Jain Resource Recycling
IPO Size: Rs. 1,250 cr
- Fresh Issue of Rs. 500 cr to repay Rs. 375 cr debt of Rs. 1,041 gross debt
- Offer for Sale (OFS) of Rs. 750 cr by the promoter (88% to drop to 73%)
Price band: Rs. 220-232 per share
M cap: Rs. 8,005 cr, implying 16% dilution
IPO Date: Wed 24th Sep to Fri 26th Sep 2025, Listing Wed 1st Oct 2025
Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.
Chennai-based Non-ferrous Metal Recycler
Jain Resource Recycling, recycles copper, lead and aluminium, importing scrap from UAE, US, UK, and recycling at 3 plants in Tamil Nadu, with an aggregate capacity of 3.26 lakh MTPA. FY25 utilization stood at 40% for copper, ~88% for lead and nearly full for aluminium. Copper, lead and aluminium products accounted for 45%, 40% and 4% of FY25 revenue of Rs. 7,100 cr respectively.
Business Strategy
70-80% of raw material is imported, while 60% revenue is from exports, providing a partial natural hedge. For balance forex exchange and commodity price volatility, company hedges the entire position, immune from price risk.
Company plans forward integration for copper for products such as cathod, wire rod and diversification into other commodities like tin, plastic / PVC granules and green copper cathode.
Strong Growth
Company’s revenue has risen at a 36% CAGR between FY22 to FY25, while PAT has grown at a similar 37% CAGR in the past 3 fiscals. FY25 PAT stood at Rs. 223 cr, leading to 3.1% net margin, with an EPS of Rs. 7.2, on an equity of Rs. 65 cr and net worth of Rs. 726 cr.
Business needs capital, mainly for working capital, which is funded via Rs. 1,000+ cr debt, rated Crisil A/Stable. Post IPO, net debt to equity ratio will halve to 0.4:1 from 0.9:1, as of 31.3.25.
Past Transactions
In Aug 2024, company raised Rs. 130 cr as pre-IPO at Rs. 128 per share. After 13 months, nearly 2x price in IPO is unjustified, when PAT is up 36% YoY.
In Mar 2025, promoter did secondary sale for Rs. 100 cr, at Rs. 198 per share. Past 6 months financials are not available, but 17% premium in not a small jump.
Many disciplinary actions have been taken by SEBI against promoter, between 2020 to present for non-disclosure, circular trading, reversal trades and an alleged insider trading case, currently sub-judice.
Fairly Valued
M cap of Rs. 8,005 cr, translates into a PE multiple of close to 25x, on FY26E EPS of about Rs.9.
Smaller peers Nile, with Rs. 920 cr topline and 4% net margin is trading at a PE of 13x, whereas Pondy Oxides with Rs. 2,000 cr topline and 2.8% net margin is trading at 47x PE, due to 85% YoY jump in Q1FY26 PAT and expected capacity increase in the near future.
Lead recycler Gravita India with Rs. 4,000 cr topline and 5% net margin from operations (8% reported net margin), trades at a PE of 35x, justified by its higher margin.
Thus, Jain Resource’s IPO fairly values it on peer comparison, accounting for larger and growing topline but low single digit margin.
