Jain Resource Recycling IPO Opens: 'Subscribe' Says DRChoksey — Check Issue And Other Key Details

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DRChoksey Report

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

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

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.

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

The allotment for the Jain Resource IPO is expected to be finalized on Sept. 29.

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

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

Objects of the Offer

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

2. General corporate purposes

Strategies:

Leverage its financial strength to expand operations

The Company plans to expand its operations gradually with internal accruals and has been recognized as the largest and fastest-growing non-ferrous metal recycling company in India (over FY23-25 by revenue). It has demonstrated profitability in a sector with significant entry barriers. Strong financial performance is expected to support it in expanding its refining capacities, without need of external debt.

Capitalize its location and multi-product recycling facility, to serve diverse set of customers and industries

The company plans to capitalize its strategically located facilities (closer to Chennai port), to serve diverse set of customers both in India and internationally. It recycling facilities can manage multiple product including lead, copper, aluminum, tin and plastic, and it employ modern machinery and diversified capabilities.

Entrenched Customer Base and Robust Global Sourcing Network

The Company with its deep scrap sourcing network spread across over 70 countries, aims to procure bulk scrap from overseas and offer high quality green metals to its large customer base spread internationally.

Effective Hedging Mechanism for Commodity Price Risk

Over years, it has built an effective hedging desk, and it aims to further improve its hedging processes, to ensure its exposure to volatility in commodity prices remains minimum. To limit its exposure it would deploy strategies in future derivative contracts on the London Metal Exchange (LME), as its finished lead products are LME-recognized, which facilitates the efficient settlement of derivative positions and enhances global acceptance.

Risks:

Product Concentration

A major share of the Company’s revenue was concentrated in two products i.e., Lead and Lead Alloy Ingots and, Copper and Copper Ingots in FY25. Any decline in raw material sourcing or the demand for these products could significantly impact its operations and financial performance.

Customer Concentration and Absence of Long-Term Contracts

A significant portion of revenue is derived from the top five and top 10 accounts, and most of these customers do not operate under long-term contracts. The loss of one or more key clients could materially affect its business and profitability.

Raw Material Supply Risks

The company’s meets ~75.0%-80.0% of its raw materials i.e., scrap requirements through imports. Lower availability of the scrap can impact its financial performance and exposes it towards supply chain risks.

Higher Foreign Exchange Exposure

Exports accounted for ~60.0% of its overall revenues in FY25, making the Company vulnerable towards higher forex exposure. Adverse movements in currency rates could impact its profitability.

Outlook:

Jain Resource Recycling, a part of Jain Metal group, is a manufacturer of non-ferrous metals through recycling, with its promoter group expertise for over seven decades.

It boasts a total capacity of 308.3 KTPA (as of Jul’25) and is among one of the largest formal recycler of non-ferrous metals in India. It has a strong hold over its operations in an industry with high entry barriers, mainly led by its strong network for sourcing raw materials from diverse base of suppliers spread across 120 countries and ability to market its product to large and seasoned base of 371 customers both in India and globally.

Led by its strong asset allocation policies, it has been profitable since inception of its business, while its revenue and net profit has witnessed a growth of 52.5% and 56.3% CAGR over FY23-25.

Its initial issue is sized up for Rs 12.5 billion, split as Rs 7.5 billion offer-for-sale and Rs 5.0 billion of fresh equity raise. The company has planned to raise Rs 5.0 billion through issue of fresh equity, for repayment of borrowings of ~Rs 3.8 billion and rest for general corporate purposes.

Jain Resource Recycling’s initial issue is priced at 35.7x TTM P/E, compared to its direct peer's average of 54.0x TTM P/E.

On comparing its financial performance with the peer set, we believe it valuation appears low, led by its higher growth and better return profile.

We expect the company to perform better, as it plans on its next leg of growth journey, driven by gradual expansion in recycling capacity. Moreover, with introduction of EPR norms and government support for higher recycling, it can positively impact its Ebitda margins.

We assign a “Subscribe” rating to the issue

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