Baheti Recycling — Q4 FY26 earnings call

Call held 5 May 2026

Management summary

Baheti Recycling delivered robust financial results for FY26, with revenue growing 38% to ₹725 crores and profit increasing 50% to ₹27 crores, driven by improved operational efficiency. The company is strategically expanding into the higher-margin aluminum wire rod segment, targeting ₹500 crores in revenue potential by FY28. While addressing historical negative cash flows and increased debt due to high inventory, management outlined plans for inventory optimization and working capital improvements to achieve positive operating cash flow by FY28-29.

Highlights

  • Revenue for FY26 grew 38% YoY to ₹725 crores, demonstrating strong top-line performance.

  • Profit for FY26 increased 50% YoY to ₹27 crores, indicating improved operational efficiency and margin expansion.

  • Strategic entry into the higher-margin aluminum wire rod segment, with a total revenue potential of ₹500 crores by FY28.

  • Total installed capacity is set to increase to 38,000 tons annually by FY27 with new electrical furnaces and a solar plant.

  • Secured a minimum order book of ₹200 crores for FY27, excluding the new wire rod business, providing good revenue visibility.

Concerns

  • The company has experienced negative cash flows for the past four years, leading to a substantial increase in debt.

  • High inventory levels, specifically 30-40 days of extra inventory, contribute to working capital intensity and cash flow stress.

  • A discrepancy was raised by an analyst regarding a preferential issue valuation report, which showed a significantly lower fair value than the actual issue price.

Key financials

  1. Revenue ₹725 Cr +38%YoY
  2. Profit ₹27 Cr +50%YoY
  3. EBITDA Margin 8%

What they filed

Q4 FY26: revenue up 83.9%, net profit up 350.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY23Q4 FY23Q2 FY24Q4 FY24Q2 FY25Q4 FY25Q2 FY26Q4 FY26
Revenue160 200 207 223 257 +61%267 +34%315 +52%410 +84%
EBITDA-9 22 8 13 16 +278%24 +9%21 +163%40 +208%
Net profit-11 17 3 4 7 +164%11 −35%9 +200%18 +350%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Ingots
    64% Revenue Share
  • Alloy (Deoxidant)
    36% Revenue Share

Order book

high confidence

Total value

₹200 Cr

as of 2026-03-31 quantified

The company has a minimum order book of ₹200 crores for FY27, excluding the new aluminum wire rod plant, indicating good visibility for the upcoming fiscal year.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹25 Cr
    • New aluminum wire rod product line (Phase 1) ₹20 Cr
    • New aluminum wire rod product line (Phase 2) ₹5 Cr
    We are investing somewhere around 25-odd crores to build this out in two phases on our existing freehold land in Dahegam... Phase 2 would be 5 crores maximum in putting up the furnace and all.
  • Debt Debt disclosed
    Furthermore, company's actively focused on Reducing the debt and improving the key financial ratio.
  • Liquidity Liquidity disclosed The company has faced negative cash flows for the past 4 years, leading to increased debt. Management is addressing this by optimizing inventory levels and utilizing a 'build to ship' concept with financing services to secure 90-day credit, which is expected to improve cash flow.
    So, my first question was regarding our cash flows. So, we see that our revenues have increased, which is great. Our EBITDA has increased, which is great. And, because with that, our debt has also increased substantially, so we are funding our operations using debt, because our cash flows are negative for the past 4 years.

Guidance & targets

Capacity

  • Total Installed Capacity Capacity · annually · High confidence 38,000 tons
    With this addition, our total installed capacity will stand to 38,000 tons annually.

    — Yash Shah

Capacity Utilization

  • Overall Capacity Utilization Capacity Utilization · FY27 · High confidence 75-80%

    Previously 60% → 75-80%

    So our current target is somewhere around 80% utilization, 75 to 80% of utilization of 38,000 tons in FY27.

    — Yash Shah

  • Overall Capacity Utilization Capacity Utilization · FY28 · High confidence Full capacity
    Our plan is to ramp up utilization, full capacity utilization by FY28.

    — Yash Shah

New Product Line

  • Aluminum Wire Rod Phase 1 Capacity New Product Line · per annum · High confidence 12,500 metric tons
    We are targeting in Phase 1 around 12,500 metric ton per annum, with an annual revenue potential of 250-odd crores

    — Yash Shah

  • Aluminum Wire Rod Phase 1 Revenue Potential New Product Line · annually · High confidence ₹250 crores

    — Yash Shah

  • Aluminum Wire Rod Total Capacity New Product Line · annually · High confidence 25,000 tons
    In phase 2, it will increase to 25,000 tons. That, that means the revenue will also increase by another 250 odd crores. So, total revenue from this plant will be somewhere around 500 odd crores.

    — Yash Shah

  • Aluminum Wire Rod Total Revenue Potential New Product Line · annually · High confidence ₹500 crores
    So, total revenue from this plant will be somewhere around 500 odd crores.

    — Yash Shah

  • Aluminum Wire Rod Phase 1 Commissioning New Product Line · 2026 · High confidence End of October/Early November
    By the end of October, you can say early November.

    — Yash Shah

  • Aluminum Wire Rod Initial Utilization New Product Line · initial 3 months · High confidence 20-30%
    So, initially, 20, 30.

    — Yash Shah

  • Aluminum Wire Rod Utilization New Product Line · FY28 · High confidence 70%
    FY28 will be reaching somewhere around 70-odd percentage.

    — Yash Shah

Margin

  • EBITDA Margin Improvement (Wire Rod) Margin · from existing business · High confidence 1-2%
    The EBITDA margin will improve by 1 or 2% from the existing business.

    — Yash Shah

  • Overall EBITDA Margin Margin · FY28 · High confidence 10%

    Previously 8% → 10%

    So, so this year, I think we did around 8%, so we sort of expect that to continue, and then with the new wire rod division coming up, we can see that increase towards 10% in FY28.

    — Yash Shah

Revenue

  • Total Revenue Revenue · from existing plant · Medium confidence 4-digit (₹1000+ crores)
    Sir, as I've told you, my target is 4-digit in terms of from the existing plant as aluminum wire rod will come from Q4 and we are, we are taking 0 as of now. So, our target is 4 digits from the existing plant.

    — Yash Shah

Market Share

  • Aluminum Alloy Manufacturer Ranking Market Share · next 1-2 years (FY28) · Medium confidence Top 3-4

    Previously Top 10 → Top 3-4

    in next one year or two, FY28, we can we can target ourselves into top 3 or 4 aluminum alloy manufacturer, number one.

    — Yash Shah

Cost

  • Manufacturing Cost Reduction Cost · High confidence 2.75%
    It will directly impact our PAT or you can say the cost of manufacturing will decrease by 2.75%.

    — Yash Shah

Market context

  • Operating Cash Flow Operating Cash Flow · FY28-29 · Medium confidence Positive

    Previously Negative → Positive

    So if the inventory is reduced by 30-40-odd days, you'll be able to see operating positive cash flow.

    — Yash Shah

What to watch in Q1 FY27

Aluminum Wire Rod Phase 1 Commissioning

Next quarter (Q3 FY27)
Current Under construction, targeting Oct/Nov 2026
Target Commercial operations begin

Why it matters

This is a key new product line expected to drive higher margins and significant revenue growth, making its timely commissioning crucial.

By the end of October, you can say early November.

Risks & concerns

  • Negative Operating Cash Flows and Increased Debt

    medium

    The company has experienced negative operating cash flows for the past four years, leading to a substantial increase in debt, primarily due to maintaining high inventory levels.

    Analyst acknowledged

  • Working Capital Intensity due to High Inventory

    medium

    Maintaining 30-40 days of excess inventory to cater to OEMs has contributed to working capital stress, though management has plans to optimize this by FY28-29.

    Management acknowledged

  • Preferential Issue Valuation Discrepancy

    medium

    An analyst raised concerns about a valuation report showing a significantly lower fair value (₹300) for a preferential issue compared to the actual issue price (₹598.50), which management agreed to investigate.

    Analyst deflected

  • Raw Material Price Volatility

    low

    Fuel prices have increased production costs by 15% due to geopolitical tensions, but these costs are immediately passed on to customers, mitigating margin impact.

    Management acknowledged

Q&A highlights

4 direct, 1 evasive
Aluminum Wire Rod Division Commissioning and Margins Direct
By the end of October, you can say early November. ... The EBITDA margin will improve by 1 or 2% from the existing business. ... we can see that increase towards 10% in FY28.

This question clarified the timeline for the new high-margin wire rod product line and its expected contribution to overall EBITDA margins, which is a key growth driver.

Asked by Disha Chordia

Cash Flow and Debt Management Direct
So, my first question was regarding our cash flows. So, we see that our revenues have increased, which is great. Our EBITDA has increased, which is great. And, because with that, our debt has also increased substantially, so we are funding our operations using debt, because our cash flows are negative for the past 4 years. ... So if the inventory is reduced by 30-40-odd days, you'll be able to see operating positive cash flow.

This question directly addressed a significant concern about the company's negative cash flows and rising debt, with management providing a detailed explanation and a timeline for improvement through inventory optimization and working capital initiatives.

Asked by Manan Vandur

Preferential Issue Valuation Discrepancy Evasive
Sir, actually, I wanted to understand with respect to preferential issue. Sir, first of all the valuation report prescribes valuation close to 300 rupees, which is almost a 50% discount to the CMP. ... Sir, can you provide us the mail ID to our IR team, so they'll take your question, and we'll provide you the clarifications.

This question highlighted a potential discrepancy in valuation reports for a preferential issue, which could impact investor confidence and transparency. Management's response to investigate rather than provide an immediate explanation makes it a critical follow-up item.

Asked by Minerva Research

Raw Material Import and Geopolitical Impact Direct
Near around 80%. ... Nothing, nothing as such. ... See, the cost of production has increased, no doubt about it, because of the fuel prices, the cost of production has increased by 15%. But ultimately, it has been diverted or it has been passed to our selling price, as simple as that.

The analyst inquired about the high import dependency for raw materials and potential disruptions from global events. Management confirmed no disruptions and clarified that increased costs are immediately passed on, reassuring investors about supply chain resilience and margin protection.

Asked by Jigar Jani

OEM Penetration and Market Share Targets Direct
in next one year or two, FY28, we can we can target ourselves into top 3 or 4 aluminum alloy manufacturer, number one. ... We have also added many automotive clients in the month of March in H2 directly to the OEMs like Bajaj Auto, TVS Motor, Royal Enfield.

This question explored the company's competitive positioning and its strategy for gaining market share, particularly through direct engagement with OEMs, which is a key growth driver for the business.

Asked by Shaurya

3 min read 6 chapters

Detailed narrative

Strong FY26 Financial Performance and Margin Expansion

Baheti Recycling delivered robust financial results for FY26, with revenue increasing by approximately 38% year-on-year to ₹725 crores, up from ₹520 crores in the previous year. Profit saw an even stronger growth of 50%, reaching ₹27 crores compared to ₹18 crores in FY25. This performance reflects improved operational efficiency and margin expansion, with current EBITDA margins around 8% and a sustainable range of 7-10% targeted, with a goal to reach 10% by FY28.

Strategic Entry into Aluminum Wire Rod Segment

The company is making a significant strategic move into the higher-margin aluminum wire rod product segment, investing approximately ₹25 crores. This expansion will occur in two phases on existing freehold land in Dahegam. Phase 1 targets 12,500 metric tons per annum with a revenue potential of ₹250 crores, while Phase 2 will increase total capacity to 25,000 tons, aiming for a total revenue of ₹500 crores from this plant. Commissioning for Phase 1 is expected by end of October/early November 2026, with initial utilization at 20-30% and a target of 70% by FY28, contributing to an overall EBITDA margin of 10% by FY28.

Capacity Expansion and Utilization Targets

Baheti Recycling is enhancing its manufacturing capabilities with the commencement of 5 new electrical furnaces in FY27, which are expected to be more efficient and greener. Coupled with a solar plant operational by May 2026, the total installed capacity will reach 38,000 tons annually. The company aims to ramp up its current 60% utilization to 75-80% by FY27 and achieve full capacity utilization by FY28, supporting its ambitious growth targets and ensuring efficient use of new infrastructure.

Working Capital and Cash Flow Management

Despite strong revenue and profit growth, the company has experienced negative cash flows for the past four years, leading to increased debt. This is primarily attributed to maintaining 30-40 days of excess inventory to cater to OEMs. Management plans to optimize inventory levels by FY28-29, expecting to achieve positive operating cash flow. Additionally, they are implementing a 'build to ship' concept with financing services to secure 90-day credit, which is anticipated to improve cash flow without increasing debt.

OEM Penetration and Market Positioning

The company has successfully penetrated the OEM segment, securing direct orders from major automotive clients like Bajaj Auto, TVS Motor, and Royal Enfield in March 2026, with repeat orders in May. This was facilitated by a temporary reduction in OEM approval times from six months to one month due to geopolitical tensions. Baheti Recycling, currently a top 10 aluminum alloy manufacturer, aims to become a top 3-4 player by FY28, leveraging its direct OEM relationships and the cost advantage of secondary aluminum (7-10% cheaper than primary).

Raw Material Sourcing and Cost Management

Approximately 80% of the company's raw material is imported, primarily from the UK, Europe, and the US. While fuel prices have led to a 15% increase in production costs due to geopolitical tensions, management confirmed these costs are immediately passed on to customers, who have been supportive. The company's sales pricing mechanism, based on LME and dollar factors with a fixed INR delta, naturally hedges against LME volatility, ensuring margin stability with a one-month lag.

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