Jain Resource Recycling: 76% revenue, 4% margin

Jain Resource Recycling Limited (NSE: JAINREC) grew Q1 FY27 revenue 76% to ₹2,724.5 crore. EBITDA rose only 22% to ₹109.5 crore. The stock is near ₹275, down 54% from its high. What happened Net profit rose 23% to ₹69.4 crore, with EPS at ₹2.02. EBITDA margin narrowed to 4.0% from 5.8%. Copper now makes up 68.2% of revenue, against 46.4% a year ago. Lead is 29% and aluminium 3%. Sequentially, revenue fell 12% from ₹3,105 crore in the March quarter, while EBITDA was flat. A furnace blast at the Gummudipoondi plant added a setback. Why it matters The company buys metal scrap, refines it and sells the metal. Solar panel recycling is a new stream for this model, since old panels contain aluminium, copper and silver. But that market is still small next to a revenue base near ₹9,268 crore. My view Ignore the 76% headline. Revenue grew 76% while EBITDA grew 22%, because the mix shifted to copper. Copper carries a high value per tonne and a thin conversion spread, so it inflates sales without adding much profit. Now see how thin the cushion is. At a 4% EBITDA margin, the entire quarterly profit is the gap between what the company pays for scrap and what it sells metal for. A small adverse move in metal prices between purchase and sale can erase it. Debt to equity of 0.81 sharpens that risk. The stock is at around 27 times earnings after halving. That is not cheap for a converter earning 4%. What I am watching Q2 FY27 results, due in November, margin returning above 5%, and the furnace back in operation. On the chart, ₹247.80 is the 52-week low and support. My stance: Avoid until margins stabilise. Revisit near ₹250, and watch the spread, not sales. Disclosure: I do not hold a position in Jain Resource Recycling Limited at the time of writing. This is not investment advice.