Why is a $2.7 bn construction materials startup betting big on home decor?

Souvik Sengupta and Aaditya Sharda, co-founders, Infra.Market
Souvik Sengupta and Aaditya Sharda, co-founders, Infra.Market

Summary

  • Infra.Market, which raised over $120 million in a rare, fully primary pre-IPO funding round, plans to grow its lifestyle vertical and diversify into new segments, including mattresses, curtains, and home décor

Infra.Market, a construction materials startup backed by Tiger Global, plans to move beyond concrete and steel and focus on lifestyle categories like mattresses, curtains, and home décor. Moving beyond traditional materials presents a larger growth opportunity for the future, said co-founders Souvik Sengupta and Aaditya Sharda.

"Lifestyle is an area that we want to focus on and build for the future," Sengupta said in an interview with Mint.

The company, valued at $2.7 billion, aims to diversify into segments, including mattresses, curtains, and home décor, while continuing to grow its main business, which currently accounts for 70% to its revenues.

"We want to be very focused on the same customer. Till now, we have been very strong in industrials, that are needed to build a home, then we went into finishing. But we are still very light on lifestyle. So, we are now looking at adding a few categories in the lifestyle part," said Sengupta.

This comes after the construction materials firm raised over $120 million in a rare, fully primary pre-IPO funding round. The funds will be used to grow the company and diversify into newer segments, Infra.Market had said earlier.

"Furnishing, home décor, with a focus on textiles, like curtains and carpets, is something we are keen on. Mattress is a very large play for us," he added.

The company's lifestyle brand, Ivas, which also includes other acquired brands like Shalimar Paints, Millenium, Emcer and Amstrad, offers materials that go "outside the wall" in home construction, like bath fittings, ceramics, tiles, paint, home appliances, consumer durables, etc.

“We started this segment with tiles and sanitaryware business three years ago. At the same time, our investment in Shalimar Paints paved the way for our entry into the home finishing business with two key categories," Sharda told Mint.

“Over time, we expanded to include MDF, plywood, electricals, modular kitchens, and consumer durables, all with dedicated manufacturing units over the past three years," he added.

Infra.Market plans to grow the lifestyle segment, which includes Ivas and other acquired brands, to about 40% of the business over the next few years from 30% currently.

Also Read: Infra.Market raises over $120 mn at $2.7 bln valuation, taps bankers for an IPO

The home decor market in India is projected to grow by 8.67% (2025-2029) resulting in a market volume of $2.97 billion in 2029, according to data and market research platform Statista, in November 2024.

The top players in the space include Ikea India, PepperFry, Godrej Interio, Urban Ladder, FabIndia, and Home Centre. 

According to Sengupta, the lifestyle brand offers higher margins and better brand recall, which Infra.Market hopes to leverage for broader business growth.

"Some brands in building materials enjoy a premium over others, because they have a B2C consumer facing brand. Their B2B product also gets sold at a premium. We want to build a consumer reach and eventually a brand that a consumer trusts which will eventually help us to get better revitalization on our B2B product," he said.

Founded in 2016 by Sengupta and Sharda, Infra.Market started as an enterprise platform leveraging technology to streamline procurement in the construction ecosystem. 

The company has since expanded its portfolio to offer an end-to-end solution for all construction and finishing needs of large builders, architects and homeowners, apart from infrastructure developers in the country.

The company earns almost 70% of its current revenue from behind-the-wall categories, including concrete, AAC (autoclaved aerated concrete) blocks, steel, pipes and fittings. Half of Infra.Market's revenue today comes from infrastructure projects, followed by real estate at 30%, which the rest coming from retail. 

Also Read: Infra.Market to increase focus on B2C-retail segment to drive profit

Growth plans

With the latest raise the company plans to continue adding around 50 new manufacturing plants annually. The company currently has about 250 plants, built over the past five years.

According to Sharda, private-label margins are three times higher than distribution-based sales, making them a crucial part of the company’s growth plans. “As we increase our private label spend, nearly two-thirds of our sales now come from our own brand, up from around 55-56% last year. The margin profile for our private label is significantly higher than that of distribution," he said.

The strategy seems to be working for the company, as even with a 23% increase in revenue, it saw a 2.5-fold increase in profits in FY24. The company reported revenues of 14,530 crore in FY24, up from 11,846.5 crore the previous year, while its profit after tax surged to 378 crore from 155 crore in FY23.

The company’s debt currently stands at around $500 million at the group level.

"Our focus for the next 24 months will be on maximizing cash flow, addressing underperforming categories, and identifying new business opportunities that offer easy wins. The goal is to build a sustainable, long-term business," he added.

Raising funds

The company has so far raised $487 million from investors like Tiger Global, Accel and Nexus Venture Partners. The new fundraise comes less than a year after the Maharashtra-based startup raised $50 million ( 400 crore) from Mars Unicorn Fund at a $2.5 billion valuation. In the recent pre-IPO round, the company raised funds from investors like Tiger Global, Evolvence, and Foundamental.

Infra.Market, which plans to go public later this year, has appointed Kotak Mahindra Capital, IIFL Capital, Goldman Sachs, Jefferies, ICICI Securities, HSBC Securities, Motilal Oswal Financial Services, and Nuvama Wealth Management, to manage its IPO, Mint reported earlier.

While public market corrections have impacted valuations, Sengupta remains pragmatic. “Ultimately, it’s about getting the right price—whether 10-15% lower or higher. We built this company frugally. While some B2B platforms in India raised up to $1 billion, we built ours profitably with just $250 million. Our investors diluted less and are sitting on substantial gains. A 10% lower IPO price wouldn’t significantly impact us or them."

“Though all-primary or all-secondary rounds are possible, primary-only rounds are not very common in Indian ecosystem, and signal strong growth, greater control, and pre-IPO scaling, as no existing shares are sold," said Dishit Shah, partner, Bhuta Shah & Co LLP.

Shah added that growth within startups has returned after companies prioritised profitability in the 2022-2023 funding winter, and it is more sustainable now.

“With companies focused on unit economics and less reliant on external capital, profitability remains key due to cautious capital markets and public market volatility. Although some still chase growth, even at the expense of margins, the dominant trend favours a measured, long-term approach," Shah said.

Also read | India sees more startups encashing Esops in 2024 in pre-IPO, secondary deals

 

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