Jain Resource Recycling Limited — Q2 FY26 earnings call

Call held 23 Oct 2025

Management summary

JAINREC delivered a robust performance in Q2 FY26, marking its first earnings call post-IPO with significant YoY growth in revenue and profitability. The growth was primarily volume-driven, particularly in the lead segment. Management outlined a clear strategy focused on forward integration in copper to enhance margins and a strategic JV to secure raw material sourcing. While a temporary spike in working capital was noted due to supply chain dynamics, the company provided a clear timeline for normalization and maintained a confident outlook on sustaining its 20-25% growth trajectory.

Highlights

  • Q2 FY26 Revenue from operations stood at ₹2,114 crores, a strong 52% YoY growth.

  • Q2 FY26 EBITDA grew 82% YoY to ₹160 crores, with an EBITDA margin of 7.6%.

  • Q2 FY26 Profit After Tax (PAT) increased by 88% YoY to ₹99 crores, with a PAT margin of 4.7%.

  • H1 FY26 Revenue reached ₹3,663 crores, up 27% YoY, while H1 PAT grew 38% YoY to ₹155 crores.

  • Successfully listed on NSE & BSE on October 1, 2025, after an IPO of ₹1,250 crores (₹500 cr fresh issue).

  • Working capital cycle increased temporarily to 52 days from 38 days due to higher inventory from bunched-up shipments; normalization expected by Feb 2026.

  • Announced a strategic JV with US-based C&Y Group to set up a copper scrap recycling plant in Ahmedabad.

  • Forward integration into copper cathodes is on track, with a ₹95 crore capex project expected to commence operations in Q1 FY27.

Key financials

  1. Revenue ₹2,114 Cr +52%YoY
  2. EBITDA ₹160 Cr +82%YoY
  3. EBITDA Margin 7.6%
  4. PAT ₹99 Cr +88%YoY
  5. PAT Margin 4.7%
  6. Working Capital Cycle 52 days

What they filed

Q1 FY27: revenue up 70.5%, net profit up 28.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,343 1,724 1,639 1,549 2,055 +53%2,676 +55%3,030 +85%2,641 +70%
EBITDA66 76 90 90 156 +136%190 +150%100 +11%106 +18%
Net profit55 42 56 57 99 +80%127 +202%62 +11%73 +28%
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

  • Copper & Copper Alloys
    46% H1 FY26 Revenue Share₹51,000 EBITDA per Ton
  • Lead & Lead Alloys
    48% H1 FY26 Revenue Share₹18,920 EBITDA per Ton
  • Aluminum & Aluminum Alloys
    4% H1 FY26 Revenue Share
  • Other
    2% H1 FY26 Revenue Share

Guidance & targets

Growth

  • Revenue Growth Growth · Ongoing · High confidence 20-25%
    we estimate that this growth of around 20%-25%, which we have already performed in the last 4 to 5 years, this growth will still continue on the present portfolio of the products.

    — Hemant Jain, Executive Director and CFO

Margin

  • Copper Segment EBITDA Margin Improvement Margin · next year · High confidence 3% to 4%
    I cannot give exact number, but I of course expect the EBITDA margin to go up by at least 3% to 4% in copper segment alone and that will have the complete chain and will have an impact on EBITDA in a positive manner in a big way next year.

    — Kamlesh Jain, Chairman and Managing Director

Capex

  • Annual Sustenance Capex Capex · per annum · High confidence ₹20-30 crores
    On that account, we expect year-on-year capital expenditure of INR20 crores per annum to INR30 crores per annum.

    — Mayank Pareek, Joint Managing Director

  • Copper Value-add Project (Phase 1) Capex · Ongoing · High confidence ₹95 crores
    And the Phase 1 consists of a plant with a capacity of 9,000 tons per annum, which has a capital expenditure of INR95 crores.

    — Mayank Pareek, Joint Managing Director

Operations

  • Copper Value-add Project Commissioning Operations · Q1 FY27 · High confidence Operations to commence
    We expect operations to commence in Q1 of FY '2027.

    — Mayank Pareek, Joint Managing Director

  • Working Capital Cycle Normalization Operations · by Feb 2026 · High confidence 40-42 days

    Previously 52 days (current) → 40-42 days

    And we'll again come back to the old level of inventory days, working capital cycle of around 40, 42 days by the end of the last, maybe in the middle of the last quarter of FY '26, somewhere in the Feb of '26.

    — Hemant Jain, Executive Director and CFO

Debt

  • Annual Finance Cost Savings from IPO proceeds Debt · annual basis · High confidence ₹20-22 crores
    So, we estimate this finance cost will come down to the extent of around INR20 crores to INR22 crores on an annual basis.

    — Hemant Jain, Executive Director and CFO

Risks & concerns

  • Elevated Working Capital

    medium

    Working capital cycle increased to 52 days from 38 days. Management attributes it to temporary import timings and expects normalization by Q4 FY26.

    Analyst acknowledged

  • Global Supply Chain Disruptions

    medium

    Management cited disturbances in shipping lines as a cause for high inventory, indicating vulnerability to global logistics issues.

    Management acknowledged

  • Potential US Ban on Aluminum Scrap Exports

    low

    Management stated the potential ban is for a type of scrap they don't use (UBC), aluminum is a small part of their portfolio, and they have diversified sourcing from 120+ countries.

    Analyst downplayed

Areas of evasion (1)

  • Direct margin comparison with specific peers

Q&A highlights

2 direct
Spike in Working Capital Cycle Direct
The working capital cycle has gone up from 38 days to around 52, majorly because of the high inventory days... we expect this normalization starting from the end of December. And we'll again come back to the old level of inventory days, working capital cycle of around 40, 42 days... somewhere in the Feb of '26.

It directly addresses a key balance sheet concern, provides a clear reason (bunched-up shipments), and sets a verifiable timeline for normalization.

Asked by Amit Lahoti

Margin Sustainability and Peer Comparison Partial
Different companies have different models and different geography conditions. You cannot compare like apple to apple... our models and our margins are sustainable long term and it is going to definitely go up in the future because of the expansion and diversification and the value-added product what we are going to manufacture.

Management deflects a direct comparison on margins versus peers, instead focusing on their unique model and future margin expansion drivers, indicating they prefer to be judged on their own strategy.

Asked by Vivek Gautam

Rationale and structure of the C&Y Group JV Direct
To secure and to avoid competition, two big giants of -- in the recycling space in the world, in the copper, is C&Y and Jain. So, we joined together... We did not -- we are asset light here and we did not bought any land... we are taking on rent, and we are not going to be owning assets, so we are asset light.

Reveals a key strategic rationale (avoiding competition with a major player) and clarifies the capital-light approach for this major growth initiative, which is positive for capital efficiency.

Asked by Deepthi Rajulapati

2 min read 5 chapters

Detailed narrative

Strong Post-IPO Performance Driven by Volume Growth

JAINREC reported a robust Q2 FY26, with revenue growing 52% YoY to ₹2,114 crores and PAT up 88% YoY to ₹99 crores. Management clarified this was driven by volume growth, not price, as their business is fully hedged. Sequentially, lead volumes grew by approximately 47% and copper by 14-15%. The strong performance underscores the company's operational strength following its successful ₹1,250 crore IPO, which concluded on October 1, 2025.

Strategic Focus on Copper: Forward Integration and JV

Copper is a key pillar of JAINREC's growth strategy. The company is executing a ₹95 crore capex for a 9,000 TPA copper cathode plant, a forward integration project expected to commence in Q1 FY27. This value-addition is projected to increase the copper segment's EBITDA margin by 3-4%. Further strengthening its copper vertical, JAINREC entered a 55:45 JV with US-based C&Y Group to build a new recycling plant in Ahmedabad, securing a critical raw material sourcing channel from North America.

Capital Allocation: Debt Reduction and Asset-Light Expansion

From the ₹500 crore fresh issue in its IPO, the company will utilize ₹375 crores to prepay debt. This is expected to result in annual finance cost savings of ₹20-22 crores. For its new JV in Ahmedabad, management has adopted an asset-light model, choosing to lease land and buildings rather than purchase them, preserving capital for operational needs. This disciplined approach to capital allocation is a key positive for the newly listed entity.

Working Capital Spike Addressed with Clear Normalization Path

A key point of discussion was the increase in the working capital cycle from 38 to 52 days. Management transparently attributed this to a surge in inventory caused by delayed Q1 shipments arriving in bulk during Q2. They expressed high confidence in resolving this, providing a clear timeline for the cycle to normalize back to the 40-42 day range by February 2026, assuaging analyst concerns.

Favorable Policy Environment and Hedging Strategy

Management highlighted the positive impact of government policies, including the removal of import duties on lead and copper scrap in the last budget, which has boosted margins. They also emphasized their robust hedging mechanism on the London Metal Exchange (LME) for both raw material procurement and finished product sales, which insulates their profitability from the volatility of global metal prices.

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