Jain Resource Recycling Ltd posted record revenue and profit for FY26, but a steep deterioration in its March-quarter performance has unsettled investors and sent the stock down about 45 percent over the past month.
While annual numbers remained strong, a sharp fall in copper profitability, supply chain disruptions linked to tensions in the Middle East and negative operating cash flow raised concerns over earnings visibility.
FY26 revenue and profit hit record levels
For FY26, the non-ferrous metal recycler reported:
- Revenue of ₹9,543 crore, up 48 percent from ₹6,429 crore in FY25.
- EBITDA of ₹559 crore, a rise of 53 percent.
- EBITDA margin of 5.9 percent, compared with 5.7 percent a year earlier.
- Profit after tax of ₹347 crore, up 56 percent.
- PAT margin of 3.6 percent.
- Volume growth of 26.5 percent.
The company said improved realizations contributed to the increase in revenue.
March quarter disappointed investors
The picture changed in Q4 FY26.
Revenue climbed 76 percent year-on-year to ₹3,105 crore, but profitability weakened.
EBITDA margin fell to 3.5 percent, leading to concerns that the strong momentum seen during the year had faded.
As quarterly numbers came in, investors reassessed earnings expectations and the stock came under pressure.
Copper margins dropped sharply
The biggest hit came from the copper business, which contributes around 55 percent of revenue.
Copper EBITDA per tonne fell sharply:
- Earlier peak: ₹55,000 per tonne
- Q3 FY26: ₹42,000 per tonne
- Q4 FY26: ₹14,000 per tonne
Management attributed the decline to volatility in the pricing formula linked to London Metal Exchange (LME) copper prices.
According to the company, copper prices surged from about $10,000 per tonne to $14,000 per tonne, triggering aggressive buying by Chinese customers in Q3. That trend reversed in Q4 after prices stabilized and demand cooled.
CFO Hemant Jain said:
- Formula-related factors reduced EBITDA by around ₹18,000-18,500 per tonne.
- Geopolitical shipping disruptions caused an additional impact of about ₹6,000 per tonne.
Management has guided for normalized copper EBITDA of ₹30,000-32,000 per tonne and said it plans to adopt long-term hedging mechanisms.
Middle East tensions disrupted supplies
The Iran-Israel conflict created logistical challenges during the quarter.
Containers carrying raw materials from the US, South America and Europe were delayed at Jebel Ali port in the UAE as vessels remained stranded in international waters.
The disruption affected feedstock availability across:
- Copper
- Lead
- Aluminium
Higher freight costs, fuel expenses, port charges and war-risk premiums also added pressure.
Management said the affected inventory was fully hedged and carried no commodity price risk. New shipments are now being routed through alternative channels, and logistics have returned to normal.
Negative operating cash flow raised concerns
Despite reporting higher profits, the company recorded negative operating cash flow of around ₹600 crore during FY26.
Investors viewed the development as a warning sign.
Management said higher copper prices increased inventory values and receivables, leading to greater working capital requirements.
The company also pointed to changes in NFRA accounting rules, which now require discounted receivables to be presented separately.
Working capital cycle days stood at 66 days. Management expects this to decline below 60 days and has guided for positive operating cash flow from Q2 FY27.
Expansion projects face delays
Several growth projects have been pushed back, though none have been cancelled.
Project timelines include:
- Copper anode production began in March 2026 with capacity of 800 metric tonnes per month.
- A second furnace adding another 800 metric tonnes per month is scheduled for Q1 FY27.
- Copper cathode commissioning is now expected in Q2-Q3 FY27.
- Wire rod project commissioning is targeted for August 2026, with capacity of 600 metric tonnes per month.
- Bus bar unit is scheduled for September 2026, with capacity of 1,500 metric tonnes per month.
- Scrap processing under the Ahmedabad joint venture with C&Y Group is expected to begin in September 2026.
- The Kuwait battery recycling venture is awaiting normalization of shipping routes.
FY27 capital expenditure is estimated at ₹115-120 crore.
Management said the copper value-addition projects could generate incremental EBITDA of ₹22-45 per kg, over and above normalized recycling margins, once fully commissioned.
About the company
Jain Resource Recycling Ltd, part of the Jain Metal Group, is based in Chennai and processes scrap across copper, lead, aluminium, tin and plastic.
The company sources material from more than 120 countries. Exports accounted for 62 percent of FY26 revenue.
TL;DR:
Jain Resource Recycling shares have dropped 45 percent in a month after weak Q4 earnings, a sharp fall in copper EBITDA, Middle East-related logistics disruptions and negative operating cash flow overshadowed record FY26 results.
AI summary:
- FY26 revenue and profit reached record levels.
- Q4 margins weakened despite strong sales growth.
- Copper EBITDA per tonne fell from ₹42,000 to ₹14,000.
- Middle East disruptions delayed raw material supplies.
- Negative operating cash flow and project delays hurt sentiment.
