GRP — Q4 FY25 earnings call

Call held 12 May 2025

Management summary

GRP Limited reported robust financial performance in Q4 and FY25, driven by strong revenue growth and significant EBITDA margin expansion, partly aided by EPR income. The company commissioned its crumb rubber facility, expanding capacity and enabling further integration. Despite macroeconomic headwinds, including raw material inflation and U.S. tariff uncertainties, GRP proactively diversified its customer base and focused on cost optimization. The company is strategically investing in capacity expansion, new technologies, and green energy initiatives for future growth, while also declaring a dividend for shareholders.

Highlights

  • Strong revenue growth: Q4 income up 16% YoY to INR 1,606 million; FY25 revenue up 19% YoY to INR 5,518 million.

  • Significant margin expansion: Q4 EBITDA margins rose 45% to INR 331 million (404 bps expansion); FY25 EBITDA margins expanded 128 bps to INR 694 million.

  • Strategic capacity expansion: Commissioning of crumb rubber facility, increasing total capacity to over 122,000 tons, enabling downstream integration.

  • Successful EPR framework monetization: Booked INR 309 million EPR gain in Q4, and INR 434 million (INR 220 million from sale of credits + INR 214 million accrued) from EPR for FY25.

  • Green energy initiatives: Yielded INR 73 million in energy cost reduction in FY25, contributing to reduced greenhouse gas emissions.

Concerns

  • One-time inventory write-off of INR 10.5 million in Q4, affecting gross margins.

  • Persistent inflation in raw material costs, especially synthetic reclaim rubber, impacting profitability in the reclaim rubber business.

  • Slowdown in the tire sector (OE segment) and global uncertainties due to proposed U.S. tariff measures, affecting Q4 volumes and export to certain geographies.

  • Employee costs rose from 9.9% to 10.7% of revenue in Q4 due to ESOP-related charges and variable pay provisions.

Key financials

2 periods

Q4 FY25

  • Total Income
    1,606 Mn
    YoY +16%
  • EBITDA
    331 Mn
    YoY +45%
  • EBITDA Margin
    20.6%
    YoY +24.1%
  • PAT
    194 Mn
    YoY +67%

FY25

  • Total Income
    5,518 Mn
    YoY +19%
  • EBITDA
    694 Mn
    YoY +32.7%
  • EBITDA Margin
    12.6%
    YoY +11.5%
  • PAT
    307 Mn
    YoY +36%
  • Working Capital Days
    76 days
    YoY -19.1%

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
    10% FY25 Export Volume Growth20% FY25 Domestic Market Share66,000 tons FY25 Volume
  • Non-Reclaim Rubber
    15% FY25 Revenue Growth14% FY25 Volume Growth23% FY25 Engineering Plastics Volume Growth4,800 tons FY25 Volume (excl. GCSL)7% Q4 Standalone Non-Reclaim Margin
  • GRP Circular Solutions Limited (GCSL)
    29% Q4 Volume Growth75 Mn Q4 Revenue13 Mn Q4 Loss

Capital allocation

high confidence
  • Capex ₹900 Mn INR 23 crores from term loan, rest from internal accruals for FY25. For FY26, Proparco loan, DFI loan, QIP, and internal accruals.
    • New pyro and crumb project ₹490 Mn
    • Integrated facility for converting end-of-life tire (ELT) waste to Energy
    • Phase 1 (1A and 1B) of pyro plant ₹1,500 Mn
    • Renewable energy substitution
    So capex we have incurred in FY '25 total of INR 66 crores. As we have already mentioned that INR 49 crores is for our new project for this pyro and crumb. And for the sourcing of this capex, it was INR 23 crores of term loan we have received, and rest is internal accrual. And going forward, the plan is of INR 80 crores to INR 90 crores, which, again, as we have already said that we have this Proparco loan, DFI loan is approved, and we are taking it in tranches. And additionally, we are going for QIP also, and internal accrual also. So all these sources will fund capex.
  • Debt Debt disclosed
    Our debt-to-equity ratio is 0.76 in FY '25 compared to 0.68 in FY '24. In addition, for FY '25, the Board has declared a dividend of INR 14.50 per share, representing 145% of the face value. These actions reaffirm our continued commitment to delivering value to our shareholders while maintaining financial discipline and investing for long-term growth.
  • Dividend ₹14.5/share (final)
    In addition, for FY '25, the Board has declared a dividend of INR 14.50 per share, representing 145% of the face value.
  • Liquidity Liquidity disclosed Adequate internal accruals and cash flows to fund capex and debt.
    We will have adequate internal accruals plus the debt that we have. We have adequate cash flows.

Guidance & targets

Capacity

  • Overall Capacity Expansion Capacity · future · Low confidence threefold
    Driven by a strong sense of purpose, a clear vision and focused strategy, we're targeting a threefold capacity expansion across our key business verticals, not merely scale, but meaningfully becoming future ready for enhanced growth thereafter.

    — Harsh Gandhi

  • Pyro Plant Capacity (Phase 1) Capacity · Phase 1 · High confidence 30,000 tons
    And there, the capacity is going to be 15,000 tons annualized. The second line that we will put up will be an additional 15,000 tons. So therefore, the pyro will take 30,000 tons of crumb rubber in total.

    — Harsh Gandhi

  • Crumb Rubber Capacity Capacity · initial · High confidence 6 KTA
    As far as crumb rubber is concerned, it is a fixed size of materials. So there, our capacity will be closer, to begin with, around 6 KTA

    — Harsh Gandhi

  • Long-term Pyro Capacity Capacity · long-term · Medium confidence 60 KTA
    I think our long-term stated plan is to get to 60 KTA of pyro capacity. And that's part of the Phase 2.

    — Harsh Gandhi

Profitability

  • GCSL Profitability Profitability · once 75% utilization · Medium confidence profit scenario
    We should start seeing a profit scenario once we get past 75% of utilization of the capacity.

    — Harsh Gandhi

Utilization

  • GCSL Utilization Utilization · end of FY26 · High confidence 75%
    GCSL by the end of the year, should get to about 75-odd percent, which means for the year, we'll be trending at closer to 60%, 65% utilization.

    — Harsh Gandhi

  • Pyro Plant Utilization Utilization · remaining 3 quarters of FY26 · High confidence 66-70%
    And the new line as far as energy I mean, tires to energy is concerned, should for the year, assuming that we commissioned it in Q1 for the rest of the 3 quarters, should also be beyond 66% to 70% utilization of assets.

    — Harsh Gandhi

Working Capital

  • Working Capital Cycle Working Capital · future · High confidence 70-72 days
    Working capital days, yes, it is 76 from 94 days from previous year. And stock creditors status everywhere, considerable improvement in days we have seen. And we are striving to achieve 70 to 72 days further working capital cycle. So that is what we want to say.

    — Shilpa Mehta

Energy

  • Renewable Energy Sourcing Energy · future · High confidence 50%
    I remind you, we have been constantly saying that we do have an internal target to take up our energy from renewable sources to closer to 50%.

    — Harsh Gandhi

What to watch in Q1 FY26

Pyro Plant Commissioning & Utilization

Q1 FY26
Current Not yet commissioned
Target Operational within 30-45 days, reaching 66-70% utilization in remaining FY26 quarters

Why it matters

Successful commissioning and ramp-up of the pyro plant is crucial for the ELT-to-Energy vertical, value extraction, and cleaner energy initiatives.

The plant for pyro should get set up within the next 30 to 45 days. And the new line as far as energy I mean, tires to energy is concerned, should for the year, assuming that we commissioned it in Q1 for the rest of the 3 quarters, should also be beyond 66% to 70% utilization of assets.

Risks & concerns

  • Persistent Raw Material Inflation

    medium

    Inflation in raw material costs, especially synthetic reclaim rubber, is impacting profitability in the reclaim rubber business.

    Management acknowledged

  • U.S. Tariffs and Global Trade Uncertainty

    medium

    Proposed U.S. tariff measures create uncertainty, affecting Q4 volumes and exports to certain geographies, requiring customer portfolio diversification.

    Management acknowledged

  • Product Mix and Pricing Power Limitations

    medium

    Unfavorable product and regional sales mix, along with delayed price corrections from customers due to contract terms, are impacting gross margins, particularly for butyl reclaim.

    Management acknowledged

  • Subsidiary (GCSL) Losses

    low

    GRP Circular Solutions Limited (GCSL) incurred a loss of INR 13 million in Q4, though it is expected to contribute meaningfully as it scales and matures.

    Management acknowledged

Q&A highlights

6 direct
Gross Margin Pressure and Reasons Direct
So as far as the gross margin is concerned, I've mentioned this even on the previous call. We are seeing specific pressure on gross margin on a particular product category only, which is butyl reclaim which is one type of a synthetic rubber reclaim. And as I mentioned, then unfortunately, that is actually a much larger portion as far as our total revenue is concerned.

Clarified the specific product (butyl reclaim) and reasons (raw material costs, inability to pass on price increases due to contract terms) for gross margin pressure, and indicated potential for reversal.

Asked by Divya Agarwal

Impact of U.S. Tariffs on Operations Partial
But several of the other geographies, in particular countries where the tariffs announced were fairly significant and there were large exporters of tires to North America, case in point being likes of Thailand, Vietnam, etcetera; our exports to some of those geographies did suffer a bit of a dip in Q4.

Explained the indirect impact of U.S. tariffs on GRP's exports to other countries that supply tires to the U.S., highlighting the fluidity of global trade flows.

Asked by Divya Agarwal

Crumb Rubber Plant Capacity Deviation Direct
As far as the capacity itself is concerned, the capacity that we have added as far as crumb is concerned, is closer to about 40,000-odd tons. But you know that some part of it goes for different end applications. And therefore, the entire the nameplate capacity is very different than what we eventually end up producing.

Clarified the difference between stated capacity and actual production based on product size, and the overall nameplate capacity.

Asked by Divya Agarwal

Update on Pyro and Recovered Carbon Black (RCB) Plant Commissioning Direct
The plant for crumb has already been established and commissioned, as I indicated. The plant for pyro should get set up within the next 30 to 45 days. And when it comes to the RCB plant, that will be set up and commissioned by Q4 of this fiscal.

Provided clear timelines for the commissioning of the pyrolysis and recovered carbon black plants, which are key strategic initiatives.

Asked by Divya Agarwal

EPR Accrual Pricing Strategy Direct
We are accruing everything at the minimum price, as specified under the guidelines, which is INR 2.52 a kilo. The range is INR 2.52 until INR 8. In the past, we have sold credits at also a price higher than the minimum reserve price. But when it comes to the accrual of the income, we have taken everything at the base price of INR 2.52.

Explained the conservative approach to EPR income accrual, using the minimum guideline price, which suggests potential upside if market prices for credits increase.

Asked by Jatin

EBIT Drop in RR and Non-RR Businesses Partial
As I said, I think as far as RR is concerned, we've been making it very abundantly clear over the last two calls that the gross margins are what are affecting the margins -- overall margins. I mean the reduction in the EBIT, as you mentioned, is clearly a function of the gross margin reduction as far as the RR is concerned.

Addressed the EBIT decline for Reclaim Rubber by linking it to gross margin pressure, but expressed confusion regarding the analyst's non-RR EBIT figures, suggesting a potential misinterpretation or data discrepancy.

Asked by Radha

Customer Approval for Pyro Plant and RCB Technology Direct
Sorry, Radha, I mentioned that the crumb rubber plant has been commissioned, pyro plant has not been commissioned so far. ... Those are only to sort of work for assessing our own product and the MSDS as well as get some validation done. I mean those are very soft approvals. We need to demonstrate the same once the commercial plans are set up.

Clarified the status of plant commissioning and the nature of current customer approvals for RCB technology, indicating that commercial validation is still pending.

Asked by Radha

FY26 Margin Outlook Direct
I'd say, we would kind of be marginally better than what we have seen in H2 of last financial year. As far as the rest of the product categories are concerned, as I said, the margin continues to be robust. And obviously, with the operating efficiencies kicking in, we are hoping that for the rest of the product categories, we will see an improvement in margin by a few percentage points because of the impact of energy as well as manpower cost rationalization.

Provided a forward-looking view on margins, expecting slight improvement for the challenged butyl reclaim segment and a few percentage points improvement for other categories due to efficiency gains.

Asked by Rohit

3 min read 8 chapters

Detailed narrative

Q4 & FY25 Financial Performance Overview

GRP reported a 16% YoY increase in Q4 income to INR 1,606 million, with FY25 revenue growing 19% YoY to INR 5,518 million. EBITDA margins expanded significantly, up 404 bps in Q4 to 20.6% (INR 331 million) and 128 bps in FY25 to 12.6% (INR 694 million). PAT for Q4 and FY25 grew 67% to INR 194 million and 36% to INR 307 million respectively, demonstrating strong financial results despite macroeconomic headwinds.

Strategic Capacity Expansion and Integration

A key milestone was the commissioning of the crumb rubber facility, which now exceeds 122,000 tons of capacity. This expansion strengthens GRP's capabilities and enables increased downstream integration with upcoming pyrolysis and recovered carbon black plants, opening new avenues in sectors like road surfacing. The company is targeting a threefold capacity expansion across its key business verticals, focusing on enhanced growth.

EPR Framework and Circular Economy Focus

The company significantly benefited from the Extended Producer Responsibility (EPR) framework, booking INR 309 million in Q4 and a total of INR 434 million for FY25 from EPR credits and accruals. With the EPR framework for plastics in place from April 1, 2025, GRP anticipates increased demand from brand owners, who will be required to incorporate up to 30% recycled content in their packaging materials, aligning with the company's circular economy vision.

Reclaim Rubber Business Performance and Challenges

While Q4 volumes were adversely affected by macroeconomic volatility, FY25 saw reclaim rubber exports grow 10% YoY, and domestic market share increased from 16% in CY22 to 20% in CY24. However, profitability in the reclaim rubber business, particularly for synthetic reclaim rubber, faced significant pressure due to persistent raw material inflation and delayed price corrections from customers. This was exacerbated by a one-time inventory write-off of INR 10.5 million in Q4.

Non-Reclaim Rubber and Subsidiary Performance

The standalone non-reclaim rubber business posted a 3% revenue increase in Q4 and 15% for FY25, driven by a 14% volume increase. The Engineering Plastics segment showed robust 23% volume growth in FY25. The subsidiary, GRP Circular Solutions Limited (GCSL), saw Q4 volumes grow 29% YoY, contributing INR 75 million in revenue but incurring a loss of INR 13 million, with profitability expected once utilization exceeds 75%.

Capital Expenditure and Funding Strategy

GRP incurred INR 66 crores in capex for FY25, with INR 49 crores specifically allocated to the new pyro and crumb projects, funded by INR 23 crores from term loans and internal accruals. For FY26, the company plans INR 80-90 crores in capex, to be funded by approved Proparco and DFI loans, a Qualified Institutional Placement (QIP), and internal accruals. This capital is earmarked for the ELT-to-Energy vertical and green energy initiatives.

Impact of U.S. Tariffs and Global Trade Dynamics

The company noted anxiety around proposed U.S. tariffs in Q4, which indirectly affected exports to certain geographies (e.g., Thailand, Vietnam) that are major tire exporters to the U.S. This led to some internal shuffling of customer portfolios and diversification to other regions. Management indicated that the full impact and future trade flows remain fluid until international treaties are finalized, requiring ongoing adjustments to supply chains and market focus.

Green Energy Initiatives and Cost Optimization

GRP's green energy initiatives yielded tangible savings of INR 73 million in energy costs for FY25, significantly contributing to reduced greenhouse gas emissions. The company has an internal target to increase its energy sourcing from renewable sources to closer to 50%. These efforts are part of broader cost optimization strategies, including automation initiatives, aimed at enhancing efficiency and profitability.

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