Jain Resource Recycling IPO — 10 Key Things To Know Before You Subscribe — Anand Rathi's Report

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Anand Rathi Report

Jain Resource Recycling Ltd.'s initial public offering will open for subscription today and will conclude on Sept. 26.

Here are the 10 things to know before investing

1. The Jain Resource Recycling Ltd. will launch its initial public offering today and the offer concludes on Sept. 26.

2. The recycler and producer of non-ferrous metals in India has fixed the price band between Rs 220 and Rs 232 per equity share.

3. The Rs 1,250-crore IPO comprises of a fresh issue of 2.16 crore shares amounting to Rs 500 crore and an offer-for-sale of 3.23 crore shares worth Rs 750 crore.

4. Investors can place bids starting from a minimum of 64 shares and in multiples thereafter.

5. Shares of the company are expected to be listed on the BSE and NSE on Oct. 1.

6. Dam Capital Advisors Ltd. is the book-running lead manager and KFin Technologies Ltd. is the registrar of the issue.

7. Objects of the Issue:

   Pre-payment or scheduled re – payment of a portion of certain outstanding borrowings availed by the company.

   General corporate purposes.

8. Key Strengths:

   Track record of profitability and consistent financial performance in an industry with significant entry barriers.

   Strategically located Recycling Facilities with capabilities to handle multiple products lines.

   Strong customer base with global footprint and deep sourcing capabilities.

   Application of Hedging Mechanism for Commodity Price Risk Protection for Products.

9. Key Strategies:

   Forward Integration into Copper Cathode and Wire Rod Manufacturing Business.

   Exploring new recycling domains to better serve their customers in domestic and international markets.

   Value creation through extraction of by-product such as tin and plastic to achieve cost efficiency.

10. Key Risk:

    A substantial portion of their revenue is derived from the sale of their key products, namely Lead and Lead Alloy Ingots and Copper and Copper Ingots constituting 39.5% and 44.8% respectively of their revenue from operation in Fiscal 2025. Any loss of sales due to reduction in demand for these products could adversely affect their business, financial condition, results of operations and cash flows.

    They have derived a significant portion of their revenue from their top customers, top five customers and top 10 customers, and they do not have long-term contracts with majority of such customers. The loss of any of these customers may adversely affect their revenues and profitability.

    In the past, there have been disciplinary action imposed by SEBI or stock exchanges against the company’s Promoter. The management cannot assure that in the future there will be no such action or regulatory proceedings initiated against them.

    They are subject to strict quality requirements and have experienced cancellation of 11, 29 and 30 customer orders in Fiscal 2025, Fiscal 2024 and Fiscal 2023, respectively. Any failure to comply with such quality standards may lead to cancellation of existing and future orders, which may adversely affect their reputation, financial condition, cash flow and results of operations.

    The company depends on third-party suppliers for the supply of scraps required for their business operations. Approximately 75%–80% of their total scrap requirement is imported, based on the average of their procurement data for the last three financial years.

    Any disruptions in the supply or availability of the scraps or fluctuations in their prices may have an adverse impact on their business operations, cash flows and financial performance.

    Any disruption or shortage of essential utilities could disrupt the company’s operations and increase their production costs, which could adversely affect their results of operations.

    The company faces competition in their product line (from both organized and unorganized players), including from competitors that may have greater financial and marketing resources. Failure to compete effectively may have an adverse impact on their business, financial condition, results of operations and cash flows.

    The company’s Promoter and Promoter Group will continue to retain majority shareholding in the company after the Offer, which will allow them to exercise significant influence over the same.

    Failure to successfully diversify may adversely affect their business, financial condition, results of operations, and cash flow.

    They rely on third-party logistics services for procurement of raw materials and for supply of their products and failure by any of their transportation providers could result in losses in sales.

Valuation and Outlook:

Jain Resource Recycling is a prominent player in India's non-ferrous metal recycling industry, specializing in the sustainable processing of copper, lead, and aluminium scrap.

The company is part of the Jain Metal Group, a well-established entity in the metal recycling sector. The company operates three recycling facilities situated in the SIPCOT Industrial Estate, Gummidipoondi, Chennai.

These facilities are dedicated to processing various types of metal scrap, including copper, lead, and aluminium. They source their raw materials from 120 countries and cater to various industries like automotive, electronics, and lead acid batteries etc.

The Company operates three recycling facilities in SIPCOT Industrial Estate, Chennai, enabling integrated operations. Their strategic location allows the use of by-products across facilities and shared resources like labs and technical expertise.

They have a strong international presence, exporting to over 20 countries—including China, Singapore, South Korea, UAE, Taiwan, and Japan—with a significant portion of revenue derived from these markets.

At the upper price band, the company is valued at 35.9x FY25 P/E, reflecting a post-issue market capitalization of Rs 80,060 million. They are entering copper cathode, wire rod, and busbar production to enhance their value chain and diversify their customer base.

Additionally, they are expanding into niche recycling segment solar panels, automotive tires, and copper-aluminium radiators—to tap into growing market and sustainability opportunities. Leveraging their recycling expertise, they aim to explore new domains, grow internationally, and drive sustainable long-term growth.

On this basis, the IPO appears fully priced and warrants a “Subscribe – Long-Term” recommendation.

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