GRP Q1 FY27 earnings call

GRP Limited reported a robust Q1 FY27, with consolidated total income increasing 26% year-on-year to INR1,573 million. This growth was accompanied by a significant 60% rise in EBITDA to INR174 million, leading to an EBITDA margin expansion of 233 basis points to 11%. Despite sharply rising raw material costs, profit after tax more than doubled to INR42 million, reflecting strong operational leverage and cost discipline. The working capital cycle also improved by 8 days to 86 days.

The company's long-term vision of an integrated circular materials platform is beginning to materialize, with Q1 FY27 showing early evidence of this strategy. The Rubber Recycling segment, comprising Reclaim Rubber, Custom Die Forms, and Pyrova Energy, saw its revenue grow 34%. Pyrova Energy, a key component of this platform, achieved its longest continuous reactor run since commissioning, a critical milestone for stable operations and future scaling.

The cumulative investment in Pyrova Energy now stands at approximately INR91 crores. The rCB plant, integral to Pyrova's profitability, is currently under commissioning and is expected to be fully operational by October 2026. Management anticipates that once the rCB facility is mature and customer approvals are secured, the Pyrova business has the potential to generate 18-20% EBITDA margins and contribute INR250-300 crores in revenue, marking a significant step change in profitability.

The 'Others' segment, particularly the plastic verticals, demonstrated strong performance. Engineering Plastics volumes grew 27%, primarily driven by robust OE demand in the automotive industry and new approvals in the appliance sector secured in Q4 FY26. The Repurposed Polyolefin business achieved a clear turnaround in profitability. Overall, plastic verticals expanded EBITDA margins by 14 percentage points year-on-year, supported by tightening Plastic EPR norms and a continued focus on value-added products.

GRP Limited expects to achieve over 20% overall revenue growth for FY27, driven by new businesses like Pyrova Energy, increased Reclaim Rubber capacity, and scaling of the Plastics division. Reclaim Rubber volumes are projected to grow close to 20% in FY27, with mid-teen growth over the next three years. EBITDA margins for Reclaim Rubber are targeted at 10-14%, Pyrova at 15-20% (post rCB stabilization), and Plastics at 10-15%, indicating structural margin expansion across segments.

The company plans a targeted capital expenditure of INR90-100 crores for FY27, primarily allocated to expanding pyrolysis lines (adding two more to reach 45 KTA), commissioning the rCB plant, and debottlenecking reclaim rubber facilities. This is part of a larger INR250 crores investment commitment made 18 months ago, with approximately INR100 crores remaining for expansion. Management emphasized a disciplined approach to capital allocation and maintaining a prudent balance sheet, with deleveraging plans to be considered as businesses start generating cash flow.

GRP Limited continues to advance its sustainability agenda, with renewable energy accounting for approximately 48% of its stand-alone power consumption in FY26, a significant increase from 37% a year ago. The company is well ahead of its stated target of 50% renewable energy usage by FY28, expecting to reach this goal in the current fiscal year. The first sustainability report for FY26 was also published, aligning with globally recognized reporting standards.