Sunlite Recycling Industries Ltd — Q4 FY26 earnings call

Sunlite Recycling Industries Limited, founded in 1986, began as a scrap trading business with a core focus on copper recycling. The company has evolved from a proprietorship to a private company and was listed on the NSE Emerge platform in 2024. The Board has been restructured, with Mr. Akshay Heda taking on the role of Chairman and Non-Executive Director, leveraging his nearly four decades of experience in the copper industry. This deep understanding of copper, from its price movements (INR 15/kg to INR 1,200/kg), underpins the company's operational expertise.

A significant strategic development was the completed integration of Sunlite Aluminium Private Limited, now a wholly-owned subsidiary. This acquisition marks a transition from a single-metal copper player to a diversified multi-metal platform, enhancing Sunlite's position as a comprehensive conductor solution provider. The consolidation, effective from February 2026, is expected to provide resilience across metal cycles and drive cost efficiencies through shared manufacturing and logistics. The acquired aluminium capacity stands at 12,000 metric tons, with utilization targeted to increase from 56% to 70% in the next year.

FY26 was a transformative year for Sunlite, marked by strong standalone financial performance. Revenue nearly doubled to INR 2,764 crores, representing a 98% year-on-year growth. EBITDA increased significantly by 151% to INR 59.69 crores, and Profit After Tax (PAT) surged by over 181% to INR 40.14 crores. The second half of FY26 showed even stronger momentum, with standalone revenue growing 116% year-on-year to INR 1,642 crores and PAT increasing by 258% to INR 25.8 crores. The Board also recommended a final maiden dividend of INR 1 per share, equivalent to 10%.

Sunlite has outlined a capital expenditure plan of INR 30-35 crores over the next 1.5 years, to be executed in a phased manner. The primary focus of this CapEx is to double the company's capacity in copper rods and copper busbars. Additionally, a new copper anode plant, with an estimated capacity of 10,000 to 12,000 metric tons per annum and an investment of approximately INR 6 crores, is being set up and is expected to be operational in FY27-28. The company has already doubled its ATC wire capacity from 800 to 1,600 metric tons per annum, and overall capacity is projected to increase from 30,000 to 60,000 tons with these expansions.

The company's strategy to focus on value-added products has significantly improved profitability, with EBITDA per tonne increasing from INR 14,000 to INR 23,000 in FY26. Recycled copper products offer a 3-4% price advantage over pure copper, making them attractive to end-users. The primary end-user sectors are cable industries (approximately 80%) and transformer industries (5-10%). A strategic decision was made to pursue an anode plant instead of a cathode plant to avoid increasing competition and potential margin compression in the cathode segment, ensuring sustained profitability.

Sunlite sources copper scrap from over 10 countries, adopting a flexible procurement strategy that balances domestic and international sourcing based on price and availability. The company maintains buffer stock to mitigate potential supply chain delays. While geopolitical events, such as the West Asia crisis, have led to delayed shipments, management states these have not caused significant stress. Increases in gas prices, a raw material, are being passed on to customers, indicating the company's ability to manage input cost fluctuations.