Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Arisinfra Solutions Ltd (NSE: ARISINFRA) Q4 2026 Earnings Call dated May. 11, 2026
Corporate Participants:
Purvangi Jain — Investor Relations
Ronak Morbia — Chairman and Managing Director
Bhavik Khara — Whole Time Director and Chief Financial Officer
Srinivasan Gopalan — Chief Executive Officer
Analysts:
Nirav Shah — Analyst
Deepak Podar — Analyst
Unidentified Participant
Unidentified Participant
Unidentified Participant
Unidentified Participant
Unidentified Participant
Unidentified Participant
Shaurya Yadav — Analyst
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q4FY26 earnings conference call of Ferris Infra Solutions Ltd. As a reminder, all participant lines will be in listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touch tone phone. Please note that this conference is being recorded at this time. I would like to hand over the conference to Ms.
Parvangi Jain from Ballaram Advisors. Thank you and over to you Ma’. Am.
Purvangi Jain — Investor Relations
Good afternoon everyone and a very warm welcome to you all. My name is Purvangi Jain from Valeram Advisors. We represent the investor relations of Aris Infra Solutions limited On behalf of the company, I would like to thank you all for participating in the company’s earnings conference call for the fourth quarter and full year ended of the financial year 2026. Before we begin, let me mention a short cautionary statement. Some of the statements made in today’s earnings call may be forward looking in nature.
Such forward looking statements are subject to risk and uncertainty which could cause actual results to differ from those anticipated. Such statements are based on management’s belief as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place undue reliance on these forward looking statements in making any investment decision. The purpose of today’s earnings call is purely to educate and bring awareness about the company’s fundamental business and financial quota under review.
Let me now introduce you to the management participating with us in today’s earnings call and hand it over to them for their opening remarks. We have with us Mr. Ronak Morbia, Chairman and Managing Director, Mr. Bhavik Khara, whole time Director and Chief Financial Officer and Mr. Srinivasan Gopalan, Chief Executive Officer. Without any delay, I request Mr. Ronak Murbay to start with his opening remarks. Thank you. And over to you sir.
Ronak Morbia — Chairman and Managing Director
Thank you, Purvangi. Good afternoon everybody. It is a pleasure to welcome you all to the earnings conference call for the fourth quarter and financial year 2026. In the interest of some of the people who may be new to the company, let me first start by giving you a brief overview of the company followed by the financial highlight and operational highlights for the quarter. Under the Green. India’s construction ecosystem continues to present a large structural opportunity driven by sustained infrastructure investments, urbanization and increasing formalization of procurement processes.
However, the industry still remains highly fragmented with limited technology integration and operational inefficiencies across sourcing, execution and working capital management. Ares is focused on solving these challenges by building an integrated execution and procurement network powered by technology, data, intelligence and disciplined operations. Ares is a tech enabled construction, materials and services company focused on simplifying procurement and execution across India’s infrastructure and real estate ecosystem.
We operate an asset light network driven model that integrates sourcing, contract manufacturing, logistics, technology and project execution into a unified operating platform. Today we serve over 3000 customers through a network of 2000 plus vendors across 23 states and union territories with more than 78% repeat order contribution reflecting the strength of our execution capabilities and customer relationships. Our business is built across three complementary segments which together create a scalable and capital efficient ecosystem.
The first segment is our B2B supply business which acts as the entry point to the network. Through this business we provide developers and contractors with efficient procurement solutions across different construction materials. This segment is relationship driven and helps us build transaction scale, pricing, intelligence and deeper customer engagement across regions. This segment contributed around 44% to our revenues in FY26. The second segment is contract manufacturing which has now become one of our key growth and profitability drivers.
Under this segment we secure production capacity through exclusive long term partnerships with manufacturing plants without owning the assets ourselves. This allows us to benefit from manufacturing economics while maintaining an asset light structure. During FY26 this segment contributed nearly 47% of our revenues and continued to scale strongly supported by improved capacity utilization and strong execution capabilities. The third segment is our services business operated through the developer as a services or as we would like to call it the DAAS model.
Under this offering we manage the entire project lifecycle for developers including procurement, project execution, funding, coordination, sales and collections. While this segment contributes a relatively smaller share of revenues today, it delivers significantly higher margins and strong capital efficiency. Our DAS execution pipeline remains strong with currently about 12 plus active projects and about 1800 plus crores of GDV under execution providing strong future revenue visibility. What is important to understand is that these three segments are deeply integrated.
The B2B supply business helps build customer relationships and network density. Contract manufacturing improves supply control and profitability while the services business drives higher margin and long term engagements. Together they create a powerful operating network with strong cross selling opportunities in improving operating leverage and increasing customer stickiness over time. With this, I now hand it over to Mr. Bhavik Khara, the whole time Director and CFO of a company for the financial highlights for the period under review.
Bhavik Khara — Whole Time Director and Chief Financial Officer
Thank you Ronak. Good afternoon everyone who’s joined. Let me take you all through the financial Highlights for the period Under Review for the quarter under review, the revenue grew from revenue from operations stood at 343 crores registering a strong growth of 55% year on year. EBITDA for the quarter grew to 202% year on year to about 31 crores with EBITDA margins improving by 431 basis points year on year to 8.8%. PAT for the quarter stood at 22 crores compared to a loss in the corresponding quarter last year reflecting a strong operating leverage and an improving business mix.
For the financial year 2026, revenue from the operations stood at 1068 crores reflecting a growth of 39% year on year. EBITDA doubled year on year to 101 crores with EBITDA margins improving to 9.43%. An expansion of 290 basis points pad for the PDID stood at 60 crores compared to 6 crores a year ago. Importantly, this growth was accompanied by a continued improvement in the balance sheet strength and capital efficiency. The net working capital days further reduced to 66 days in FY26 from 110 days a year ago while the net debt to equity improved significantly to negative 0.09x.
Operating cash flow also turned strongly positive during the year reaching 142 crores reflecting disciplined working capital management, stronger cash generation and a structurally improved business model. Thank you. With this I hand it over to Mr. Srinivasan Gopalan, our CEO of the company to give you operational highlights for the quarter.
Srinivasan Gopalan — Chief Executive Officer
Thank you Bharat and Ronak. Good afternoon everyone. Coming to the operational highlights for the quarter under review, our contract manufacturing business scaled strongly during the quarter with revenues growing 169% year on year. Volumes delivered increased 91% year on year to 11.29 lakh metric tonnes in Q4 financial year 2026. We also saw capacity utilization improvement to 50% from 39% in the corresponding quarter last year, reflecting better throughput and improving operational efficiencies across manufacturing operations.
Another important highlight during the quarter was the strong traction in asphalt which is our newly launched product category. Revenues from asphalt increased to 30 crores in Q4 2026 growing 88% sequentially. More importantly, active customers in this category nearly doubled during the quarter to 28 customers reflecting strong customer acceptance and rapid market penetration. Our DAS developer as a service business also continued to scale well during the quarter. DAS revenue stood at 36 crores in the quarter registering a growth of 264% year on year and 61% sequentially driving by strong project execution and increasing adoption of our service offering.
Overall, we believe ARES is steadily evolving beyond a traditional construction materials business into a scalable network led platform where technology execution capability and ecosystem relationships together create long term value and sustainable growth. Thank you,
Operator
Sir. Shall we open the floor for Q and A?
Nirav Shah — Analyst
Please.
Questions and Answers:
Operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press STAR and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Disha from Sapphire Capital. Please go ahead.
Deepak Podar
Hello.
Unidentified Participant
Am I audible, sir? Yes, yes,
Deepak Podar
Yes. Thank you so much for this opportunity. So, a couple of questions from my side. Firstly, sir, we’ve seen the contract manufacturing segment. We’ve seen huge growth. So how do you see the overall mix evolving in FY27? What sort of percentage share are we targeting for contract manufacturing and the services segment?
Ronak Morbia
Yes, so if you see, historically from FY25 to the last year that we closed, We’ve grown almost 2x in both the segments. And now the contract manufacturing segment contributes to almost 47% of our annual revenues and services about 9%. You know, we have repeatedly, you know, mentioned that going forward, you know, for the next maybe three to five years, the focus is always going to be on contract manufacturing and services. And we believe that the numbers that we have delivered today will be sustained and we are confident that we will be able to improve the utilization even further, thereby improving the contribution from contract manufacturing as well.
Services, on the other hand, is lower revenue. But we are very confident with the kind of projects that we have under execution that we will be able to add meaningfully and improve that contribution in the next 12 months as well.
Deepak Podar
So can we expect like around 55 to 60% sort of revenue share from contract manufacturing in this 9% that we reach for services? Can this inch up to 10 to 11%? Will that be a fair assumption?
Ronak Morbia
I think it would, it would be a fair assumption. We will be looking to target about 55 to 60% contribution from contract manufacturing and services? I think somewhere around 9 to 10% that we have, you know, really maintained historically as well.
Deepak Podar
Okay, okay, that’s very good to know, sir. So if, if, suppose if we were to take that mix, so can we target and assuming 40% sort of growth, can we target 100cr pad for FR27.
Ronak Morbia
Well, it will be hard to actually put down a number to it but historically, you know, I mean in the last year itself we’ve grown 10x in terms of pack. It’s important to understand how we will achieve and what are the reasons that we would achieve. One of the main, there are three key reasons for it. One is the model that we operate on. You know, we keep our costs significantly under control because the entire business is managed to the tech platform that we’ve developed and that keeps the dependency on human workforce to a minimum.
And that is why you have seen a significant amount of growth in pat in the last year. The improving contribution from contract manufacturing and services definitely plays a part. And more importantly working capital which is a significant area that we continuously focus on. And with a reduced number of days in terms of 44 days this year itself, that definitely helps us improve our profitability as well because we are able to churn the cash more. So hard to put a number on it. But yes, we will be looking to compound the pat, you know, within terms of revenue as well.
Deepak Podar
Okay, fair enough sir. And sir, we’ve seen a sharp increase in other expenses in the fourth quarter and gross margin I think also were affected a bit. Could you please elaborate a bit more on why do we see that this sharp increase in other expenses?
Ronak Morbia
Yes, so that is mainly due to the expected credit loss that we have taken. Usually we like to do that at the end of the year. We have taken an additional expected credit loss of about 5 crores. This is in line with taking a more conservative approach in terms of the receivable risk that we generally take in our balance sheet. And that’s something that we did not take for the first three quarters. And we’ve taken a more conservative approach and that is why you see a spike in other expenses.
Deepak Podar
And also in terms of interest cost. We’ve seen debt reducing significantly but our interest cost has increased. So what will be the cost for that?
Ronak Morbia
The interest cost has reduced but as a strategic move we have started now getting access to working capital limits. We got a 30 crore sanction from one of the banks. And this is what we have mentioned before also that we will be going for about 100 to 150 crores of working capital facilities. The interest cost is not more of a concern for us because it is more of a strategic move. We are in the business of funding the bridge between payables and receivables. This is not long term structured debt.
We don’t need capital to grow. But we need this working capital facility to actually bridge the gap between payables and receivables. So this year, FY26, we had quarter one interest cost which was before the listing period and that is why it was high. So when you see the annual interest cost, it is on the higher side because of, you know, the higher debt that we had before listing.
Deepak Podar
Okay, okay, that’s very clear. Thank you so much and I wish you all the best for the future.
Ronak Morbia
Thank you so much.
Operator
Thank you. Next question is from the line of Darshul Zaveri from Crown Capital. Please go ahead.
Unidentified Participant
Hello.
Unidentified Participant
Good morning, sir. Thank you so much for taking my question. Firstly, congratulations on a great Q4, sir. So, sir, just wanted to understand in terms of seasonality, like is H1 and H2 similar for us or because of monsoons, how does that impact. Sir, our seasonality, sir,
Ronak Morbia
How we look at our business is slightly different. It’s more of a strategic move than seasonality. H1 usually is a little slower. H2 is higher, but that is more for strategic move. That is how we would like to operate as well. We like to push during the second half where the construction activity is at its peak and when the cash flows are stronger than the first H1 period. So the monsoons don’t really affect in terms of the demand or supply because the construction activity is on. And compared to that, our scale is relatively small.
I mean it’s, it’s almost negligible as compared to what kind of construction activity happens around. But you could say it is, it is more of a strategic move.
Unidentified Participant
Okay, fair. Fair enough, sir. So just wanted to understand in terms of like our FY27, you know, target in terms of revenue and EBITDA, do we have any guidance for that? Sir,
Ronak Morbia
We have, you know, we grew about 40% last year in terms of revenue and we have historically mentioned that we will be looking for a 40% growth for the next two years. So yes, the projected revenue growth is about 35 to 40%. EBITDA will grow significantly mainly because of the costs that I mentioned will be in control with respect to the revenue growth that we will see mainly because of the direct cost or the biggest cost component that will be in control.
Unidentified Participant
Oh, okay, okay, okay. EBITDA will also improve. Yeah, fair enough. I just wanted to know, like last year Q1 we had like around 8%, 8 and a half percent margin. So right now like we will see improvement quarter on quarter. Right. I just want to know because in Q3 we did around 11 and now if I exclude the 5cr provisioning. We would be nearly at that same level in Q4 also. So just like wanted to understand like Q1 also margins will be, will be steady state, right? Like our 11% margin is something that we can normally expect from you all around the year, right?
Or will there be some chunkiness towards H2 more?
Bhavik Khara
No. So we would maintain an EBITDA around 10, 10.5%. That is our sweet spot and we’ll keep our consistently growth, growth and numbers in there.
Unidentified Participant
Okay, fair.
Bhavik Khara
5 crore that you removed, right? That is a fair assumption. That is counting factor. After removing that we are 10, 10.2% and we’ll maintain that.
Unidentified Participant
Okay, okay, fair, fair enough. I just wanted to understand like in terms of this war and you know, power crisis, are we seeing some kind of, you know, maybe slow down in construction or like, you know, are there somewhere like, you know, do we have like the pricing power in terms of raw materials? How does that work? So just if is it impacting our business like when we, you know, deal with the contract manufacturing, do we have the ability to pass on the extra cost if we, you know, if everything is increasing, how do, how are we secured on that front?
Sir,
Ronak Morbia
To be honest, not, not much of a material impact. You know, the model itself is designed in a way that, you know, the larger it becomes, the more the transactions, the more the cost benefit and the more the profitability. And you know, that is actually what differentiates us from a traditional trading model as well. So economies of scale is something that we have started to extract. And as we go further with our costs being under control, we will see, you know, good amount of improvement in profitability and also, yes, a good amount of discounts in terms of volume, discounts in terms of raw material pricing as well.
Unidentified Participant
Okay. No, okay, okay, fair enough. That’s it from my side. So thank you so much. All the best.
Ronak Morbia
Thank you.
Operator
Thank you. Next question is from the lineup. Nirav Shah from GC Holdings. Please go ahead.
Nirav Shah
Yeah, good afternoon sir. And congrats on decent set of numbers. What was heartening was the balance sheets that we reported in March. So congrats on that, sir. So two questions. Firstly, it’s on the trade. Vendor receivables. We’ve seen a large increase in FY26 maybe because we are trying a poor capacities for our contract manufacturing growth. Just in terms of some guidance, how much can this trade deposit? I mean the current vendor base can achieve the revenues because contract manufacturing, that particular portion, I mean how much can it grow on this current Base, asset base.
And second question on this is what are the plans for this particular year? FY27. So the new vendor base will be for newer geographies only or we are looking for expanding the existing geographies also.
Ronak Morbia
Yes. So currently the trade deposits that are deployed, you know, for securing the capacity and also you know a newer model that we entered into which is securing demand for the next five years. And we started with multi year long term contract with a company like capacity infra projects. So these deposits are actually deployed for that. It gives us predictable revenue not just for this year, but for the next five years. With respect to the numbers, with the current asset base we have about 9 million metric tons of offtake annually.
That’s about 900 to 1,000 crores of material capacity on an annual basis which itself is about 4000 to 5000 crores for the next five years. And add to that the 800 crore of contract that we recently signed with capacity, that gives us that predictable revenue as well. And we are in the process of exploring more contracts and we will be announcing them soon. So the current asset base actually gives us a revenue predictability of more than 6000 crores for the next five years. And secondly, in terms of geographies with the current vendor base that we have, the current manufacturing partners, it is always going to be a much more stronger strategy to expand our reach and to improve more and more in the regions that we are present and you know, to actually enter into more and more projects and increase our wallet share with the customers present in those regions.
Nirav Shah
The 500 crore of contract manufacturing revenue that we did in FY26 on a 9 million ton of capacity contracted, it can go to what I mean on just this current tie ups.
Ronak Morbia
Yes, you are five years, six years
Nirav Shah
Cumulative number. But I just want an annual number that can be maxed out on this. How much can you spread this? Yeah.
Ronak Morbia
Yes. So the annual number that I mentioned, we will be looking to reach a peak utilization of more than 75 to 80% in this financial year itself.
Nirav Shah
And on revenue basis because it’s a mix of all commodities and pricing is different. Yes. So if I just add all the top line, it can be 700 crores, 800 crores on the current asset base of. Yes, absolutely.
Ronak Morbia
Yeah. Yes. Yeah.
Nirav Shah
Okay. Fair point. And how much will be type? I mean how much vendor deposits are we targeting to make an FY27? Was. Was around 160 crores,
Ronak Morbia
Correct? No, that’s absolutely correct. And we will look to increase more capacity. I think every quarter. And we will look to maybe invest another 25 to 50 crores this year. Also what we believe is that it is imperative to depend less and less on spot transactions and improve our capacity so as to secure the supply capacity. Because we are in that journey of getting higher demand from very large contractors and developers. We believe that we have achieved something with far less capital, which other companies have been doing by investing a heavy sum in manufacturing facilities.
So this is the real advantage and differentiator of our model. And these are all refundable, recyclable within a specified period. So we will look to invest more in this financial year. Maybe about 25 to 50 crores depend on the. Depending on the opportunities that we get.
Nirav Shah
And just the second question is on our chunky receivables. We are doing a good job collecting those overdue receivables. So what is the outstanding balance and will we see complete recovery in FY27? As the second and last question. Thanks.
Ronak Morbia
Yeah, I’d like to answer that. You know, with respect to the total receivables as well. If you look at our revenue, it has. We have grown by about 40% but our receivables has grown only by about 25 to 27% overall. So we have outpaced the collections in terms of revenues, the 180plus number, the stuck receivables now are in the range of about 40, 42 crores. And we expect a significant amount of recovery in this financial year. So, yes, we’ve been doing fairly well in terms of recovering the stock receivables and significantly, well in terms of, you know, the active receivables.
That is the active business under review.
Nirav Shah
Got it, Got it. Great, Great. Sir, congrats to the team and all the best.
Ronak Morbia
Thank you so much.
Operator
Thank you. Before we take the next question, a reminder to all the participants. If you wish to ask a question, please press star and 1. The next question is from the line of Love Gupta from Countercyclical Investments. Please go ahead.
Unidentified Participant
Hello. Am I audible?
Unidentified Participant
Yeah.
Srinivasan Gopalan
Yes, sir.
Unidentified Participant
I’m actually new to the company, so just seeking a couple of clarifications. So our services order book, is that the GDV or is it the material supply plus our fee revenue?
Srinivasan Gopalan
It’s the material supply plus the fee revenue. So what is the top line for us? So it’s not the GDV of the client.
Unidentified Participant
All right. And second on slide about 29 of the investor presentation, you say that you’ve infused some working capital investments in these projects. So can you Throw some light on that. And what sort of investments are we looking to make on the services side?
Srinivasan Gopalan
So basically sir, these are some small working capitals that are required from time to time. So nothing significant on that portion of. So going forward we have tied up for our GDV order book. The GDV is around 2000 crores. So we will every quarter we will be looking at investing small amounts in order to secure projects. So we will be at around 10% of the total turnover is what Ranak and Bhavik have also given the guidance. So we will be on track with that.
Unidentified Participant
All right, so lastly, you know, as we increase our contract manufacturing and services business, can we expect margin improvement over the next two, three years or other? Current numbers sustainable long term margin trajectory?
Ronak Morbia
So sir, I
Srinivasan Gopalan
Mean, yeah, you’re on a qt.
Ronak Morbia
Yeah, I think, I think, you know, the current numbers, they are sustainable and that is going to be the focus area going forward. However, we will definitely look to increase our focus on the two very important segments that we have and try to improve profitability. But just to reiterate, we will be looking to sustain the numbers that we are already clocking.
Unidentified Participant
All right, thank you so much.
Operator
Thank you. Next question is from the line of Urmesha from Mani Bevas. Please go ahead.
Unidentified Participant
Yeah, hi, am I audible?
Deepak Podar
Yes,
Operator
You’re audible.
Unidentified Participant
Yeah. So my first question is on the networking capital days, we have seen a very good improvement in that. So could you just highlight the reasons and is this number sustainable going forward?
Ronak Morbia
So if you look at our networking capital days, we started with about 120 days at the time of DRP we are sitting at about 66 days today. So this has not happened overnight or it is not a function of getting lucky for 1/4. This model was always designed in such a way that at a particular scale at an inflection point, the model becomes more and more capital efficient. If you look at the last three quarters, we’ve been significantly improving in terms of the working capital efficiency and the number of days has come down to about 66 currently.
So yes, we believe that while growing, improving your net working capital base is a definite improvement or maybe a validation of the model that we have. And we believe that while we grow forward in the next few quarters, we’ll be able to at minimum sustain this number and definitely look to improve as well.
Unidentified Participant
Okay, got it. So on asphalt, I mean, could you just explain the thought process of entering a new category and the pricing structure and how much margins are we able to clock on that? Obviously, I know it’s very new, but if you could just give a color on that.
Ronak Morbia
Sure. Since the beginning, you know, when we started this company, the focus was always on, you know, this segment, which is very, very complex, but really the backbone of India’s growth story, construction materials. And we were always looking for complex categories where there was a certain value add, not just in terms of adding value to customers, but also to the suppliers as well. And asphalt falls in line perfectly with this kind of thesis. If you look at this product, it is not just about delivering the material.
It is actually about the entire execution and laying off the asphalt. If you look at any road activity today, most of these have multiple layers of aggregates, which we are, you know, which is actually our core product. And then there is this final layer of a swab which adds to, to the portfolio that we already had. So we are present across the value chain of constructing any road project today in India. And it is a very skilled, execution heavy segment. And it is a very niche segment where there are not many players who are doing this on a very large scale.
So it was a perfect fit to the strategy that we have as a platform. And that’s the reason why we decided to enter this segment on the margins. We have seen historically with the partner that talking about 18 to 20% net profit is very much possible. And the working capital is also significantly under control. And the primary target market is all the big infra company. So that these were the reasons why we were very excited to actually partner with a manufacturer. And get this.
Unidentified Participant
Okay, so then how are the contracts line? It’s almost similar as aggregates or, you know, because road projects may get hampered, you know, some for some reason or the other. So how are the contracts and how are we safeguarded if there’s a delay?
Ronak Morbia
Yeah, so it works very similarly to how, you know, aggregates work. But the only difference being that in terms of stone aggregates, when we supply, it is just as. It is just a delivery model where you just deliver the materials and, you know, the work is completed. With respect to asphalt, it is not just about delivering, but it is also about execution, which is basic layering of the material. That is the only difference. Apart from that, not much liability as a, you know, as a platform or as a partner who’s into the supply and execution of materials.
So it doesn’t work as a typical EPC contract. It is still a supply contract.
Unidentified Participant
Okay, so and on contract manufacturing, we have improved our utilization to 50. What is the optimum number that you cater to and you see for you know, targeted revenues going forward.
Ronak Morbia
So if you look at our utilization and that to just the fourth quarter at an annualized rate, we are well above 65 to 70%. In terms of the annual number. The contribution is about 47% because it’s been growing steadily over the quarters. As mentioned earlier this year, we will look to hit a peak utilization of over 75 to 80 or even more. We have the supply, we have the demand and we are just now looking to add more customers and increasing our wallet share with existing customers as well.
Unidentified Participant
What’s the current wallet share? If you could just.
Ronak Morbia
It’s a mixed bag, right? From you know, the topmost customers where we actually contribute to maybe somewhere around 25 to 50% of their demand to then going to maybe about just to 5 to 10% in terms of, you know, companies which are very, very big. So it’s a mixed bag. Hard to put a number. But you know, wherever we are, we are looking to kind of increase our wallet share with all of these customers.
Unidentified Participant
Sure. So that helps. I’ll join back. Thank you.
Ronak Morbia
Thank you.
Operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Giriraj Daga from Vasaria Family Trust. Please go ahead.
Unidentified Participant
Yeah. Hello Tim one clarification. Did you mention that five year contract manufacturing asset base can give 6,500 crore revenue over the cumulative ICS?
Ronak Morbia
No sir, the total deposits that are deployed which is in the range of let’s say about 200 to 250 crores is the asset base which will give us about 4,000 to 4,500. And the contracted revenue model example is the capacity contract that we signed which is about 800 crores for the next five years. And that is also added as a separate, you know, revenue predictability on top of that. So that actually gives us. And then you add the services segment as well. The fee income plus the cross selling of materials all put together gives us a revenue predictability of around 6,000 plus crores in the next five years.
Unidentified Participant
Okay. Second, you made about 450 crore of deposit in the customer as well as vendor. Cumulatively first of all, is this interest bearing? First of all,
Ronak Morbia
No, these are not interest bearing since these are actually, these are actually long term refundable deposits linked to multi year capacity contracts. Accounting standards require us to discount them upfront and then recognize the impact over the life of the contracts. These are basically recognized as financial instruments. And accordingly based on this there was about a 5 crore of non cash unwinding income recognized during the period which has resulted in higher other income. And you’ll see that in the quarter four and a corresponding impact on ebitda.
And that is why you will see that the EBITDA reported EBITDA is down by about 5 crores because of this. Because they were recognized as financial instruments, the related cash flows continued to be reflected under investing activities. Given the long term nature of these arrangements.
Unidentified Participant
Okay, so. So just a thought process like. Well it’s not part of like other income or other operating income because that’s like business nature of the income, right?
Ronak Morbia
Yeah. So it is basically based on the accounting standards. And because these are recognized as financial instruments non interest bearing, they are discounted at present value. And then there is, you know, operating income at play. And then there is a present value discount which is taken expense. So the net effect is at pat limit. But these are all
Unidentified Participant
Last thing you mentioned. 25:30 crore investment in contract manufacturing vendor deposits. Are you including the customers? Also because I saw the number of 162 and 88 crore this year.
Ronak Morbia
So
Unidentified Participant
I’m 250 crore will grow by how much? Let’s say each year next to three years.
Ronak Morbia
So the 250 crore is a combination of all these capacity deposits and the contracted revenue model that we entered into. And this itself in the next five years is going to be about 5,000 plus crores. This year itself it should be about a thousand crores.
Unidentified Participant
I’m saying how much will you invest more to like a car? Cash outflow will be water.
Ronak Morbia
Invest more. Yeah, yeah. So as as I mentioned earlier we will be looking to invest about 25 to 50 crores. But it all depends on the kind of opportunities that we get. The recent being the Australian opportunity which was very exciting. So we are continuously in the lookout for more and more opportunities.
Bhavik Khara
So sir, to your question, combination of both customer and vendor. The 25 to 50 crores customer and vendor, not just one side.
Unidentified Participant
Okay. Okay. Sure. Thank you.
Operator
Thank you. Next question is from the line of uncle from Jan Capital. Please go ahead. Just
Unidentified Participant
To confirm, just to confirm, there is no commodity price risk on you guys, right? Whether it’s asphalt or normal real estate.
Srinivasan Gopalan
Yeah, nothing I think.
Unidentified Participant
And second just to understand, let’s say capacity gives you an order. Compared to capacity, how much do you guys are able to save? Given your scale on procurement in percentage terms
Ronak Morbia
That would actually be getting all the trade secrets. But what we have realized is when we started our journey with not just capacitive but other companies as well, we were making fairly less gross margins and in about five years, because of the volume purchases that we have been doing, the growth that we have seen, we’ve enabled us to get higher volume discounts are the prices that I would believe that nobody else would get in the market.
Unidentified Participant
And do you see yourself offering this service to more infrastructure contractors, someone making the metro stations and all that, or will you stay with.
Ronak Morbia
Absolutely, yes, it is, it is. It is a model that is, you know, designed not just for real estate developers or contractors, but for infra contractors as well. In fact, we definitely did receive a few inquiries from more bigger contractors after we announced capacity. So yes, we have enough visibility in the market. The model definitely adds a lot of value to these customers because they get predictability not just for one order or a month, but they actually get predictability for the next three to five years.
So that’s a real value add for them. And this is what this industry is now slowly understanding and getting used to. You know, as against depending on spot transactions,
Unidentified Participant
Then strategically does it make sense to get into other adjacencies like construction chemicals or, or something like paints? Does that make sense for you guys?
Ronak Morbia
We are already present in construction chemicals. However, it contributes just to about 2 to 3% of the revenue. We are not big believers as a management in diversifying a lot in terms of product categories. We believe that the top five to six raw materials in India today, the demand for themselves is thousands and thousands of crores. And relatively to that our scale is negligible. So we believe that complex materials, materials that are harder to source, materials that are harder to get on on time, materials that are very, very non transparent in terms of pricing, you know, actually give us a much better margin profile and a much better dependency on the customers and vendors on us.
So that is what we will look to do.
Unidentified Participant
Yeah, see the point, I mean I’m trying to understand is if I look at tiles, given the gas shortage, a lot of MOBI guys struggled. But now given your skill, can you go ahead and do that same stuff in for example, styles?
Ronak Morbia
Yes, as a model we definitely can. But as a strategy we haven’t tried that, we would like to concentrate on the key raw materials. There are multiple reasons to it more business than actually financial. And that’s something that we plan very well as management. Where we want to enter which geographies, which products and how fast we can grow and what is the working capital cycle looking like in that particular region. So that’s going to be more important than just kind of getting into any product category.
Unidentified Participant
Fair enough. Again, let’s, let’s work with 40% growth. I guess similar margins will give you 100 crore pad this year, let’s say another 140 next year. So what kind of operating cash flows will let’s say 100 crore pad this year or 140 crore pad next year give for F27 and F28?
Ronak Morbia
Yes, we would not like to give hard code numbers, but yes, you know, the numbers can be derived based on the revenue growth that we have. We are going to project. Important to note we have turned to cash flow from operating activity positive this year and it’s about 140 crores which actually, you know, is validated, you know, by the business model that we have. We genuinely are at an inflection point where whatever we did for the last three to five years, the foundation that we built, the diversification we did in terms of customer profiles, in terms of product mix, in terms of getting the technology to give us all of the data that is available real time and to make much more informed decisions and to actually improve our credit structure, credit management and credit exposure, which is a big part of what we do that has significantly contributed to the pat.
And we believe that, you know, if these underlying factors remain, you know, stronger, fundamentally stronger, we will be, you know, reaching those numbers that you’ve mentioned and we will be staying cash flow from operations positive.
Unidentified Participant
Let me rephrase. Can you give us some color on your OCF to PAT ratio that you guys think you can achieve in next this financial year and next financial year? I’m not asking for that
Ronak Morbia
Ratio. I mean currently we are at about one is to do somewhere around that. And I think the next year we will be looking to be somewhere around 1 to 1.5 maybe. But that’s something that, you know, I mean we will look to sustain this kind of ratio as well going in the future.
Unidentified Participant
Do you think, let’s say sometime end of H1, you will have some color of how do you want to use that surplus cash generated?
Ronak Morbia
We are at a growing stage. The model we haven’t really pivoted from the core model that we have in the last three to five years. We would like to stick to that. So the excess cash generation will go into investing in capacities and there are a lot of opportunities in terms of increasing the capacity also in the services segment where we can actually secure our business for the near term. So that’s something that we will look to do when it comes. But yes, the primary focus right now is to actually improve our capacity, increase our capacity as we move forward because we like to have predictability for the business for the next three to five years.
Unidentified Participant
Okay, all the best. Thank you.
Operator
Thank you. Next question is from Pinpoint X Capital. Please go ahead.
Shaurya Yadav
Yeah, good afternoon, sir. Am I audible? So, congratulations on a good set of numbers. We’re talking about a 40% kind of growth, say for FY27 and 28. So being a platform business, do you see any operating leverage coming in? You’ve been talking about the fixed costs going down and managing the cost. So do we see the EBITDA growth will be higher than the revenue growth in percentage, sir?
Ronak Morbia
Yes. If you look at FY26 as well, we’ve grown in terms of EBITDA margin in terms of profit, mainly because our costs have been in control. And we’ve been mentioning this in our previous earnings calls as well, that being a platform having technology at its core to run the operations, our dependency on the biggest cost center is relatively less. And While we grew 40% in terms of revenue, our actually biggest cost center didn’t grow linearly. And that is what we expect going forward as well. So, yes, to answer your question, more of the gross margin will flow into EBITDA and eventually into patterns.
Shaurya Yadav
Okay, so we can expect a higher percentage growth in terms of ETA and BANK than the rest. Yes,
Ronak Morbia
We will first sustain a 10 plus, 10% plus EBITDA margins. And this we will look to, you know, improve that even further because we expect improvement from, you know, contribution improvement from contract manufacturing and services.
Shaurya Yadav
And in our last interview on television, we had mentioned that we have a, you know, visibility of, you know, a lot of orders in pipeline in the first quarter and we would be able to do the whole year’s booking and that. So I mean, could you give some color on that? Like, what’s the pipeline looking like? The nearest near term pipeline.
Srinivasan Gopalan
Yeah, so, sir, that’s what. That was me. That was me in the interview. Q1 is very, very crucial for us. In Q1 we will tie up most of our business for the entire year. And you had, I mean, in the last few days you must have seen some of the announcements, like the capacity deal and very soon, I mean, you will hear a few more. So our aim is, in Q1 we should be able to predict around 85 to 90% of our top line and similarly of the bottom line as well. So that is where we try to be different. We want to secure the entire year in Q1 itself.
That’s our first five year five overs of the IPL match.
Shaurya Yadav
Great, sir. And looking at the orders are like a typical order, you know, execution timeline is what like two, three years.
Srinivasan Gopalan
So sir, typically if it’s a das, DAS project, we generally do projects which get executed between 12 to 24 months. And now with the model that we have chosen, like the capacity deal that we’ve done, we like to secure our procurements orders for close to four to five years. So that’s how typically the procurement side and the DAS model works.
Shaurya Yadav
So as you’re procuring, you’re getting the new orders is giving you visibility not just for this year, but for the next, maybe two or three years. Absolutely.
Srinivasan Gopalan
So as far as DAS projects are concerned, we know very clearly which material is required, when, what are the BOQs, so on and so forth. As far as these revenue projects are concerned, like capacity, we have secured our revenues for the next five years. We are actually a part of their annual operating plan. We are one of the largest partner vendors for them and we know which projects the materials are growing. So that gives us complete visibility on the backward integration for us to plan where to secure from, how to secure from and what price to secure.
And there is complete predictability in the business.
Shaurya Yadav
Like whatever the raw material cost would be inflated. I would assume there are pass through on the manufacturing side.
Srinivasan Gopalan
Sorry, I didn’t get your question.
Shaurya Yadav
So I’m sure there must have been raw material inflation sir, because of the Iran war. So are these costs like the pass through on our sales? For
Srinivasan Gopalan
Us it is a clear pass through. Our business model is such if the steel, if steel is sold at 90,000 and if the market is at 95. So for us it is a complete pass through. We have seen steel at 40, 60, 90, but that does not really impact our profitability.
Shaurya Yadav
Great sir. Thank you investor.
Srinivasan Gopalan
Yeah, yeah. Thank you so much.
Operator
Thank you. A reminder to all the participants. Anyone who wishes to ask a question may press star N1. We will take our next question from the line of Sumit Singh, an individual investor. Please go ahead.
Unidentified Participant
Hello sir, can you hear me? As a congratulations for great set of numbers. Pardon me for my simple question but I wanted to understand what’s the vision for the management for next three years, four years? We are, we have product of das. We have now mentioned as a fault. Are we actively looking for new categories or thinking of doubling down on the segments we are already in? That would be my first question. Secondly I’ll ask answer also.
Ronak Morbia
Yeah, so with respect to the vision, if you look at the Indian construction Industry. It is a humongous industry. Lakhs and lacks of crores for projects and the biggest component being materials. So we set out to build an operating layer for this construction industry which no one has ever built. This operating layer which actually keeps the entire supply chain together. That was the vision and that is still the vision in terms of how we will achieve this and what would be the strategy? Yes, we will look to double down on the categories that we are only already doing because we haven’t scratched the surface till now.
Even with this scale and with newer product materials like asphalt or maybe the more exciting DAS vertical that we have, which has grown more than I would say about 10 15x in the last three years is something that is gaining a lot of traction. And we have identified a new category in itself which has real demand in the Indian market. So the vision being simple, you know, to create that operating layer for the Indian construction industry.
Unidentified Participant
Supply to large PPC companies. I wanted to. Why can’t they backward integrate? Is it due to economics of scale? Or we as a company has advantages some more that not easily even if large VC companies can integrate.
Ronak Morbia
Sorry, your voice is pretty low. I can’t hear you clearly.
Unidentified Participant
Can you hear me now?
Ronak Morbia
Yes, I can. Yes.
Unidentified Participant
Okay. So second sir, I wanted to understand ICV supplied to large EPC companies. Why can’t they backward integrate into get into supplier contract supplies as we are with small manufacturers? Is it because of economics of scale that we have achieved or some other reasons? Secondly, so what’s the competitive landscape? Are there any other companies which are operating in a similar model as we are? Thank you.
Ronak Morbia
Yes. So on the question of doing, you know, integrating the supply chain themselves, this is what was happening before, you know, companies like Ares existed. It was happening directly. There were a lot, maybe hundreds of bilateral relationships exist existing between the vendors and the customers. The real challenge or the challenge that has existed for many, many years now is the working capital issue. Suppliers, you know, want money early, customers pay late. There is money stuck in the middle.
But more importantly, there is no predictability of cash flows. And when there is no predictability, the materials don’t arrive on time. And because all of these projects are limited duration, their demand is fluctuating. Suppliers cannot actually adjust or tune to this kind of fluctuating demand. That is where platforms like Ares actually come into existence and add a lot of value. Not just on the demand side, but on the supply side as well. So we bring in very simple terms. What we do is we create that single relationship between all of these Vendors on one side and all of these customers on the other side.
And we bring predictability to cash flows, to material planning, to production planning. And that is why we are able to kind of generate high returns, you know, as you see in our performance as well.
Unidentified Participant
And so any light on competitive landscape, like are we the only company who is like thinking the way we are operating?
Ronak Morbia
So if you look at our business model, it is unique in terms of the different segments that we have combined. We are into supply, we are into services, and we operate through technology. That is a very unique combination that is present in India today. And that is why you would see that, you know, it just, it’s just not supply of materials, but it is about the execution or the operating layer that we are building that is solving most of the problems and we are present across the value chain in terms of competitive landscape.
You know, would not like to comment more on the competitors but the business model today, the moat really is the relationships. Trusting the customer, trusting the vendor. And the trust is on both sides. And this does not happen overnight. It takes years to build. And once you’re able to do this on a very large scale, as you see with us, 3000 plus customers till date, 2000 plus vendors, the business compounds itself. So this is where we are and we believe that we are in the right direction and, and we will be looking to grow this network in the coming few years as well.
Unidentified Participant
All right sir, thank you so much and all the best for the coming.
Ronak Morbia
Thank you.
Operator
Thank you. Next question is from the line of Darshil Zaveri from Crown Capital. Please go ahead.
Unidentified Participant
Thank you so much for letting me ask a question again, sir. So just like harping from our last participants question in terms of competition, just wanted to know like you know there are, you know, there’s some like Shankara is there, right? So is that for them, is it easy to come into this, you know, place like, you know, it’ll be more like kind of like a mart, right? Type like what we can offer. So what is the difficulty? If someone, you know, a big group comes in, like they like someone, then they want to start doing this.
How difficult would it be to replicate us? That’s what I want to understand, sir.
Ronak Morbia
I think it’s more important to understand what we have built with respect to the business model, specifically focusing on the large infra contractors and developers across the country. These are not hardware tools that we sell or it’s not a supermarket or anything of that sort. The moat here is execution. It’s not the product portfolio when we get into execution, we take bulk orders. Sometimes the purchase orders can be in excess of, of 50 to 60 crores as well, which is continuous supply for the next maybe six months.
So we are into a different segment. It is, you know, the more serious segment. If you look at the technology that we built, you know, we’ve been mentioning about it since the last, you know, we’ve been building this in the last five years. If you look at this business, demand generation is fairly easy, but managing the operations and actually execution of say the thousand crores of revenue that we did is fairly tough. And the dependency on human workforce increases as you scale. This is what we wanted to solve for and that is exactly what the infrastructure that we’ve built solved for us.
Today we are operating, you know, handling about 800 deliveries per day. We’re handling thousands of documents. Last year itself, we digitized about 6.5 lakh documents. And we have reached a point where we are creating automated entries using AI just by clicking a picture of a delivery challenge. And that is something that is unheard of in this industry. And this is the kind of change that we are bringing to a traditional model where it was dependent on a large workforce, a lot of phone calls, a lot of different mediums of communication to execute the business.
And third, and the most important segment is services. So we are ahead, we believe, in terms of what we have built because it will take this kind of investment, this many years of investment and this kind of experience and the legacy behind the management to build what we have built in about five to ten years.
Unidentified Participant
Okay, fair. Fair enough. So, and just last question, like when I was going through a presentation in terms of tech also, you develop something very exciting stuff. So is that just used in house or are we ever looking, you know, offering this also as a solution? Because a document, you know, the digitization process can be used by a lot of other players in just our industry. So are we ever looking at that or is it just mostly for internal user?
Ronak Morbia
Absolutely. I mean, we are as much excited as, you know, you, you thought, you know, we would be about developing this platform because it’s really not just about, you know, punching in orders. It is really about running the business, operating the business through technology. As of now, our entire business now is, you know, running through that piece of technology. There will be an option to kind of open it up to customers and vendors, but we don’t look at this as a pure SaaS model where we will be selling the program that we built.
But more importantly, it is going to be a hook for the customers and vendors to start transacting with us. Because the kind of efficiency that it actually gives on both the sites is very, very significant when you actually factor Factoring the large SKUs, the large number of SKUs, the product complexity, the non transparent pricing and the credit exposure that we take. So yes, it’s more of an internal use as of now, but we will open it up for the customers and vendors in the near future. Not to sell the platform, but to maybe get into a subscription model or a transaction fee that we will look to do in the future.
But this is just a part of the strategy as of now.
Unidentified Participant
Okay, fair enough. That’s it from us. Thank you so much. All the best.
Ronak Morbia
Thank you.
Operator
Thank you. Next question is from the line of Kushal Kasliwal from Invade Research. Please go ahead.
Unidentified Participant
Yeah, hi, thanks for taking my question, sir. In your press release I’ve seen on page number three we mentioned that we plan to, you know, target new categories including tiles, plumbing, electrical and sanitary wear. So who will be the typical customers here? Real estate guys and what kind of, you know, how large can this portion or this part of business can become in the next two to three years?
Ronak Morbia
Right now all of these materials are actually factored in other materials which contribute to about 15 to 20% of the overall revenue. The real target market for this is real estate developers and contractors, as you mentioned. And these can be of, of different sizes as well. We believe this category takes a little while to build. A lot of manufacturing partnerships need to be done. The products are differently handled when compared to the key raw materials. But some of these segments can be very exciting in terms of operating as a platform with all of these construction materials under one roof.
So yes, right now the other material segment is about 15 to 20% and we will look to sustain this number at a 40% growth. And from there on we will see which of the verticals are very exciting and we will look to kind of, you know, going deeper with those materials.
Unidentified Participant
Is there a private label opportunity here? Because most of the materials which you sell otherwise is more, what should I say, B2B nature. But these, these materials are B2C sometimes are also sold on the basis of brand. So is there also some private label opportunity here versus some of the other material?
Ronak Morbia
I mean the opportunity is always there, was always there with respect to the key raw materials as well. You know, it is going from our own manufacturing plants are our partners. So technically these are private labels. It’s just that you cannot package stones or concrete. The point with other materials where there is a private label opportunity as the management, we don’t really focus on private labels, but actually the benefits that can be derived from having a private label brand. And as long as we are able to achieve that, we don’t really focus too much on establishing a category.
We have realized that there are different contractors and developers in India who are not really brand, they’re actually brand agnostic. They’re not actually particular about getting a particular brand. So there are different kinds of customers available in India. It’s not necessary to have a brand. In fact, our platform actually has, has all the brands that are available in the market. So we will be brand agnostic with respect to that. And if there is an opportunity in the future, we will kind of look to enter as well.
Unidentified Participant
Understood sir, thank you. Just my last question on the tech part. I think you were also alluding to how we are using technology in this sector. Can you give a broad picture of. This is basically similar to a trading business where you know, you have infused a lot of tech and kind of driving value. So I mean tech today has become in some ways commodity with AI and all that someone people can build their own tech. So I just wanted to understand is this really a defensible kind of mode when we say that we are using tech in our operations and billing systems have become automated and there can be various layers to it.
But just wanted to understand this in more detail.
Ronak Morbia
Yeah, I think to be honest, technology is something that is experienced more much better than explained. But I’ll try to explain it with an example. If you look at our business or any B2B business in India with respect to construction materials and when there are 800, 900 deliveries happening on a daily basis from hundreds of manufacturing facilities to hundreds of customers and that to different regions with different prices for each delivery. Cost price, sales price, commercial terms, dynamic terms.
And when you have to close deals with vendors on a daily basis, dynamic terms manage the credit of customers 700 actively that we are managing on a quarterly basis. Today, all of this becomes more of an operational issue, a scalable issue. If you are running operations manually with technology at play, all of this becomes available at your fingertips, you know, real time. And when you have more data available, when you are able to manage such a complex business operation through technology, scalability is much more faster and much more efficient.
So it’s not really in terms of, you know, technology when you compare us to any other company in terms of demand generation, but it is really from operations perspective and if you look at our scale and if you look at our costs, you know, the operating leverage is already visible. And we expect, expect this to improve even further, you know, when we go in the next two to three years.
Unidentified Participant
Got it, sir. Got it. Thank you so much for your time. Thanks.
Operator
Thank you, ladies and gentlemen. We will take that as a last question for today. I would now like to hand the conference over to the management for closing comments.
Ronak Morbia
Thank you guys so much for joining the call, and I hope we have all answered all your questions well. And, you know, really looking forward to you guys becoming a part of the journey. Thank you so much. And thank you.
Operator
Thank you very much on behalf of Ares Infra Solutions limited that concludes this conference. Thank you all for joining us today. And you may now disconnect your line.