GRP

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^🌐.

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.

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.

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.

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.

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.