Jain Resource Recycling: Why Did The Shares Crash by 34% in Just 2 Days?

Synopsis: The share of this company fell over 30 percent as margin compression, weak copper realisations, supply disruptions, and project delays hurt investor sentiment despite strong revenue growth. 

The share of this Chennai-based non-ferrous metal recycling company came under pressure despite reporting strong Q4 FY26 revenue growth, as investors reacted negatively to margin compression, supply chain disruptions, and delays in expansion projects.

With a market capitalization of Rs 13,182 crore, Jain Resource Recycling Ltd’s share made a day low of Rs  378 per share, down by 34 percent from its Monday day’s high of Rs 569.75 per share. The share of this company has given a return of 29 percent since its listing in October 2025.

What are the factors driving the sentiment?

Severe Margin Compression in Q4: Despite delivering strong growth in FY26, the company reported sharp margin pressure during Q4 FY26 on both a QoQ and YoY basis. Gross profit margin declined significantly to 4.7 percent in Q4 FY26 from 8.7 percent in Q4 FY25 and 10.2 percent in Q3 FY26, reflecting a contraction of 402 basis points YoY and 546 basis points QoQ. The steep decline indicates rising cost pressures and weaker profitability during the quarter.

EBITDA margin also fell to 3.5 percent in Q4 FY26 compared to 5.3 percent in Q4 FY25 and 7.2 percent in Q3 FY26. Additionally, net profit margin declined sharply to 2.1 percent in Q4 FY26 from 4.5 percent in the previous quarter, almost halving on a sequential basis. The sharp deterioration in operating and net margins weighed on investor sentiment despite the company’s strong full-year performance.

Realisation Formula Decline Against Surging Copper Prices: the company witnessed a decline of around 1.25 percent to 1.50 percent in copper sale realisation as a percentage of LME (London Metal Exchange) prices, reflecting a broader global trend across the copper industry. Copper and copper alloy products remained the company’s largest revenue contributor, accounting for nearly 55 percent of quarterly revenue, making the business highly sensitive to fluctuations in global copper pricing dynamics.

As LME copper prices surged sharply during the quarter, customers across global markets resisted higher absolute purchase costs and pushed back against standard pricing formulas. This led to a squeeze in formula-based realisations for sellers across the copper value chain. As a result, the company faced significant pressure on margins in its core copper business during Q4 FY26, impacting overall profitability despite strong demand conditions.

Geopolitical Supply Chain and Freight Cost Inflation

The Iran-Israel conflict disrupted the company’s import supply chain during Q4 FY26, especially in March 2026. Vessel rerouting increased port discharge and liner charges, while higher global crude oil and gas prices raised fuel procurement and production costs, significantly impacting EBITDA per metric ton and overall margins.

Management stated that conditions have improved in Q1 FY27, with shipping companies rerouting vessels through alternative routes away from conflict-hit regions. As a result, liner surcharges and port-related costs have largely normalised, and the company expects these exceptional cost pressures to not continue in the upcoming quarters.

Delayed Project Timelines and Capital Inefficiencies The company stated that expansion projects are progressing broadly in line with earlier guidance despite temporary delays caused by the ongoing West Asia crisis. During Q4 FY26, the company commissioned the first furnace under its Copper Anode Expansion project, adding 800 MT per month capacity, while the second furnace is expected to commence operations in the June quarter. 

Although delays in machinery deliveries affected timelines for the Copper Cathode, Wire Rod, and Busbar projects, installation and erection activities remain on track, with commissioning expected between July and September 2026.

Shutting Down and Scrapping of the Precious Metals Division: The company had partnered with UAE-based Ikon Square Limited by acquiring a 70 percent stake in Jain Ikon Global Ventures (FZC), a Sharjah-based free zone company. The acquisition was aimed at establishing a gold refining facility in the UAE, which commenced refining operations for gold and silver in August 2024.

However, the board approved the discontinuation of the precious metals business effective April 17, 2025, due to low margins, high operational overheads, working capital constraints, and continued volatility in the gold refining industry. The subsidiary has now been reclassified as an asset held for disposal as the company plans to divest its stake.

About the Company

Incorporated in 2022, Jain Resource Recycling and its subsidiaries specialize in recycling non-ferrous metal scrap and producing lead, copper, and aluminium alloys. Its lead ingots are London Metal Exchange-registered, ensuring international quality standards. The company also trades non-ferrous metals and commodities.

Financial Highlights: The revenue from operations grew by 76 percent to Rs 3,105 crore in Q4 FY26 (Mar 2026) from Rs 1,760 crore in Q4 FY25 (Mar 2025), and EBIDT grew by 18 percent to Rs 110 crore in Q4 FY26 from Rs 93.4 crore in Q4 FY25. Accompanied by a net profit growth of 22 percent to Rs 66.0 crore in Q4 FY26 from Rs 52.5 crore in Q4 FY25, resulting in an EPS growth of 18 percent to Rs 1.91 per share in Q4 FY26 from Rs 1.62 per share in Q4 FY25. 

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