Jain Resource Recycling Ltd (JAINREC) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator (DAM Capital Advisors Limited): Ladies and gentlemen, good day, and welcome to Jain Resource Recycling Limited Q2 and H1 FY '27 earnings conference call, hosted by DAM Capital Advisors Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Mehra from DAM Capital. Thank you, and over to you, sir.
Abhishek Mehra (DAM Capital Advisors Limited): Good afternoon, everyone. Welcome to Jain Resource Recycling Limited Q2 and H1 FY '27 earnings conference call. From the management side, we have with us, Mr. Kamlesh Jain, Chairman and Managing Director; Mr. Mayank Pareek, Joint Managing Director; Mr. Hemant Jain, Executive Director and CFO; Mr. Sanchit Jain, Executive Director. Without taking any more time, I will hand it over to Mr. Kamlesh Jain for his opening remarks. Thank you, and over to you, sir.
Kamlesh Jain (Jain Resource Recycling Ltd): Thank you, Abhishek. A very good afternoon to everyone on the call. Thank you for taking the time to join us and for your continued interest in our company. I would like to start with the larger picture. For us, the first half of FY '27 has been
Kamlesh Jain (Jain Resource Recycling Ltd): things. Growing our existing business and bringing our newer investments into operations. Both have moved forward during the quarter, particularly on the copper side. Over past several quarters we have been working to build a stronger, more integrated copper business. The idea is to use our experience in recycling and gradually move further into value-added products. We are now seeing the first commercial result of that work. Our new copper anode facility have started contributing to sales and our Ahmedabad subsidiary CNY group has been commenced the operations. Let me share a few numbers to put this in context. Our consolidated revenue in the second quarter was approximately Rs. 3,337 crores, an increase of 58% over the same quarter last year and 22% sequentially. In the first half, the revenue reached approximately 6,061 6,061.4 crores, up 65% year-on-year. The copper business has played a major role in this growth. Copper and copper ingot volume increased by around 74% year-on-year, quarter 2 FY '27. While our copper business including the new initiative contributed 8% of total revenue. At the same time our established business continues to have an important role, lead profitability improved compared to quarter 1 FY '27 and aluminium volume also moved up during this quarter. So, the growth is being supported by our existing operations and as well as the new investments. On the profitability front, we delivered an improved performance during quarter 2 FY '27 with EBITDA increasing by approximately 27% and profit after tax growing by around 30% on a sequential basis. EBITDA margins stood at 4.2% in quarter 2 FY '27 compared to 4% in quarter 1 FY '27, resulting in an H1 FY '27 margin of 4.1%. As we continue to scale up our copper volume, we expect some moderation in EBITDA margins due to the evolving product mix. However, the increase in volume is expected to drive healthy growth in an absolute EBITDA, which remains a more meaningful measure of value generated by our expanding operations. Importantly, we also generated positive cash flow from operations of approximately 137 crores, supported by a significant improvement in working capital efficiency. Working capital days reducing to 49 days from 66 days earlier in FY '26. This improvement reflects our continued emphasis on enhancing the cash generations, optimizing working capital and maintaining financial discipline whilst supporting the next phase of growth. On the sourcing side, we continue to strengthen our network in India and overseas. We are also closely watching the geopolitical situation and shipping disruptions, especially in the West Asia. Our diversified sourcing relationship and hedging practices help us to manage the risk, but we remain cautious about developments outside our control. Looking at the industry, we continue to believe that is a meaningful, long-term opportunity in organized non-ferrous metal recycling. Customers are placing greater importance on recycled materials and resource efficiency and sustainable manufacturing. We want to be ready for the demand with the right capacities, product quality and customer relationships. So for the balance FY '27, our direction is very clear: We need to complete the project under executions, steadily ramp up the facilities that have started operations, improve the returns we earn from the capacity already created. Mayank is closely involved in the execution of this project, I will now request him to take you through the operational development and what we are working towards over the coming quarters. Over to you, Mayank.
Mayank Pareek (Jain Resource Recycling Ltd): Thank you, Kamlesh ji. Good afternoon, everyone. As Kamlesh ji mentioned, we have reached an important stage in our expansion program. Some facilities are already operating and the next set is moving towards commissioning. Let me explain where each project stands and more importantly, what we are focusing on now. I will begin with Jain Green Technologies and our value-added copper operations. Both phases of copper anode plant, each with a capacity of 800 metric tonnes per month, have now been commissioned and taken
Mayank Pareek (Jain Resource Recycling Ltd): our total installed capacity to 1,600 metric tons per month. Phase two is currently in its trial run stage. With commissioning behind us, the priority is to make the plant run consistently and improve utilization. In a new facility, we have to stabilize the process, maintain product quality, and build a reliable production rhythm. We are working working on all the three. We have also started seeing sales from the value-added copper portfolio. In the first half of financial year '27, sales volumes were approximately 3,575 metric tons. This is a positive beginning and our focus is to build on it and in a disciplined manner rather than rushing to ramp-up. The next project is copper cathodes. We are developing total plant capacity of 1,500 metric tons per month in two phases. The first phase would be 750 metric tons, and the second phase will be the equal quantity of 750 metric tons. Civil work for phase one has been completed and commissioning is pending. In fact, the commissioning is at a very advanced stage and would be executed any day from now. For phase two, we are targeting quarter four financial year '27. Alongside the commissioning work, we are paying close attention to process stability and quality. Our objective is to work towards producing LME grade copper cathodes. Getting the specifications right is just as important as bringing the plant on stream. We are also progressing with our downstream projects. The copper wire rod facility has planned capacity of 600 metric tons per month. The bus bar and profile facility has planned capacity of 1,500 metric tons per month. Both are targeted for commission commission in quarter three financial year '27. Why are these projects important? Because together, they allow us to move beyond basic recycled metal and serve customers with a wider range of copper products. We expect the commercial benefits to build gradually as production stabilizes and utilization increases. They will not all come on the day a plant is commissioned. Moving beyond copper, we have two more projects under execution. The first is antimony. This facility will help us recover additional value from lead-antimony bullion that turns through our recycling operations. The planned output is approximately 100 metric tons per month and we continue to target commissioning in quarter three financial year '27. The second is our dedicated plastic recycling facility with a planned capital expenditure of around Rs. 15 crores. We are targeting commencement of operations in quarter three financial year '27. Apart from adding plastic recycling capacity, moving this activity to a dedicated location should also ease congestion at our existing copper and lead plants. Let me now come to Jain CyI Circular Solutions, our Ahmedabad subsidiary with C&Y Group Investments Inc Corporation. The unit has commenced commercial operations and recorded approximately Rs. 25.4 crores of revenue during quarter two. With input capacity to process approximately 71,000 metric tons of scrap annually, the plant can produce around 25,000 metric tons of copper product per annum at full capacity ramp up. It gives us a stronger operating presence in Western India and the ability to process the broader mix of copper-bearing scrap. It also fits well into the larger plan of our copper business by strengthening our scrap processing and sourcing network. Jain CyI can support the raw material requirements of our downstream operations. For now, the focus at Ahmedabad is on increasing throughput and stabilizing the plant. Finally, on Kuwait, the investment remains part of our long-term plans for raw material security and a presence in the Middle East recycling market. The machinery is ready, but shipments and project executions are affected by the geopolitical and logistical situations in West Asia. We are monitoring developments and will proceed as conditions permit. Given these external uncertainties,
Mayank Pareek (Jain Resource Recycling Ltd): shift from construction to commercial operations. Our next task is operational performance, consistent output, the required quality, better utilization, and stronger customer relationships. That is the work we are focused on over the coming quarters. With that, I will now hand over to Hemant to take everyone through the numbers and the balance sheet. Hemant, over to you.
Hemant Jain (Jain Resource Recycling Ltd): Thank you, Mayank sir. And good afternoon, everyone. I'll take you through our financial performance for the quarter and the first half, followed by the three operating segments and the balance sheet. Starting with second quarter, consolidated revenue from operation was Rs. 3,337 crores. This compares with Rs. 2,113 crores in Q2 last year and 2,724 crores in the previous quarter. This th- that that is the growth of approximately 58% year-on-year basis, while 22% on quarter-to-quarter basis. Higher copper volumes along with the initial contribution from value-added products supported this increase. Quarterly EBITDA stood at around 138 crores compared to 109 crores in Q1 of FY '27, reflecting a sequential growth of approximately 27%. EBITDA margin stood at around 4.2% in Q2 FY '27 compared to 4% in Q1 of the same financial year, reflecting a sequential improvement of 14 basis points. This improvement was supported by our continued focus on operational efficiencies, despite the impact of an evolving business mix, raw material dynamics, and the initial ramp-up phase of our new value-added plants. As these facilities progressively stabilize operations and achieve higher capacity utilization, we remain focused on enhancing operational efficiencies and driving sustainable profitability on a growth growing revenue base. Now, coming to the profit the profit after tax for Q2 FY '27 stood at around 90 crores compared to 69 crores in Q1 FY '27, reflecting a sequential growth of approximately 30%. The PAT margin has also improved to 2.7% compared to 2.5% in the previous quarter, reflecting an improvement in profitability on quarter-on-quarter basis. For the first half FY '27, revenue from operations was around 6,000 61 crores, up about 65% on year-on-year basis, while EBITDA was 248 crores compared with 250 crores in the H1 of the last year. Profit after tax has increased by approximately 3% to 160 crores. The first half EBITDA margin was 4.1% against a 6.8% a year ago. So, now let me now cover the performance of the individual business. In copper and copper ingots sale volume has reached approximately 16,411 metric tons in Q2. That compares to with 9,434 metric tons in Q2 of last year and 14,683 metric tons in the preceding quarter, giving us an year-on-year volume growth of around 73%. The copper segment EBITDA has also increased from 46 crores in the Q1 to 61 crores in Q2. EBITDA per ton also has improved from approximately 31,825 to Rs. 37,237. The value-added copper business has started contributing to the revenue, while its profitability will develop as production become more consistent and utilization increases. Now, coming to lead and lead alloy ingots business quarterly volumes has improved to around 34,851 metric tons from around 32,150 metric ton in Q1. Volumes were below the year-ago quarter, but we have we saw the sequential improvement in both volumes and earnings. Lead EBITDA increased from approximately 60 crores to 67 crores in this quarter and EBITDA per ton has improved from 18,660 to 19,000 310 rupees per ton. Now, coming to aluminum and aluminum alloys business our Q2 volume has increased from has increased to 2,493 metric ton compared with 2,201 metric ton in Q1. Segmental EBITDA also has increased from approximately four 4.7 crores to 5.3 crores. So, before I conclude, let me touch on the cash flow and the balance sheet, because they're very equally important as we expand. At the end of September 2026, our working capital cycle has approximately 49 days compared to 66 days at the end of the FY '26,
Hemant Jain (Jain Resource Recycling Ltd): seven times and the at the end of the March 2026. During the first half, we have also generated approximately 129 crores of net cash inflow from operating ac- activities. We are pleased with the improvement in working capital and the leverage, and we intend to maintain this discipline as the newer facilities scale up. From the remainder of FY27, the priorities will be on the financial side are straightforward: improve profitability per tonne, manage working capital cycle carefully, and support the ramp-up of capacities without losing the sight of the balance sheet. So that brings us to an end of our opening remarks. Thank you for your attention. And may I request the moderator to open the floor for the questions?
Moderator (DAM Capital Advisors Limited): Thank you very much, sir. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
Moderator (DAM Capital Advisors Limited): The first question is from the line of Shubham from 3A Financial Services. Please go ahead.
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