Baheti Recycling: How Does a Scrap Supplier to Bajaj, TVS and Royal Enfield Make Money?

Synopsis: Baheti Recycling Industries Limited is evolving from a traditional aluminium scrap recycler into a direct supplier to automotive OEMs such as Bajaj Auto Limited, TVS Motor Company, and Royal Enfield. Supported by capacity expansion, wire rod diversification, and policy tailwinds, the company is targeting stronger margins, better working capital efficiency, and a possible move toward four-digit revenue in the coming years. 

In India’s fast-growing recycling and manufacturing ecosystem, few companies have quietly transformed the way Baheti Recycling Industries Limited has over the past few years. What began as a Gujarat-based aluminium scrap recycling business has now entered a new phase, supplying directly to leading automotive OEMs while expanding into higher-value aluminium wire rods. 

With FY26 revenue rising to Rs 725 crore, profits growing 50%, and fresh capacity coming online, the company appears to be positioning itself for its next phase of scale and profitability. With a market cap of Rs 635 crore, the shares of Baheti Recycling Industries Ltd are trading at Rs 608 and are trading at a PE of 23 compared to their industry’s PE of 17.4. 

A Recycler Finds a New Growth Road

This is an industry that sees commodity prices fluctuating on a daily basis, while availability of raw materials means survival. This is a story of Baheti Recycling Industries Limited, which started its recycling of aluminium from Gujarat in the 7th decade. However, the financial year 2026 was special for Baheti. 

It not only saw improved performance but also forayed into the world of supplying directly to automotive OEMs like Bajaj Auto Limited, TVS Motor Company and Royal Enfield. This year also saw a foray into aluminium wire rods, a more profitable line of products. This leads to the following question: How does a scrap recycler earn revenue, and what’s its current strategy?

How Baheti Makes Its Money

The primary operations of Baheti begin with the sourcing of aluminium scrap, which mainly comes from the international market. The management stated that about 80% of raw materials come from regions like the UK, Europe, and the US. 

The aluminium scrap is converted to aluminium alloy ingots and aluminium deoxidisers, which are sold to industries in the steel, electrical, and automobile sectors. In FY26, the firm recorded a revenue of close to ₹725 crores against ₹520 crores in the preceding year, accounting for around 38% year-over-year growth. 

The profit grew from ₹18 crores to ₹27 crores, marking a 50% increase in profitability. Additionally, the management informed us that the revenue mix was about 64% from ingots and 36% from alloys, which shows that alloy products are gaining importance in their operations.

Protecting Margins in a Commodity Business

The prices of aluminium can be correlated to the London Metal Exchange, and any form of price fluctuation may result in reduced margins in recycling. According to the explanation from the management of Baheti, their price calculation method enables them to retain healthy margins due to natural hedging. 

They purchase scrap metals correlated to LME prices and sell the finished goods using the average prices of the LME calculated in dollars together with a set delta of rupees. This way, the company can ensure its ability to remain profitable in situations where aluminium is either 200 or 400. 

As such, the management advised that volume growth and EBITDA percentages should be considered. A sustainable level of EBITDA for the industry ranges between 7% and 10%.

When Global Disruptions Created Opportunity

It was observed by the management that due to geopolitical tensions in the Middle East region, there was a shortage in the availability of primary aluminium products; this forced the customers to turn towards dependable sources of secondary aluminium products. This was the moment of change for Baheti. 

The company kept excess stock of between 30 and 40 days to capture any large opportunities. When the OEMs encountered difficulty in sourcing their needs, Baheti was prepared to start deliveries at once. As explained by the management, the OEM approval process that would take six months previously only took one month due to the prevailing conditions in the market.

From Traders to Auto OEMs

Among the other major strategic moves in FY26 is the decision by Baheti to shift from selling to traders and Tier-1 suppliers to OEMs. The company started delivering around 250 tonnes of product to Bajaj Auto, 150 tonnes of product to TVS Motor Company, and 100 tonnes to Royal Enfield in March. 

According to management, these initial orders have been renewed again in May, indicating that there may be a stronger relationship with these companies. Furthermore, the company is now holding vendor codes for these OEMs, which is one of the biggest barriers to entry in the automotive industry. 

The management also said that OEM sales not only improve profit margins but also payment terms for Baheti. It took about four to five years for the management of the company to develop capabilities in aluminium alloys, which led to their ultimate goal – OEM sales.

Building Capacity for Scale

In order to meet rising demand, Baheti has been increasing capacity. According to the management team, five additional electrical furnaces would come online in FY27, thus bringing the total annual production capacity to 38,000 tonnes. They would ensure increased productivity, greater fuel efficiency, and environmentally friendly performance. 

Another major investment would be in terms of solar power, which should go live by the end of May 2026. Currently, the utilisation is close to 60% due to annual capacity additions by the company. The target set by the management team is full utilisation by FY28. For FY27 specifically, management hopes for 75% – 80% utilisation of the 38,000-tonne facility.

The ₹500 Cr Wire Rod Bet

In addition to alloy production and deoxidant production, Baheti is looking to move into aluminium wire rod production, which, according to the management, is an opportunity that offers high margins and forward integration. The firm is making an investment of approximately ₹25 crore to establish the plant in two phases on its existing land at Dahegam. Phase 1 will increase production capacity by 12,500 tonnes annually, generating revenue opportunities of around ₹250 crore. 

On completion of Phase 2, production capacity is expected to more than double to 25,000 tonnes, thus adding a further ₹250 crore of revenue for the total potential revenue generation of ₹500 crore. Phase 1 commissioning is expected by October or November, while FY28 utilisation is estimated to be 70%. 

The introduction of wire rods in their portfolio is also likely to enhance EBITDA margin by about 1% to 2%. Some of the customers for these products include existing industrial customers like Tata Steel, ArcelorMittal, and Jindal Steel, among others.

Can OEM Orders Drive ₹1,000 Cr Revenue?

The management commenced FY27 with a bare minimum of ₹200 crore in orders, excluding the wire rod segment. Significantly, the management also indicated that they were “more than hopeful” of recording a four-digit revenue number from the current capacity alone. 

At present, the company aims to expand its customer base to include OEMs such as Maruti Suzuki India Limited, Hero MotoCorp Limited, Honda Motor Co., Ltd, and Yamaha Motor Co., Ltd. It expects that once the demand from the OEMs stabilises, there will be less need for stockpiling, leading to improved working capital efficiency and stronger cash flow from operations in FY27 and FY28. 

Along with the expansion in the wire rod segment, enhanced customer quality, and favorable policies from the government, like making it compulsory to have an EPR percentage of 5% in FY28 and 10% in FY29, it seems that Baheti is shifting from being a scrap metal handler to providing aluminium-based solutions. For an organisation that once relied heavily on traders, the next step could be how well it leverages OEM acceptance into recurring revenues.

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.

The post Baheti Recycling: How Does a Scrap Supplier to Bajaj, TVS and Royal Enfield Make Money? appeared first on Trade Brains.