Jain Resource Recycling Q1 FY27 earnings call

Jain Resource Recycling Limited delivered robust financial results for Q1 FY27, with consolidated revenue from operations reaching Rs. 2,725 crores, marking a significant year-on-year growth of 76%. Profit After Tax (PAT) also saw a healthy increase of 23% year-on-year, totaling Rs. 69 crores. This strong performance was largely attributed to robust growth in copper volumes and the initial contributions from the company's value-added copper products, which now account for 67% of consolidated revenue, up from 55% in FY26.

Despite the strong top-line growth, EBITDA margin for Q1 FY27 moderated to 4%, compared to 5.8% in Q1 FY26, though it improved from 3.5% in Q4 FY26. Similarly, PAT margin stood at 2.5% for the quarter, down from 3.6% in Q1 FY26. Management attributed this moderation to the evolving product mix and the ramp-up phase of newer value-added businesses. However, they expressed confidence that margins would progressively improve as these projects mature and achieve higher utilization levels, with value-added copper products expected to add 2% to existing margins.

The company made significant strides in its strategic initiatives, particularly in the value-added copper segment. The copper anode facility was successfully commissioned, with approximately 600 tonnes of copper anodes already sold. The copper cathode project is on track for Phase-1 commissioning in Q2 FY27, aiming for an installed capacity of 1,500 metric tonnes per month. Additionally, copper wire rod and busbar/profiles projects, with capacities of 600 and 1,500 metric tonnes per month respectively, are expected to be commissioned in Q3 FY27.

Jain Resource Recycling Limited commenced trial production at its Ahmedabad joint venture facility, designed to process 72,000 tonnes of copper-bearing scrap annually, with operations expected to stabilize in Q2 FY27. However, the Kuwait strategic investment, vital for raw material security, faced delays in machinery shipment due to the West Asia war crisis, pushing its contribution to Q3 FY27 onwards. The crisis also resulted in Rs. 20-30 crores worth of raw material being stuck at Dubai port, though it is fully insured.

The upcoming recycling mandate from FY28, requiring 5% recycled content in certain products, is viewed as a significant tailwind, expected to increase demand for recycled metals and boost volumes. For FY27, the company plans a total capital expenditure of approximately Rs. 87 crores, primarily allocated to ongoing copper value-added projects, the antimony project, and a new Rs. 15 crore plastic recycling facility. The company maintains a strong capital base and focuses on disciplined working capital management, with inventory days at 55 and debtor days at 19.