GRP

GRP Limited faced a challenging Q1 FY26, with consolidated total income declining 2% year-on-year to ₹1,247 million. This dip was primarily due to a 7% reduction in volumes, driven by external market headwinds^🌐 and a one-time^📎 operational downtime for a plant upgrade. Gross profits decreased 7% to ₹624 million, and EBITDA saw an 18% decline to ₹109 million, resulting in EBITDA margins contracting to 8.7% from 10.5% in Q1 FY25. Profit after tax stood at ₹17 million, down from ₹44 million in Q1 FY25.

The reclaimed rubber sector experienced significant headwinds. Export revenues declined by 9% due to tariff-related uncertainties in key overseas markets (Europe and North America) and port congestion. The global OE tyre segment remained flat, with sharp declines in Europe (-8%) and North America (-5%). Domestically, reclaim rubber exports grew by a slower 5% compared to 10% in FY25, with notable declines in shipments to Europe and North America by almost 14%. The butyl reclaim rubber segment, a significant contributor, faced persistent gross margin pressure for the third consecutive quarter due to sustained inflation in raw material costs for automotive inner tubes and an unfavorable product/geographic mix.

In contrast to the reclaimed rubber segment, the non-reclaim rubber business delivered a strong 17% year-on-year growth. This was fueled by robust performance in polymer composite and custom die forms businesses, supported by stable demand and favorable margin profiles. However, this growth was partially offset by a decline in the engineering plastics division due to lower virgin nylon prices and softening demand in the Indian automotive sector. Subsidiaries, GRP Circular Solutions Limited and GSPL, continued to improve, reporting a combined top line of ₹74 million, and are expected to achieve positive EBITDA by the end of FY26.

The crumb rubber plant, which became operational last quarter, has started supplying material to bitumen modifiers, with several approvals secured. The company anticipates a pickup in volumes in Q4 FY26 as the road surfacing season recommences. The first phase of the tyre pyrolysis oil project is undergoing cold trials, with commercial operations expected to begin in Q2 FY26. The company also targets to commence commercial operations for the recovered carbon black project by the end of FY26. Total CAPEX of ₹150 crores (out of ₹250 crores announced) is expected to be deployed by December 2025 to January 2026, with 65-70% allocated to the waste-to-energy business and the remainder split between reclaim rubber and plastic recycling.

GRP drew €7.5 million from Proparco as part of the ECB in Q1 FY26 to fund strategic investments. The board has approved additional capacity for solar power generation for its Gujarat and Maharashtra reclaim rubber manufacturing units under a group captive arrangement. This initiative is a key step towards the company's renewable energy transition, targeting 50% renewable energy usage by 2028, aiming to reduce its carbon footprint and achieve meaningful incremental margins and GHG emission reductions for the reclaim business.

The new technology installed in reclaim rubber operations has shown encouraging results, securing product approvals from several tyre and non-tyre customers, which is expected to drive incremental volume growth in upcoming quarters. Additionally, one production line has switched to an alternate process, significantly reducing manpower dependence and GHG emissions. Approvals for this new process have been received from customers, and the company aims to convert more SKUs to this process in the coming year.