 to FY26: revenue grew about 61.0% a year (our arithmetic, DRHP p.52), EBITDA about 87.0% a year (our arithmetic, DRHP p.104) and profit after tax about 124.9% a year (our arithmetic, DRHP p.52). EBITDA margin moved from 15.25% to 20.57%, up 532 basis points, so from 15.3% to 20.6% rounded (DRHP p.104). The company reports revenue growth of 63.60% in FY25 and 58.41% in FY26 (DRHP p.104).

The year ends on March 31 throughout. The FY24 figures were restated: net worth as audited was ₹47.2 crore against ₹40.3 crore as restated, after write-offs of old receivables, a lower value for work in progress and recognition of gratuity, CSR and deferred tax for earlier years (DRHP p.219, DRHP p.220).

Figures repeated for the key-figures table. Operating cash flow was −₹14.4 crore in FY26 (DRHP p.53). Other income was 2.01% of FY26 profit before tax, the company's own figure (DRHP p.229). Return on capital employed was 32.85% in FY26 (DRHP p.104), and debt to equity 1.35 times, about 1.4× (DRHP p.104). Borrowings were ₹163.8 crore at March 31, 2026 (DRHP p.263).

Net debt, borrowings less cash and bank balances of ₹14.8 crore, was about 1.5× FY26 EBITDA (our arithmetic, DRHP p.51). Working-capital days were 261, 126 and 111 (DRHP p.30). Receivable days were 102 in FY24 and 64 in FY26 (DRHP p.31). Bank guarantees given for the company stood at ₹93.0 crore at March 31, 2026 (DRHP p.54).

The largest customer was 44.3% of FY26 revenue (DRHP p.59), the top five 78.2% and the top ten 92.6% (DRHP p.26). Related parties were 61.9% of FY26 revenue (DRHP p.24) and Tamil Nadu 79.1% (DRHP p.24). Related-party transactions of all kinds were ₹320.8 crore in FY26, 68.04% of revenue (DRHP p.36). The Coimbatore plant ran at 62.9% of capacity in FY26 (DRHP p.37).

Of the fresh issue, ₹160.0 crore is earmarked for working capital (DRHP p.90).

05What the growth is made of

Revenue rose ₹289.2 crore from FY24 to FY26 (our arithmetic, DRHP p.52). By client type, government work added ₹138.7 crore, private work ₹88.6 crore and the company's own projects ₹62.2 crore (our arithmetic, DRHP p.145).

Related parties account for most of the rise. Revenue from related parties went from ₹74.7 crore in FY24 to ₹291.7 crore in FY26, an increase of ₹217.0 crore (our arithmetic, DRHP p.24). Within that, sales to Royalcare Super Speciality Hospital Limited rose from ₹74.0 crore to ₹208.9 crore, and Royal Habitat and Royalcare Trust appear as customers for the first time in FY26 with ₹67.2 crore and ₹15.6 crore (DRHP p.59, DRHP p.60). The company explains FY25 growth by "higher sales to one Super Speciality Hospital" for its construction, up 139.86%, and its share of the Rameswaram station work (DRHP p.336, DRHP p.337).

FY26 growth the company attributes to new government orders, including the NCERT Regional Institute of Education campus and the Kumbakonam station redevelopment, with the number of customers more than doubling (DRHP p.335). Government revenue rose from ₹44.7 crore to ₹151.0 crore that year (DRHP p.145).

A construction contractor has no unit volume in the usual sense. The document does not give revenue or margin by project, so the increase cannot be split into new contracts, price escalation and mix. That is the finding. Sub-contracting carried more of the work in FY26: sub-contract expenses were ₹96.9 crore, 20.56% of revenue, against 13.25% in FY25 (DRHP p.31).

06Earnings quality

The item that needs explaining is cash. Profit rose to ₹56.6 crore in FY26 while operating cash flow was −₹14.4 crore, because trade receivables rose ₹89.8 crore in the year (DRHP p.53). Receivables went from ₹32.3 crore at March 2025 to ₹116.9 crore at March 2026, 24.81% of revenue (DRHP p.31). Read from the filing: at March 31, 2026 the related parties owed ₹84.4 crore, of which Royal Habitat ₹69.2 crore, Royalcare Trust ₹9.8 crore and Royalcare Super Speciality Hospital Limited ₹5.4 crore, about 72% of all receivables (our arithmetic, DRHP p.59, DRHP p.60).

The transfer of work in progress to fixed assets also matters. Building additions were ₹23.6 crore in FY26, "a significant part" of which came from inventory (DRHP p.226, DRHP p.338). Read from the filing: costs moved from inventory into buildings leave the profit and loss account and appear as fixed-asset purchases in the investing section of the cash flow, of ₹36.9 crore in FY26 (DRHP p.53, DRHP p.227). The document does not say which building was moved.

Two other points sit in the notes. Quarterly stock and book-debt statements filed with the banks differed from the books: at the FY26 year end the stock reported to banks was ₹142.8 crore against ₹96.6 crore in the books, and in the first quarter book debts reported were ₹92.5 crore against ₹25.2 crore, which the company puts down to quarter-end closing entries (DRHP p.258). Fixed deposit balance confirmations were not available and were verified from deposit receipts (DRHP p.225). A ₹5.2 crore provision for doubtful debts was made in FY26 against receivables more than three years old (DRHP p.228, DRHP p.339).

07The balance sheet

At March 31, 2026 total assets were ₹388.3 crore: trade receivables ₹116.9 crore, inventories ₹96.6 crore (work in progress ₹80.9 crore), property, plant and equipment ₹67.0 crore, short-term loans and advances ₹65.0 crore, retention money and other current assets ₹15.6 crore, and cash and bank balances ₹14.8 crore (DRHP p.51, DRHP p.224, DRHP p.225). The advances include ₹33.1 crore paid for land, ₹19.7 crore to vendors and ₹6.1 crore of inter-corporate deposits (DRHP p.225).

Against that: short-term borrowings ₹132.6 crore, long-term borrowings ₹31.2 crore, trade payables ₹32.9 crore, other current liabilities ₹50.8 crore and equity ₹121.6 crore (DRHP p.51). Other current liabilities include ₹15.9 crore of customer advances, ₹15.8 crore of statutory dues payable, a ₹12.8 crore book overdraft and ₹2.3 crore of interest owed on late payments to small suppliers (DRHP p.223). Taxation provision was ₹17.3 crore (DRHP p.224).

Borrowings of ₹163.8 crore comprise bank overdraft ₹128.5 crore against a sanctioned ₹127.5 crore, term loans from banks and finance companies ₹34.9 crore, and ₹0.50 crore of unsecured loans from related parties repayable on demand (DRHP p.263, DRHP p.41). Working capital lines carry interest from 8.50% to 11.50% (DRHP p.94). The promoters have given personal guarantees for the company's bank loans (DRHP p.198). Bank facilities of ₹357.65 crore are rated IVR BBB/Stable for long-term and IVR A3+ for short-term (DRHP p.42). Contingent liabilities were ₹1.5 crore of disputed income tax and a ₹64.2 crore arbitration counterclaim, not provided for, plus ₹93.0 crore of bank guarantees given (DRHP p.54).

Source: DRHP p.51, DRHP p.110, our arithmetic. The objects do not repay borrowings (DRHP p.90). Net worth after the issue cannot be stated because the price and issue expenses are blank (DRHP p.262).

08What the money is for

Sabari Constructions Technologies IPO objects: what the money is for

Source: DRHP p.90, DRHP p.96. The percentages cannot be stated because the issue amount is blank (DRHP p.90). The company estimates its working capital need at ₹231.0 crore in FY27 and ₹373.3 crore in FY28, against ₹199.8 crore in FY26, and plans to fund the increase from bank lines, internal accruals and the issue (DRHP p.92). Those are the company's own estimates, built on receivable days of 85 and 86 and inventory days of 82 and 89 (DRHP p.93).

The objects have not been appraised by any bank or agency (DRHP p.65, DRHP p.97). A monitoring agency is to be appointed, its name left blank (DRHP p.98). No issue money goes to the promoters, directors or group companies (DRHP p.99).

Into the business up to 63,00,000 new shares; the amount depends on a price not yet set, and the working capital object alone is ₹160.0 crore (DRHP p.1, DRHP p.90). To selling shareholders none; the whole issue is fresh shares (DRHP p.1).

09Who is selling

Sabari Constructions Technologies IPO offer for sale: who is selling

The document states the offer for sale is "Nil" and that the entire issue is a fresh issue of equity shares (DRHP p.1). The promoters and promoter group will not take part in the issue (DRHP p.88).

10Promoters

The document names three promoters: Vangatachalapathy K, A Arunsakdeeban and Preethi Vangat (DRHP p.196). Together they hold 1,12,95,000 shares, 74.00% before the issue (DRHP p.196). The document lists Vangatachalapathy K as the father of Preethi Vangat and father-in-law of A Arunsakdeeban, and Preethi Vangat as the spouse of A Arunsakdeeban (DRHP p.181, DRHP p.182).

Vangatachalapathy K, aged 68, is Chairman and Managing Director, with over 28 years in infrastructure and construction; the original degree certificate cannot be traced and the qualification shown rests on an affidavit (DRHP p.180, DRHP p.36). A Arunsakdeeban, aged 44, is a whole-time director with 23 years of experience, previously at Tata Consultancy Services (DRHP p.180, DRHP p.181). Preethi Vangat, aged 43, is a whole-time director responsible for administration, with 17 years in software engineering and infrastructure (DRHP p.181). None of the directors has sat on the board of a listed company (DRHP p.43).

Pay: remuneration to the three promoters was ₹3.2 crore in FY24 and ₹3.8 crore in FY26, of which ₹2.5 crore to Vangatachalapathy K in FY26 (our arithmetic, DRHP p.57, DRHP p.58, DRHP p.183). Present terms are basic salaries of ₹0.23 crore a month for Vangatachalapathy K, ₹0.05 crore for Preethi Vangat and ₹0.03 crore for A Arunsakdeeban (DRHP p.182, DRHP p.183).

Pledges and guarantees: no promoter shares are pledged (DRHP p.88). The promoters have given personal guarantees to banks for the company's loans (DRHP p.198).

Cases: no criminal, regulatory or material litigation is outstanding against the promoters, and no tax cases (DRHP p.345, DRHP p.346, DRHP p.347).

Other interests: Vangatachalapathy K is a partner in RIO, a shareholder in Sree Sabari infrastructures and constructions India private limited and a trustee of Royalcare Trust; A Arunsakdeeban and Preethi Vangat are partners in One Rent Infra and Royal Habitat (DRHP p.197, DRHP p.198). The promoter group also includes Royal Care Super Speciality Hospital Limited (DRHP p.200). Four of these group entities are in real estate, construction and interiors, and the company has non-compete agreements with them (DRHP p.33). The group company Royalcare Super Speciality Hospital Limited has Karuppanasamy Madeswaran, listed as the brother of Vangatachalapathy K, as managing director and 12.34% shareholder (DRHP p.199, DRHP p.202).

Loans to and from the Managing Director: the company advanced ₹66.5 crore to Vangatachalapathy K in FY24 and recovered ₹66.5 crore the same year, with ₹4.1 crore outstanding at March 2024 and recovered in FY25 (DRHP p.57). In FY25 the Managing Director lent the company ₹38.8 crore and was repaid ₹38.1 crore (DRHP p.57).

Promoter economics: Vangatachalapathy K subscribed 8,50,000 shares at ₹10 in 2011 and 35,30,000 at ₹10 in 2012, gifted 6,55,000 to Chandra Venkat on April 3, 2025, and received 74,50,000 bonus shares on September 25, 2026 (DRHP p.84). A Arunsakdeeban and Preethi Vangat each subscribed 20,000 shares at ₹10 in 2011 and received 40,000 bonus shares (DRHP p.84, DRHP p.85). The promoters bought or sold no shares in the six months before filing (DRHP p.85).

11Who already owns it

Sabari Constructions Technologies promoter holding before and after the IPO

Source: DRHP p.83. A Arunsakdeeban and Preethi Vangat hold 0.39% each and C V Sabari, in the promoter group, 0.39% (DRHP p.84, DRHP p.85). Promoters hold 74.00% and promoters with the promoter group 75.90% of 1,52,62,950 shares; the public holds 24.10% across 96 holders, 101 shareholders in all (DRHP p.196, DRHP p.81).

If all 63,00,000 new shares are issued, the promoters' 1,12,95,000 shares would be about 52.4% of 2,15,62,950 shares, and the promoters with the promoter group about 53.7% (our arithmetic, DRHP p.74, DRHP p.196). The document leaves the post-issue holding blank (DRHP p.85).

The new outside holders: 5,87,650 shares were placed at ₹660 each in three preferential allotments on August 28, September 1 and September 24, 2026, ₹38.8 crore in all, to about 100 investors, before the 2:1 bonus (DRHP p.75, DRHP p.110). The largest allottees were India - Ahead Venture Fund (1,51,516 shares), Convivial Advisors LLP (75,758) and F3 Advisors Private Limited (60,606) (DRHP p.75, DRHP p.77). Adjusted for the bonus, the placement price is ₹220 a share (DRHP p.110). After the bonus, India - Ahead Venture Fund holds 3.0%, Convivial Advisors LLP 1.5% and F3 Advisors Private Limited 1.2% before the issue (DRHP p.83).

Vinodini Vinod Hasal held 5,98,500 shares, 13.30%, a year before filing and at March 31, 2026, with no allotment shown in the paid-up capital history (DRHP p.83, DRHP p.221). Yash Jasbir Oberoi does not appear in the list ten days before filing (DRHP p.83). The document does not say how either came to hold shares or at what price.

12What changed just before the IPO

• Revenue and profit: revenue went from ₹181.9 crore in FY24 to ₹471.4 crore in FY26 and profit after tax from ₹11.2 crore to ₹56.6 crore (DRHP p.52).
• Receivable days moved from 102 in FY24 to 64 in FY26, after 45 in FY25 (DRHP p.31).
• Margin: EBITDA margin rose from 15.25% to 20.57% (DRHP p.104).
• New related-party customers: Royal Habitat and Royalcare Trust became customers in FY26 with ₹67.2 crore and ₹15.6 crore of sales (DRHP p.60, DRHP p.59).
• Promoter pay went from ₹3.2 crore in FY24 to ₹3.8 crore in FY26 (our arithmetic, DRHP p.57, DRHP p.58).
• Pre-IPO placement: 5,87,650 shares at ₹660 between August 28 and September 24, 2026 (DRHP p.75).
• Bonus issue: 2:1, 1,01,75,300 shares allotted on September 25, 2026, the last allotment before the IPO, with no price paid (DRHP p.75, DRHP p.77).
• Auditor change: P.S. Sitaram resigned on July 31, 2024 on conversion of the practice, M/s P.S. Sitaram & Co. was appointed on August 28, 2024 and resigned on May 11, 2025 citing pre-occupation, and M/s VEKAM & Associates was appointed on June 10, 2025 (DRHP p.66).
• Became a public company: resolution of July 27, 2026, certificate dated August 13, 2026 (DRHP p.2).
• Board and managers: two independent directors joined on September 17, 2026; a Chief Financial Officer and Company Secretary were appointed the same day; a director, Dharmalingam Pravin, died on January 15, 2026 and Chandra Venkat left the board on April 30, 2026 (DRHP p.185, DRHP p.195).
• Staff turnover: 266 employees left and 181 joined in FY26, an attrition rate of 100.95%, after a review the company links to a quality issue raised by a client (DRHP p.27).
• Gift of shares: 6,55,000 shares from Vangatachalapathy K to Chandra Venkat on April 3, 2025 (DRHP p.84).
• Capital expenditure: buildings and land of ₹33.0 crore added in FY26, much of it from work in progress (DRHP p.226, DRHP p.338).
• Compliance clean-up: compounding applications filed or being filed for unfiled consolidated statements for FY23 to FY25 and late cost auditor appointments (DRHP p.28, DRHP p.29).

13Capacity and expansion

Source: DRHP p.37, DRHP p.38, DRHP p.145. Production at Coimbatore fell from 28,438 m3 in FY24 to 25,496 m3 in FY26, while Chennai rose from 300 m3 to 27,342 m3 (DRHP p.37). The figures are certified by an independent chartered engineer, and the plants run three shifts round the clock (DRHP p.38, DRHP p.133). Product sales to outsiders were ₹1.3 crore in FY26, so nearly all output goes to the company's own sites (DRHP p.227).

Both plants have permit issues. The Tamil Nadu Pollution Control Board rejected consent to operate the Chennai concrete plant on November 15, 2025, citing a house within 250 metres, nearby reserve forests and inadequate pollution controls; the company's appeal is pending (DRHP p.345). The company has not applied for consent to establish the Coimbatore plant (DRHP p.362). The Coimbatore plant sits on land leased from the group company Royal Care Super Speciality Hospital Limited at ₹10,000 a month (DRHP p.154).

Plant and machinery had a gross value of ₹12.2 crore at March 2026 (DRHP p.147). None of the issue money goes to capacity (DRHP p.90). For a contractor the order book plays the role capacity plays for a manufacturer: the 19 projects listed carry contract values of ₹1,815.3 crore with ₹980.2 crore billed by March 31, 2026, leaving about ₹835.1 crore unbilled, of which about ₹654.7 crore on government and public sector projects (our arithmetic, DRHP p.140 to DRHP p.143). The document does not print an order book total, and two projects show billing above contract value (DRHP p.141).

14Market size and industry structure

Sabari Constructions Technologies industry: market size and growth

As claimed: the Industry Overview chapter is not a commissioned report. It is compiled from public sources: the IMF, the Ministry of Statistics, the Reserve Bank, IBEF, Mordor Intelligence, Horwath HTL, Colliers, Cushman & Wakefield and others, and the company says it has not verified the data (DRHP p.117, DRHP p.41). The broadest figure is construction's share of the economy: gross value added by construction was ₹26,55,075 crore at current prices in FY26, about 8% of nominal gross value added (DRHP p.121). Mordor Intelligence, as cited, puts the India construction market at US$0.79 trillion in 2026 (DRHP p.123).

The part that is addressable: the company builds hospitals, homes, institutional buildings, railway stations and commercial buildings, mainly in Tamil Nadu (DRHP p.131, DRHP p.24). The chapter does not size building contracting, or any of these segments, in Tamil Nadu or in South India, so no addressable figure can be given from the document.

What the company is today: FY26 revenue of ₹471.4 crore is about 0.02% of national construction gross value added (our arithmetic, DRHP p.52, DRHP p.121). That comparison mixes a revenue figure with value added and is shown only for scale.

Size over time: construction gross value added at constant 2022-23 prices went from ₹21,09,100 crore in FY23 to ₹23,18,266 crore in FY24, ₹24,87,430 crore in FY25 and ₹26,70,543 crore in FY26, growth of 9.9%, 7.3% and 7.4% (DRHP p.121, DRHP p.122). In the first quarter of FY27 it grew 7.7% (DRHP p.122).

Mordor Intelligence, as cited, puts the India construction market at US$0.74 trillion in 2025 and projects US$1.10 trillion by 2031, 6.87% a year; that is the research firm's projection, not the company's (DRHP p.123). A Knight Frank India and CREDAI Tamil Nadu study, as cited, projects the state's construction sector growing from US$32 billion in FY23 to US$208 billion by 2047-48 (DRHP p.129).

Segments: the chapter divides building demand into residential, offices and IT parks, hotels, healthcare, industrial and warehousing, institutional and railway work (DRHP p.124). Residential was 44.68% of the construction market in 2025 by Mordor's count (DRHP p.123). The company's own revenue in FY26 was 52.88% private, 32.03% government and 15.09% own projects (DRHP p.145).

What drives demand: public capital expenditure of ₹12,20,000 crore budgeted for FY27, up from ₹2,63,000 crore in FY18 (DRHP p.120); railway capital expenditure of ₹2,93,030 crore in FY27 and 1,337 stations identified for redevelopment (DRHP p.128); a hospital bed ratio of 1.3 per 1,000 people and an estimated 2.4 million more beds needed (DRHP p.126); a health ministry budget of ₹1,06,530 crore and an education budget of ₹1,39,289 crore for FY27 (DRHP p.126, DRHP p.127); a branded hotel pipeline of about 144,000 rooms, with Chennai and Coimbatore among the highest occupancy markets (DRHP p.125, DRHP p.130).

In Tamil Nadu, the chapter cites real state output growth of 11.19% in 2024-25, construction employing 18% of the state's workforce against 12.0% nationally, and Coimbatore office vacancy near zero on 5.5 million square feet of stock (DRHP p.128, DRHP p.129).

Structure: the chapter calls the industry "highly fragmented", from large engineering groups to regional building contractors and unorganised players (DRHP p.130). It names Larsen & Toubro, Megha Engineering & Infrastructures, Shapoorji Pallonji, Tata Projects and KEC International among major construction companies, and Hindustan Construction Company and NCC in infrastructure (DRHP p.130). Regional contractors compete on pre-qualification credentials, repeat private clients, execution, and the ability to furnish guarantees and working capital (DRHP p.130). The risk factors add that price is often the deciding factor in tenders (DRHP p.38).

Inputs and trade: cement is 15% to 20% of building costs, and GST on cement was cut from 28% to 18% (DRHP p.124). The producer price index for manufactured goods rose 10.7% in the first quarter of FY27, which contractors manage through escalation clauses (DRHP p.124). The company's own imports were ₹2.9 crore of raw material in FY26, 1.43% of consumption (DRHP p.256).

Rules: the business works under the Real Estate (Regulation and Development) Act for its own projects, the Tamil Nadu Town and Country Planning Act, 1971 and building rules of 2019, PWD contractor registration, contract labour and inter-state migrant workmen licences, and pollution board consents for the concrete plants (DRHP p.156, DRHP p.157, DRHP p.158, DRHP p.162, DRHP p.362).

What the chapter says can go wrong: the IMF's downside risks from renewed Middle East conflict, commodity price swings and trade fragmentation, felt by contractors through cement, steel, bitumen, diesel, freight and interest rates (DRHP p.118). Railway works depend on budget support, with the operating ratio above 98% (DRHP p.128). Hotel supply is being delivered behind schedule (DRHP p.125). Elsewhere the document notes slower work in the monsoon (DRHP p.35).

15Competitive position

Sabari Constructions Technologies competitors

Source: DRHP p.104, DRHP p.107, DRHP p.108, DRHP p.109, converted from ₹ lakh. The document gives debt to equity for the peers, not borrowings. The chapter names larger national firms but no regional competitor in Tamil Nadu (DRHP p.130).

What the company puts forward: a mixed order book of government, private and own projects, in-house concrete plants, its financial record and an experienced management team (DRHP p.100, DRHP p.144, DRHP p.145). Against that: revenue concentrated in Tamil Nadu and in related parties, a debt to equity ratio higher than each listed peer's, 1.35 against 0.04 to 0.26, no registered trademark, permit gaps at both plants and an attrition rate of 100.95% in FY26 (DRHP p.24, DRHP p.104, DRHP p.153, DRHP p.345, DRHP p.362, DRHP p.27). Its PAT margin and return on capital are higher than all three peers in FY26 (DRHP p.104, DRHP p.107 to DRHP p.109).

16Peers the company named

Peers named in the offer document: RPP Infra Projects Limited, Ahluwalia Contracts (India) Limited and PSP Projects Limited (DRHP p.103, DRHP p.106).

All three are listed contractors several times the company's size: RPP Infra about three times, PSP Projects about seven times and Ahluwalia Contracts about ten times by FY26 revenue (our arithmetic, DRHP p.104, DRHP p.107 to DRHP p.109). Their FY26 PAT margins were 0.50%, 1.76% and 5.82% against the company's 12.01% (DRHP p.107 to DRHP p.109). The document prints their P/E on September 28, 2026 prices as 34.16, 55.59 and 14.37, an average of 34.71 (DRHP p.101, DRHP p.103). The company's FY26 EPS after the bonus is ₹41.95 (DRHP p.100). With no price band, no P/E for the company can be stated.

17Risks, in plain words

Sabari Constructions Technologies IPO risks

Related parties: related parties brought 61.88% of FY26 revenue (DRHP p.24) → the terms of that work are not tested against outside clients, and related parties owed about ₹84.4 crore at March 2026 (our arithmetic, DRHP p.59, DRHP p.60) → one group company alone was 44.32% of FY26 revenue (DRHP p.59).

Customers: the top ten customers were 92.62% of FY26 revenue (DRHP p.26) → losing one large client changes revenue directly → the top two were 55.27% (DRHP p.26).

Region: Tamil Nadu brought 79.06% of FY26 revenue (DRHP p.24) → state policy, weather or payment delays there carry through → its registered office, regional office and both plants are in Tamil Nadu (DRHP p.25).

Cash and working capital: operating cash flow was −₹14.4 crore in FY26 (DRHP p.53) → work is funded before clients pay → receivables rose to ₹116.9 crore and working capital to ₹199.8 crore (DRHP p.31, DRHP p.30).

Debt: borrowings were ₹163.8 crore against net worth of ₹121.6 crore (DRHP p.263, DRHP p.51) → the overdraft was above its sanctioned limit at March 2026 → ₹128.5 crore drawn against ₹127.5 crore sanctioned (DRHP p.263).

Lender consents: no-objection certificates for the issue are still awaited from Central Bank of India, Bank of Maharashtra, IndusInd Bank, State Bank of India, Karur Vysya Bank and Axis Bank (DRHP p.28) → the issue may be delayed if they do not come.

Contracts: projects are fixed price or item rate, with liquidated damages of up to 10.00% of contract value for delay (DRHP p.27, DRHP p.35) → cost overruns fall on the company → sub-contracting was 20.56% of FY26 revenue (DRHP p.31).

Regulation and permits: the Chennai concrete plant's consent to operate was rejected and the Coimbatore plant has no consent to establish (DRHP p.345, DRHP p.362) → output at either could be stopped → the two plants produced 52,838 m3 in FY26 (our arithmetic, DRHP p.37).

Compliance: past lapses include unfiled consolidated statements for FY23 to FY25, unspent CSR in four years and late GST returns, up to 143 days late (DRHP p.28, DRHP p.29, DRHP p.39) → compounding fees and penalties are not yet known → interest owed on late payments to small suppliers was ₹2.3 crore (DRHP p.223).

Legal: an arbitration counterclaim of ₹64.2 crore plus interest is pending against the company (DRHP p.345) → it is more than half of FY26 net worth (our arithmetic, DRHP p.51) → no provision has been made (DRHP p.54).

People: attrition was 100.95% in FY26 (DRHP p.27) → execution depends on site staff → the Chief Financial Officer and Company Secretary were appointed on September 17, 2026 (DRHP p.195).

Issue-specific: the promoters' shares cost ₹10 each before the bonus and the pre-IPO placement was at ₹660, ₹220 after the bonus (DRHP p.84, DRHP p.110) → the price band, issue size and general corporate purposes amount are blank (DRHP p.90).

18Litigation and regulatory matters

Cases against Sabari Constructions Technologies and its promoters

Criminal: none against or by the company, the promoters, the directors or the group company (DRHP p.344 to DRHP p.346). Civil: no outstanding civil proceedings by or against the company other than the arbitration (DRHP p.344). Regulatory: no actions by statutory authorities against the company, promoters or directors (DRHP p.344, DRHP p.345, DRHP p.346).

The arbitration began on a Bombay High Court order of September 30, 2025 appointing a sole arbitrator; the company claims ₹23.7 crore with 18% interest and the counterparty claims ₹64.2 crore with 12% interest (DRHP p.345). Tax: besides the table, a ₹10,000 income tax demand for AY 2023-24, an unquantified scrutiny notice for AY 2025-26 and GST notices from Jharkhand and Maharashtra under scrutiny (DRHP p.347, DRHP p.348).

Pending compounding applications concern unfiled consolidated statements and cost audit lapses (DRHP p.28, DRHP p.29). The company also lists licence gaps: an expired labour licence for the NCERT campus project with no renewal filed, and shop and establishment licences not applied for at the Chennai and Coimbatore offices (DRHP p.362).

19Related-party transactions

Source: DRHP p.57 to DRHP p.60, converted from ₹ lakh. Transactions with promoters, relatives and promoter group entities totalled ₹320.8 crore in FY26, 68.04% of revenue, against ₹278.3 crore (93.51%) in FY25 and ₹215.5 crore (118.49%) in FY24 (DRHP p.36). In FY24 that total includes the ₹66.5 crore advanced to and recovered from the Managing Director (DRHP p.57).

At March 31, 2026 Royal Habitat owed ₹69.2 crore, Royalcare Trust ₹9.8 crore and Royalcare Super Speciality Hospital Limited ₹5.4 crore (DRHP p.59, DRHP p.60). The company also paid ₹1.9 crore of staff welfare expenses to the hospital company in FY26 and leases its Coimbatore plant land from it (DRHP p.59, DRHP p.154).

What appeared or changed in the two years before filing: sales to Royal Habitat and Royalcare Trust from FY26 (DRHP p.60, DRHP p.59); purchases from RIO, a firm in which the Managing Director is a partner, up from ₹3.1 crore to ₹12.7 crore (DRHP p.59); the ₹38.8 crore loan from the Managing Director in FY25 and its repayment (DRHP p.57); a loan of ₹1.3 crore from Chandra Venkat, given and repaid in FY26 (DRHP p.58); and the five-year lease of the Coimbatore plant land from November 25, 2025 (DRHP p.154).

The company says the transactions were at arm's length and that it has a related party transaction agreement with the hospital company (DRHP p.36, DRHP p.203).

20What the offer document does not say

Margins by project, by client type or for related-party work against outside work are not given. The total order book is not printed, and the client for the ₹575.0 crore hospital project Phase III at Neelambur, Coimbatore, with ₹523.8 crore billed, is not named; the group company Royalcare Super Speciality Hospital Limited has its registered office at Neelambur (DRHP p.143, DRHP p.201).

What Royal Habitat bought for ₹67.2 crore in FY26, and why it owed ₹69.2 crore at the year end, is not explained (DRHP p.60). Customers other than the related parties are not named in the concentration table (DRHP p.26). How Vinodini Vinod Hasal and Yash Jasbir Oberoi came to hold their shares, and at what price, is not disclosed (DRHP p.83). Which building moved from inventory into fixed assets is not said (DRHP p.227).

The issue amount, price band, general corporate purposes amount and issue expenses are blank (DRHP p.90, DRHP p.96).

Several inconsistencies are recorded as document matters, not business ones. The results table in the management discussion shows revenue of ₹56.5 crore and profit of ₹7.8 crore for FY26, refers to "AFR and BMH plant projects" and to exports, and its cash flow paragraphs carry other figures; none of this matches the restated statements (DRHP p.326, DRHP p.331, DRHP p.332, DRHP p.341, DRHP p.342).

The same chapter gives FY26 operating cash flow as −₹14.7 crore against −₹14.4 crore in the cash flow statement (DRHP p.341, DRHP p.53). The working capital annexure shows FY26 inventory of ₹76.2 crore and receivables of ₹133.3 crore against ₹96.6 crore and ₹116.9 crore on the balance sheet (DRHP p.91, DRHP p.51).

The issue was approved on September 17 and 21, 2026 in one place and August 14 and 19, 2026 in another (DRHP p.48, DRHP p.349). The registrar is Purva Sharegistry (India) Private Limited on the cover, while the depository agreements name Share India Capital Services Private Limited (DRHP p.62, DRHP p.349). The property table says no lessor is a related party and then marks the Coimbatore plant lessor as related (DRHP p.153, DRHP p.154).

The notes say no loans were given to promoters repayable on demand, while the related-party table shows the ₹66.5 crore advance to the Managing Director in FY24 (DRHP p.257, DRHP p.57). The tax benefit statement calls the company "Sabari Construction Technologies Limited" (DRHP p.113). The company is said to operate in 7 states in one place and 10 in another, with 11 listed (DRHP p.24, DRHP p.131).

The Rameswaram contract is ₹90.2 crore in the milestones and ₹106.0 crore in the order book (DRHP p.174, DRHP p.141).

21Five questions for management

1. What gross margin did the company earn on work for Royalcare Super Speciality Hospital Limited, Royal Habitat and Royalcare Trust in FY26, against work for unrelated clients?
2. What did Royal Habitat purchase for ₹67.2 crore in FY26, and when will the ₹69.2 crore it owed at March 31, 2026 be collected?
3. What is the unexecuted order book in total today, how much of it is from related parties, and who is the client for the Phase III hospital project at Neelambur?
4. How much of FY26 profit came from the ₹21.2 crore of work in progress moved into fixed assets, and which building was it?
5. If the Chennai plant's consent to operate is not restored, where will the company source the 27,342 m3 of concrete that plant produced in FY26, and at what extra cost?

1Sources and cited facts

This study was read from 1 document the company filed. The 184 figures it cites are listed under the document each came from, with the page and the sentence as printed.