GRP — Q2 FY26 earnings call

Call held 14 Nov 2025

Management summary

GRP Limited reported modest top-line growth in Q2 FY26, with total income up 1% and EBITDA up 13%, but PAT saw a significant 22% decline. The reclaim rubber business showed strong domestic growth, but exports were hampered by US tariffs. Non-reclaim rubber segments faced challenges from price declines and competition, leading to the discontinuation of the Polymer Composite business. The new pyrolysis plant commenced operations, contributing to H1 revenue, with management optimistic about its H2 performance and overall margin improvement.

Highlights

  • Q2 FY26 Total Income grew 1% YoY to INR 1,331 million despite global volatility and pricing pressure.

  • Q2 FY26 EBITDA grew 13% YoY to INR 114 million, with EBITDA margin expanding to 9% from 8% in Q2 FY25.

  • Domestic reclaim rubber revenues grew a strong 20% YoY, offsetting a 2% decline in export revenues.

  • Successful commencement of pyrolysis operations at Solapur, with INR 20 crores revenue in H1 FY26 and an expectation of INR 25-30 crores in H2 FY26.

  • Management anticipates a 200-250 basis point improvement in EBITDA margin for H2 FY26.

Concerns

  • Q2 FY26 PAT declined 22% YoY to INR 20 million from INR 25 million in Q2 FY25.

  • H1 FY26 PAT significantly declined from INR 69 million in H1 FY25 to INR 37 million.

  • Export business was negatively impacted by US tariffs, leading to a 2% decline in reclaim rubber export revenues and INR 3.8 crores gross margin reduction.

  • Non-reclaim rubber business underperformed, with the plastics segment experiencing a sharp ~45% YoY decline in virgin polymer prices and heightened competition.

  • Subsidiaries GCSL and GSPL reported combined losses of INR 12 million for the quarter, not yet reaching optimal scale.

Key financials

2 periods

Q2 FY26

  • Total Income
    1,331 Mn
    YoY +1%
  • Gross Profit
    680 Mn
    YoY +1%
  • EBITDA
    114 Mn
    YoY +13%
  • EBITDA Margin
    9%
  • PAT
    20 Mn
    YoY -22%

H1 FY26

  • Total Income
    2,578 Mn
    YoY 0%
  • Gross Profit
    1,304 Mn
    YoY -3%
  • EBITDA
    222 Mn
  • EBITDA Margin
    9%
  • PAT
    37 Mn
  • Net Debt
    1,788 Mn
  • Debt-Equity Ratio
    0.99

What they filed

Q1 FY27: revenue up 26.7%, net profit up 140.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue132 132 160 124 132 +1%135 +2%145 −10%157 +27%
EBITDA10 13 33 10 11 +8%11 −15%9 −73%17 +70%
Net profit3 4 19 2 2 −22%1 −81%-1 −107%4 +140%
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

  • Reclaim Rubber (Domestic)
    20% Revenue Growth9% Sequential Revenue Growth6% Sequential Volume Growth
  • Reclaim Rubber (Export)
    -2% Revenue Decline16% Sequential Revenue Growth13% Sequential Volume Recovery
  • Non-Reclaim Rubber (Plastics Segment)
    -45% Virgin Polymer Prices Decline
  • Subsidiaries (GCSL & GSPL)
    45 Mn Combined Revenue12 Mn Combined Losses
  • Crumb Rubber/Pyrolysis
    200 Mn Revenue (H1 FY26)

Capital allocation

high confidence
  • Capex Capex disclosed
    • Pyrolysis project (green energy business - crumb rubber, tyre pyrolysis, recovered carbon black) ₹720 Mn
    • Reclaim rubber business (new technology and maintenance) ₹220 Mn
    • Remaining Phase 1 capex (pyrolysis capacity) ₹560 Mn
    • Phase 2 capex (Dahej plant, additional capacity for rCB) ₹1,000 Mn
    A total capex of INR72 crores has been deployed towards this project, along with an additional INR22 crores in the reclaim rubber business for new technology and maintenance as part of the overall investment plan, which were outlaid, taking deployment to about INR95 crores over the course of the last 4-6 quarters (factually corrected). The balance outlay will be incurred in phases by May or June of 2026 with continued investments directed towards technology upgradation, energy efficiency and sustainable growth.
  • Debt Net ₹1,788 Mn
    On the debt side, our net debt, which includes both long-term and short-term debt stood at INR1,788 million in H1 of FY '26. Our debt equity ratio is 0.99 in H1 of FY '26.

Guidance & targets

Revenue

  • Crumb Rubber/Pyrolysis Revenue Revenue · H2 FY26 · High confidence INR 25-30 crores
    Now that the pyrolysis business is established, I mean, the reactors have begun, there's an expectation that this, as far as H2 is concerned, would generate anywhere around the INR25 crores to INR30 crores revenue for the second half.

    — Harsh Gandhi

Utilization

  • Crumb Rubber Plant Utilization Utilization · January/February · High confidence 75-80%
    we are expecting that by January, February, we would be pretty much operating at healthy utilizations of over 75%, 80%.

    — Harsh Gandhi

Profitability

  • Pyrolysis Plant Profitability Profitability · starting next month · High confidence in the black
    But starting next month, we are I mean, we are fairly hopeful that we will turn around and that will be in the black.

    — Harsh Gandhi

Performance

  • Reclaim Rubber Business Performance Performance · H2 FY26 · High confidence much stronger than H1
    So therefore, fairly confident that H2 as far as RR is concerned, will be much stronger than what we have seen in the current first half.

    — Harsh Gandhi

  • Overall Revenue and Profitability Performance · FY27 · Medium confidence significant breakout
    But leading us into FY '27 where the full-blown impact of even the recovered carbon black will come through and we are fairly positive that FY '27 will be a turnaround where there will be a significant breakout in both revenue as well as profitability.

    — Harsh Gandhi

Margin

  • EBITDA Margin Improvement Margin · H2 FY26 · High confidence 200-250 basis points
    I mean we've not commented usually, but I'll say at an EBITDA level, one can say anywhere between 200 to 250 basis points would be a fair assumption to make as far as the margins are concerned.

    — Harsh Gandhi

Sustainability

  • Renewable Energy Power Mix Sustainability · middle of next year · High confidence 50%
    This is both in line with our long-term agenda of getting 50% of our power through renewable sources, and we are on track to achieve that by middle of next year

    — Harsh Gandhi

What to watch in Q3 FY26

Pyrolysis plant profitability

Next month (December 2025)
Current Burning cash
Target Turn around and be in the black

Why it matters

The new pyrolysis plant is a strategic initiative, and its profitability is crucial for overall company performance.

But starting next month, we are I mean, we are fairly hopeful that we will turn around and that will be in the black.

Risks & concerns

  • Global macroeconomic and industry challenges (volatility, pricing pressures, US tariffs)

    high

    Persistent macroeconomic and industry challenges, global volatility, pricing pressures on commodities, and US tariffs impacted Q2 FY26 performance, particularly exports.

    Management acknowledged

  • Sharp decline in virgin polymer prices and competition from low-cost Chinese imports

    high

    The plastics segment of the non-reclaim rubber business saw a ~45% YoY decline in virgin polymer prices and increased competition, exerting pressure on realizations.

    Management acknowledged

  • Losses and sub-optimal scale in subsidiaries (GCSL and GSPL)

    medium

    GCSL and GSPL reported combined losses of INR 12 million for the quarter, as the businesses have not yet reached optimal scale, with no major turnaround expected for the rest of the year.

    Management acknowledged

  • Impact of new import policy on polyolefin materials

    medium

    A recent government announcement regarding import policy for polyolefin materials, mostly from China, is expected to lead to further erosion in margins and softening of prices.

    Management acknowledged

  • Discontinuation of Polymer Composite business

    medium

    The Polymer Composite business was discontinued due to commercial unviability from tariffs and local competition, impacting annual top-line by INR 7 crores and EBITDA by 10-15%.

    Management acknowledged

Q&A highlights

8 direct
Capacity Utilization across segments Direct
As far as the capacity utilization is concerned, the reclaim rubber, we are operating more or less at about 85% to 90% utilization of capacity. As far as the non-reclaim rubber businesses are concerned, they are operating at about 40% utilization only.

Provides clarity on current operational capacity utilization for both core and non-core businesses.

Asked by Yash Purbhe

Breakdown of INR 250 crores Capex Direct
As far as the outlay of INR250 crores is concerned, that was to be spent across a combination of pyrolysis, recovered carbon black and reclaim rubber, all 3. And when it comes to pyrolysis and recovered carbon black was to be the bulk of the spend at roughly, I think, about 60% to 65% of the total spend is to be on the pyrolysis and recovered carbon black and the remaining was to be between reclaim and also some amount on the plastic recycling.

Details the strategic allocation of significant capital expenditure across new and existing segments.

Asked by Yash Purbhe

Expected revenue from crumb rubber and pyrolysis in H2 Direct
Now that the pyrolysis business is established, I mean, the reactors have begun, there's an expectation that this, as far as H2 is concerned, would generate anywhere around the INR25 crores to INR30 crores revenue for the second half.

Offers specific revenue guidance for the newly operational and strategic pyrolysis business.

Asked by Yash Purbhe

Industry demand scenario and impact of EPR policy Direct
But India has been the bright spot when it comes to reclaim rubber because there, the consumption continues to grow. So I hope this answers all the 3 parts of your questions on the outlook, on the perspective of recovered carbon black and also on our capex plans.

Addresses broader market trends and the positive influence of EPR in India on reclaim rubber demand.

Asked by Ajay Surya

Factors contributing to margin decline Direct
One is the U.S. alone, there has been a decline in margin, which is roughly INR3.8 crores at a gross margin level. Over and above that, the recovered carbon black business, there has been a sorry, not recovered carbon black, but the RC business, which we have pretty much had very little sales through Q2, that generates a certain EBITDA, which has obviously been affected in the quarter.

Clarifies the specific reasons for margin compression, including US tariffs and low sales in certain segments.

Asked by Pranav Bohra

Outlook for H2 FY26 and expected margin improvement Direct
I think overall, the overhang of the tire recycling will definitely be far more positive. And therefore, H2 will be far, far more positive than H1 has been... I mean we've not commented usually, but I'll say at an EBITDA level, one can say anywhere between 200 to 250 basis points would be a fair assumption to make as far as the margins are concerned.

Provides a strong positive outlook for H2 and quantifies the expected EBITDA margin improvement.

Asked by Divy Agrawal

Engineering Plastics margins amidst virgin nylon price volatility Direct
So good thing is that our margins continue to be driven partly by the fact that as far as nylon is concerned, we continue to rely on raw material, which is in-house generated from end-of-life tire material. And to that extent, therefore, the margin has been more in our control than before. But of course, since virgin nylon prices have dropped, our selling prices in those categories have dropped. And as a result, the margin has been affected. I think we used to be in mid-teen EBITDA.

Explains the impact of raw material price volatility on Engineering Plastics margins and the mitigating factor of in-house sourcing.

Asked by Kunal Shah

Impact of new government import policy on polyolefin materials Direct
And as a result, there is likely to be a further reduction in certain polyolefin materials, which are mostly manufactured in China. So we are likely to see a further erosion in margins or further softening of prices when it comes to certain other virgin plastic materials on account of the announcement made by the government just yesterday.

Highlights a new, immediate regulatory risk that could further impact margins in the polyolefin segment.

2 min read 6 chapters

Detailed narrative

Q2 & H1 FY26 Performance Overview

GRP Limited reported a 1% YoY increase in Q2 FY26 total income to INR 1,331 million, with EBITDA growing 13% to INR 114 million and margins expanding to 9%. However, PAT declined 22% YoY to INR 20 million. For H1 FY26, total income remained flat at INR 2,578 million, while PAT significantly dropped from INR 69 million in H1 FY25 to INR 37 million, reflecting persistent macroeconomic and industry challenges.

Reclaim Rubber Business Dynamics

The reclaim rubber segment showed mixed performance, with strong domestic revenues growing 20% YoY, supported by a 9% sequential increase in revenues and 6% volume growth. Export revenues, however, saw a 2% decline YoY, primarily due to US tariffs impacting INR 6.2 crores in revenue and INR 3.8 crores in gross margin. Management expects H2 FY26 to be 'much stronger' for this segment, driven by new technology adoption and improved utilization.

Non-Reclaim Rubber & Plastics Challenges

The non-reclaim rubber business underperformed, particularly the plastics segment, which experienced a sharp ~45% YoY decline in virgin polymer prices and heightened competition from low-cost Chinese imports. The Polymer Composite business, heavily reliant on the US market, was deemed commercially unviable and has been discontinued, leading to an estimated INR 7 crores annual top-line impact and 10-15% EBITDA loss.

Strategic Capex and Pyrolysis Plant Update

GRP deployed INR 95 crores over the last 4-6 quarters, including INR 72 crores for its new pyrolysis operations in Solapur and INR 22 crores for reclaim rubber technology upgrades. The pyrolysis plant, which commenced operations, generated INR 20 crores in H1 FY26 and is expected to contribute INR 25-30 crores in H2 FY26, with management anticipating it to turn profitable by December 2025 and achieve 75-80% utilization by Jan/Feb.

Subsidiary Performance and Outlook

Subsidiaries GCSL and GSPL reported a combined revenue of INR 45 million for Q2 FY26 but incurred losses totaling INR 12 million, as they have not yet reached optimal scale. Management does not anticipate a major turnaround for these subsidiaries in the remainder of the year, with softening virgin prices and new import policies potentially adding further pressure.

Margin Pressures and Mitigation Strategies

Overall margins were impacted by US tariffs, elevated butyl costs, and a notional forex loss of INR 2 crores in Q2. Higher finance costs also contributed to PAT decline. To mitigate these pressures, the company implemented diversification of sources, selective price increases, and operational efficiencies, leading to an 82 basis point improvement in segmental EBITDA margin for reclaim rubber despite lower export volumes. Management guides for a 200-250 basis point EBITDA margin improvement in H2 FY26.

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