GRP Limited Q1 FY27 Earnings Conference Call Summary

Call Date: Monday, 27th July, 2026 at 03:00 p.m. (IST)

Key Financial Performance (Consolidated)

Financial Highlights for Q1 FY27 (Year-on-Year):

  • Total Income: Increased 26% to ₹1,573 million from ₹1,247 million in Q1 FY26.
  • EBITDA: Increased 60% to ₹174 million.
  • EBITDA Margin: Expanded by 233 basis points to 11.0% from 8.7%.
  • Profit Before Tax (PBT): Increased 161% to ₹84 million.
  • Profit After Tax (PAT): More than doubled to ₹42 million after adjusting for prior period items.
  • Gross Profit: Stood at ₹760 million with a Gross Margin of 48.3%.
  • EPR Income: ₹49 million compared to ₹46 million in Q1 FY26.
  • Working Capital Cycle: Improved by 8 days to 86 days.

Operational and Segment Performance

Segment Reorganization:

The company has regrouped its operations into two reportable segments:

1. Rubber Recycling: Comprises Reclaim rubber, Custom Die Forms, and Pyrova Energy.

2. Others: Comprises Engineering plastics, Windmill operations, and the residual Polymer composite business.

Rubber Recycling Segment Performance:

  • Segment revenue grew 34% year-on-year on a stand-alone basis.
  • Reclaim rubber volumes grew 12%.
  • Reclaim export volumes rebounded 20% as U.S. customer order patterns normalized post tariff easing.
  • Domestic demand remained healthy with market share staying intact.

Pyrova Energy Update (Within Rubber Recycling):

  • The plant achieved its longest continuous reactor run since commissioning, a key milestone for throughput and reliability.
  • Cumulative investment stands at approximately ₹91 crores.
  • Both crumb rubber and continuous pyrolysis facilities have largely stabilized.
  • Focus is now on raising utilization, expanding customer approvals, improving process efficiencies, and commencing recovered carbon black (rCB) production.
  • The business is not yet stand-alone profitable but is scaling.

Others Segment Performance (Plastics and Windmill):

  • Revenue was broadly stable against a higher comparative base (which included the now-shut polymer composite business).
  • Engineering Plastics volumes grew 27%, helped by domestic automotive demand and a favourable virgin nylon pricing environment.
  • Repurposed Polyolefin business (run through a subsidiary) delivered a clear turnaround in profitability.
  • The plastic verticals expanded EBITDA margins by 14 percentage points year-on-year on a 10-point improvement in gross margin.

Management Commentary and Strategic Outlook

Management stated that FY2027 is the year where past investments begin to reflect in operating performance, with Q1 being an encouraging step. The integrated circular materials platform is starting to come together.

Medium-Term Business Targets (3-Year Outlook):

Reclaim Rubber:

  • FY27 Volume Growth: Expected to be close to 20% over FY26.
  • Next 3 Years: Sustained mid-teen volume growth from new product introductions.
  • Revenue: Healthy double-digit growth.
  • EBITDA Margins: Expected to improve from the 9-10% average of the last couple of years towards 10-14% as synergies with Pyrova materialize.

Pyrova Energy:

  • Capacity Scaling: Target to steadily scale to 45,000 tons as technology stabilizes, followed by a further 30,000 tons capacity addition in FY28.
  • Profitability: Margins expected to build from single digits during ramp-up to 18-20% once the rCB facility is commissioned, operational, mature, and has customer approvals.

Plastic Recycling Business (Nylon and Polyolefin):

  • FY27 Growth: Expected over 20%.
  • Through FY2030: Mid-teen growth.
  • EBITDA Margin: Target to maintain 10% to 15%, supported by tightening EPR regulation and a focus on value-added products.

Overall Company Target:

  • FY27 Revenue Growth: Targeting close to 20%-plus overall revenue growth.

Project Updates and Capital Expenditure (Capex)

rCB Project:

  • The rCB plant is scheduled to be under commissioning starting August 2026.
  • It is expected to be commissioned by October 2026.
  • Commissioning trials and product trials will take a couple of months post-commissioning.
  • Meaningful contribution from rCB is expected by Q4 FY27.
  • Customer approvals for tire industry use are expected to take several quarters.

FY27 Capex Plan:

  • Targeted capex is between ₹90 crores to ₹100 crores.
  • Allocation: Expansion of pyrolysis lines (2 more lines to reach 45 KTA), the rCB plant, and debottlenecking of reclaim rubber plants.

FY28 Capex & Long-Term Plan:

  • A decision on FY28 capex will be taken in the second half of FY27.
  • The company remains committed to its overall investment plan of ₹250 crores announced 18 months ago.
  • Future plans include creating 30,000 tons additional pyrolysis capacity and 12,000 tons rCB capacity in Gujarat, plus more reclaim rubber debottlenecking.

Sustainability Initiatives

  • Renewable Energy: Accounted for 48% of stand-alone power consumption in FY26, up from 37% a year ago. This is ahead of the target of 50% by FY28, which is expected to be achieved in the current fiscal (FY27).
  • The company published its first sustainability report for FY2026 during the quarter.
  • It is the first reclaim rubber manufacturer globally to earn ISCC Plus certification.

Q&A Session Highlights

Tariff Impact & Recovery:

  • The polymer composite business was permanently shut down due to tariffs.
  • Direct exports to the U.S. have recovered and are at healthier margins than pre-tariff levels.
  • Indirect business impact (exports to other countries for goods supplied to North America) has not fully recovered but is expected through the rest of the year.

Customer Conversations:

  • Evolved to a combination of sustainability-led solutions and price/value propositions.
  • Reclaim rubber is being seen as a strong alternative due to volatility in virgin material prices (synthetic rubber, carbon black).

Raw Material Inflation:

  • Acknowledged sharp increase in raw material costs during the quarter.
  • A large part of the cost increase has been passed through to customers, albeit with a lag due to quarterly/semi-annual/annual contracts.
  • Volume growth for the quarter was 12%; the company aims to maintain double-digit volume growth for FY27.

Pyrova Operational Milestones:

1. Achieving a continuous reactor run of 25 days in a month (achieved in July 2026).

2. Commissioning and stabilizing the rCB product (Commissioning target: Oct 2026).

3. Gaining approval from the tire industry for rCB, which will provide significant value add.

4. Replicating the operational template for future capacity.

Deleveraging:

  • No firm plans on the table currently.
  • Timing is not entirely in the company's hands, but deleveraging may be considered to accelerate the next phase of expansion in Gujarat.