GRP — Q3 FY26 earnings call

Call held 13 Feb 2026

Management summary

GRP Limited reported a stable Q3 FY26 with a 2% YoY revenue growth to INR 135.2 crores, supported by strong domestic performance and new business contributions. However, profitability was impacted, with adjusted PAT declining 49% YoY to INR 2.3 crores, primarily due to higher raw material costs and a significant 40% drop in North American export volumes. While new initiatives like tyre pyrolysis face stabilization delays, recent US tariff reductions and a new solar PPA offer positive outlooks for future export recovery and cost savings.

Highlights

  • Total income grew marginally by 2% YoY to INR 135.2 crores in Q3 FY26, demonstrating stability despite challenges.

  • Domestic revenues in reclaim rubber grew 17% YTD, with market share improving by 200 basis points, driven by focus on non-tyre applications.

  • EBITDA margins in the reclaim rubber business improved due to structural cost reduction measures, including a 256-basis point reduction in other expenses.

  • US tariff reduction from 50% to 18% is expected to improve export volumes and realizations from the current quarter.

  • Solar PPA investment of INR 3 crores is expected to deliver annual cost savings of INR 3-4 crores and reduce carbon footprint.

Concerns

  • Adjusted PAT declined by 49% YoY to INR 2.3 crores in Q3 FY26, primarily due to higher raw material costs, export margin decline, and fixed costs from underutilized new plants.

  • Export volumes to North America fell nearly 40% YoY in Q3 FY26 due to tariffs, significantly impacting overall volumes.

  • Stabilization of tyre pyrolysis technology is taking longer than anticipated, leading to near-term capacity utilization below expectations and deferral of expansion plans to August 2026.

  • The recycled polyolefin segment faces headwinds with industry prices 30-35% lower YoY and slower-than-anticipated demand momentum for EPR benefits.

Key financials

2 periods

Q3 FY26

  • Total Income
    ₹135.2 Cr
    YoY +2%
  • Gross Profit
    ₹66.6 Cr
    YoY -5%
  • EBITDA
    ₹11.2 Cr
    YoY -14%
  • Adjusted PAT
    ₹2.3 Cr
    YoY -49%

9M FY26

  • EBITDA Margin
    9%
  • Total Income
    ₹393 Cr
    YoY +0.5%

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.

Order book

low confidence

Pipeline

other

Commercial conversations have begun with US customers post-tariff reduction, with expectations of volume recovery over the next few quarters.

Management expects volume recovery in Custom Die Forms and reclaim rubber over the next few quarters, linked to OE replacement tire manufacturing in North America.

Source: Inferred

Capital allocation

high confidence
  • Capex ₹80 Cr
    • Pyrolysis and Recovered Carbon Black business ₹80 Cr
    • Reclaim rubber new technology ₹12 Cr
    the rest of the capex as far as FY '27 is concerned, an approximate about INR 80 crores of capex to be deployed in this year. ... investment is likely to be in the region of between INR 12 crores to INR 15 crores and will be deployed entirely by May of this year.
  • Debt Gross ₹180.2 Cr
    Gross debt, including long-term and short-term borrowings stood at INR 1,802 million in 9 months of FY '26, debt-to-equity ratio was 0.92 as on 31st December 2025.

Guidance & targets

Capacity

  • Pyrolysis & Recovered Carbon Black commercial production Capacity · H2 FY27 · High confidence available from the second half of the half year
    These are now expected to be commissioned by August 2026 with commercial production available from the second half of the half year.

    — Harsh Gandhi

  • Reclaim rubber new technology commissioning Capacity · Q1 FY27 · High confidence by May of this year
    investment is likely to be in the region of between INR 12 crores to INR 15 crores and will be deployed entirely by May of this year.

    — Harsh Gandhi

  • Next site additional capacity completion Capacity · Q1 FY28 · High confidence by Q1 of FY '28
    the next site where we are planning to deploy will also have additional capacity and that work will start towards the second half of this year, potentially complete by Q1 of FY '28.

    — Harsh Gandhi

  • Green Energy (Pyrolysis/rCB) effective net capacity Capacity · High confidence 45,000 tons
    effective net capacity available of about 45,000 tons for the year additionally for all of pyrolysis steel, oil, crumb, char and rCB.

    — Harsh Gandhi

Project Execution

  • Solapur project execution and commissioning Project Execution · H1 FY27 · High confidence by first half of FY '27
    We expect that by first half of FY '27, the entire project in Solapur will be executed and commissioned.

    — Harsh Gandhi

Capex

  • Pyrolysis & Recovered Carbon Black capex Capex · FY27 · Medium confidence INR 80 crores
    the rest of the capex as far as FY '27 is concerned, an approximate about INR 80 crores of capex to be deployed in this year.

    — Harsh Gandhi

  • Reclaim rubber new technology capex Capex · FY27 · Medium confidence INR 12 crores to INR 15 crores
    investment is likely to be in the region of between INR 12 crores to INR 15 crores and will be deployed entirely by May of this year.

    — Harsh Gandhi

Cost Savings

  • Solar PPA cost savings accrual Cost Savings · August 2026 · High confidence start accruing from August
    benefits of this will start accruing from August.

    — Harsh Gandhi

Volume

  • Reclaim rubber volume growth Volume · FY27 · Medium confidence mid-teen kind of a number
    So expectation is a mid-teen kind of a number in terms of volume growth for next year over FY '26.

    — Harsh Gandhi

Utilization

  • Plastics business utilization Utilization · Low confidence 75%, 80%
    I think the plastics business, I would be satisfied with the utilization levels from the current sub 50% would go to closer to 75%, 80%.

    — Harsh Gandhi

What to watch in Q4 FY26

Pyrolysis & Recovered Carbon Black commercial production

H2 FY27
Current Stabilization taking longer than anticipated, expansion deferred.
Target Commissioning by August 2026, commercial production in H2 FY27.

Why it matters

Key new business segment, successful commissioning and production are vital for future growth and profitability.

These are now expected to be commissioned by August 2026 with commercial production available from the second half of the half year.

Risks & concerns

  • Impact of US tariffs on exports and competitiveness

    high

    US tariffs led to a nearly 40% YoY decline in export volumes to North America for key customers in Q3 FY26, impacting India's competitiveness. Tariffs reduced from 50% to 18%.

    Management acknowledged

  • Stabilization delays and low utilization in Tyre Pyrolysis technology

    medium

    Stabilization has taken longer than anticipated, leading to near-term capacity utilization below internal expectations and deferral of expansion to August 2026.

    Management acknowledged

  • Weak global tyre demand and subdued OEM markets

    medium

    Global tyre demand remains under pressure, with modest growth in passenger car/light truck OEM (driven by China) but weakness in Europe and subdued truck/bus OEM demand.

    Management acknowledged

  • Raw material price inflation impacting margins

    medium

    Continued inflation in select raw materials, with one key grade seeing a 45% increase in input cost, though 35% pass-through was achieved.

    Management acknowledged

  • Headwinds in Recycled Polyolefin segment

    medium

    Sharp decline in Virgin polypropylene prices and sustained low-cost imports led to industry prices being 30-35% lower YoY, affecting volumes and EPR demand momentum.

    Management acknowledged

  • Fixed costs from new, underutilized plants

    medium

    Fixed costs from new plants operating at sub-optimal levels impacted EBITDA and margins in Q3 FY26.

    Management acknowledged

Q&A highlights

6 direct
US Tariff Normalization and Commercial Negotiations Direct
I think commercial conversations have already begun with the customers. Notwithstanding the fact that one particular business, which is the rubber composite, we announced earlier that we have decided to sort of shut that business that we would not be restarting. But the rest of the businesses around Custom Die Forms as well as the reclaim rubber, we should be able to revert to those volumes potentially over the course of the next few quarters.

Clarifies that commercial talks have resumed post-tariff reduction, but one business (rubber composite) will be discontinued, and volume recovery for others is expected over several quarters, linked to OE replacement tire manufacturing.

Asked by Rajvi Shah

Timeline for Volume Recovery post-Tariff Reduction Partial
As far as the time lines are concerned, we are in conversations with the customers. I would say it will probably be another 3 to 4 weeks before clarity of this emerges. So, some impact visible from this quarter and clarity emerging definitely from next quarter, but to get back that entire volume, I don't have a timeline to provide

Management indicates some impact this quarter and clarity next quarter, but cannot provide a firm timeline for full volume recovery, highlighting ongoing uncertainty.

Asked by Rajvi Shah

Capex Deployment for Green Energy (Pyrolysis, rCB, Crumb Rubber) Direct
I think so far, a total of about INR 76-odd crores has been deployed until FY '26 until Q3 of this financial year, starting FY '24 last quarter that we had begun. And the rest of the capex as far as FY '27 is concerned, an approximate about INR 80 crores of capex to be deployed in this year. However, we've recalibrated our plans from our earlier trajectory or earlier volumes that we were planning, almost 25% additional volume is planned for the entire project given the cost economy. And therefore, there's going to be an overrun on the overall spend, but to the higher capacity that will get deployed.

Provides a detailed breakdown of past and future capex for green energy projects, revealing a planned increase in overall spend for higher capacity despite earlier delays.

Asked by Jigar Shah

Revenue Potential and Asset Turns from New Projects Partial
Okay. I don't have those numbers immediately. I mean I think we've indicated as far as the entire pyrolysis and recovered carbon black is concerned, where the expected asset turns are in the range of 2 depending on the stage of execution that we do. As far as the reclaim rubber itself is concerned, the asset turns would be in line with the current numbers. And therefore, this INR 12 crores to INR 15 crores will yield appropriate revenue number.

Management avoids giving specific revenue potential numbers for new projects, only reiterating asset turn ratios and linking reclaim rubber capex to 'appropriate revenue number,' which is vague.

Asked by Jigar Shah

Margin Outlook for Sub-optimal Plants Direct
I think the new tech will start seeing the utilization inch up about 60%, 65%, starting next quarter. And as the next line comes in, that utilization will also take some time to brew. But as far as Q3 reclaim is concerned, overall, we were at about 87% utilization. There is still some room for growth. The EP business or the Engineering Plastics business continued to operate at just about 50% level. And the Custom Die Forms and the rubber composites, again, which were both U.S. dependent, were operating at 50% utilization. As I mentioned, the composite business, we have taken a call to discontinue, that is obviously not sure, but the CDF business is expected to get back up to the 75%, 80% utilization that it was operating pre tariffs.

Provides detailed utilization levels for various segments and expectations for improvement, crucial for understanding future margin trajectory.

Asked by Jigar Shah

Subsidiary Operating Model Reassessment and Strategic Options Direct
I think all options are on the table. I think the subsidiary has predominantly the polyolefin recycling as part of its portfolio. We've got some good strong approvals from brand owners. We've also started recently working with global compounder for the same. Some of the areas that we are reassessing the same is the kind of product mix and customer mix that we are targeting and also the end segments. ... As far as your question on whether we are looking at either of a fundraise or a strategic partnership and or reduction in capital, I think we haven't gotten far. I mean there is all on the drawing board and several options under consideration. We will certainly announce something once we have made progress on either of these opportunities. But yes, some of these are within the realm of possibilities.

Reveals that the company is actively reassessing its polyolefin recycling subsidiary's strategy, including potential fundraise, strategic partnerships, or capital reduction, indicating significant strategic review.

Asked by Karan Sharma

EPR Credit Generation and Monetization Challenges Direct
No. Answer is no, there is no challenges in either of monetizing, generating or regulatory challenges. We continue to generate EPR credits in line with our domestic sourcing and in line with the production of the different grades of materials that are eligible for generating the credit. ... There is only one particular issue, which is our pyrolysis plant. That registration is still pending and likely to be received in this quarter. So the impact of EPR credits on account of both purchases and sales in the pyrolysis and rCB business, those are not factored in our current approvals, because the approval from the CPCB is not in place. But that's generally, there is a lag. It takes a couple of months, and we are hoping that in this quarter, we will have the registration and then start generating the credits and accruing the income to that effect.

Clarifies that while general EPR credit generation/monetization is fine, the pyrolysis plant's registration is pending, delaying EPR credit accrual from that specific business.

Asked by Jay Jain

Comfort Level with Leverage and Debt Reduction Direct
I think the debt equity was a conscious call when we did raise the capital because there is adequate confidence in the future cash flows that we are generating in the business. Of course, this year, over the first 6 months, there has been a little bit of a hiccup on account of the tariff from North America and its resulted impact on the gross margins for the company. But we remain fairly confident that the margins will now start turning given that the tariffs have reversed. And this leverage will certainly reduce. But I think the current debt-to-EBITDA as well as the debt equity ratios, we are fairly comfortable with the current level. You will see in the course of the next few quarters that this will start improving for sure.

Management expresses comfort with current debt levels, attributing recent hiccups to tariffs, and expects leverage ratios to improve in coming quarters as margins recover.

Asked by Nisha Shah

2 min read 6 chapters

Detailed narrative

Q3 FY26 Financial Performance Overview

GRP Limited reported a marginal 2% YoY increase in total income to INR 135.2 crores for Q3 FY26. Despite this, gross profit declined by 5% to INR 66.6 crores, and EBITDA fell 14% to INR 11.2 crores. Adjusted PAT saw a significant 49% YoY decline to INR 2.3 crores, primarily impacted by higher raw material costs, a 45% decline in export margins due to US tariffs, and fixed costs from underutilized new plants.

Impact of US Tariffs and Export Market Challenges

The company experienced a nearly 40% YoY decline in export volumes to North American markets in Q3 FY26, largely due to the impact of US tariffs. However, recent tariff reductions from 50% to 18% are expected to improve export volumes and realizations, with benefits anticipated from the current quarter. Commercial conversations with US customers have resumed, though a full recovery timeline is still uncertain, expected to gain clarity in 3-4 weeks.

Green Energy Initiatives and Project Delays

GRP is progressing with its integrated tyre recycling ecosystem, including tyre pyrolysis, recovered carbon black (rCB), and crumb rubber. While the yield profile of tyre pyrolysis is encouraging, stabilization of the technology has taken longer than anticipated, leading to below-expected capacity utilization. Consequently, the next stage of expansion for pyrolysis and rCB commissioning has been deferred to August 2026, with commercial production expected in H2 FY27.

Domestic Market Strength and Diversified Portfolio

The domestic market provided support, with reclaim rubber domestic revenues growing 17% YTD and GRP's market share improving by 200 basis points. The company's diversified portfolio and focus on non-tyre applications contributed to overall volume stability, with incremental gains from new businesses like Tyre Pyrolysis Oil balancing declines in export-linked volumes. Income from pyrolysis and crumb rubber businesses also began to build, supported by sales to cement and steel industries.

Headwinds in Recycled Polyolefin Segment

The recycled polyolefin segment faced significant challenges, with industry prices declining 4-5% sequentially in Q3 and remaining 30-35% lower YoY. This was driven by a sharp decline in virgin polypropylene prices and increased low-cost imports, particularly from China. These factors hindered the company's ability to increase volumes and scale in this market, and demand momentum linked to EPR benefits has been slower than anticipated.

Capital Expenditure and Debt Position

GRP deployed approximately INR 50 crores in capex for FY26 YTD, with INR 31 crores allocated to pyrolysis and rCB. An additional INR 80 crores is planned for FY27 for pyrolysis and rCB, alongside INR 12-15 crores for new reclaim rubber technology. Gross debt stood at INR 180.2 crores as of December 31, 2025, with a debt-to-equity ratio of 0.92. Management expressed comfort with current leverage and expects improvement in debt ratios in the coming quarters.

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