Recycling Stock: Can Aluminium Demand Make It a Key Beneficiary of India’s EV Boom? 

Synopsis: India’s EV transition is expected to accelerate aluminium demand, creating long-term opportunities for recycled metal producers. CMR Green Technologies, India’s largest recycled aluminium manufacturer, is expanding capacity, diversifying into solar and beverage can recycling, and leveraging technology, ESG initiatives and strong automotive relationships to capitalise on the growing demand for sustainable aluminium.

The Indian EV revolution is expected to drive up aluminium usage substantially because automakers will be trying to keep weight down to save on efficiency and extend the battery range. Scrap aluminium is becoming the choice material because of its lower environmental impact and price competitiveness, making a sustainable market for scrap aluminium recyclers. 

CMR Green Technologies, which makes the largest amount of recycled aluminium in India, sees this structural change, combined with growing automotive manufacturing and recycling regulations as a tailwind to their future business prospects. With a market cap of Rs 5,080 crore, the shares of CMR Green Technologies Ltd are trading at Rs 232 and are trading at a PE of 24 compared to their industry’s PE of 15. 

India’s Largest Recycled Aluminium Player

The firm is India’s largest recycled aluminium manufacturer with an installed production capacity of approximately 6.15 lakh metric tonnes per year, which means that it is four times bigger than its nearest competitor. As claimed by the company management, it is also one of the 12 biggest recycled aluminium producers all over the world, taking into account Chinese companies. 

The company’s strong performance is especially pronounced in the automotive industry, where the company takes nearly 45% market share, which means that each second car running in India has aluminium from CMR Green Technologies. 

Aluminium makes for nearly 81% of FY26 revenue, while the rest, 19%, is obtained from the recycling of other non-ferrous metals like copper, brass, zinc, lead, stainless steel, and magnesium. Over the past seven years, the company has launched seven factories and now has 13 manufacturing sites in the country.

EV Demand Could Change Aluminium Consumption

One of the key growth opportunities mentioned by management is the rising adoption of aluminium in electric vehicles. As opposed to the traditional internal combustion engine vehicles, EVs require aluminium in battery trays, battery cases, motor casings, suspension parts, and now even in the body of the car to offset the weight of the batteries. 

As per the company, the adoption of aluminium in EVs is likely to be more than triple compared to traditional vehicles owing to the superior strength-to-weight ratio of aluminium. For tapping into this growth opportunity, CMR has already commenced construction of a new plant in Future Mobility Park in Shoolagiri, Tamil Nadu, to serve customers in the future mobility and EV segments. 

On the other hand, another expansion project in Bawal, Haryana, has been initiated as per the demand of an existing customer. Management has also indicated that the passenger vehicle sales increased by around 18%, while two-wheeler sales increased by around 12% in the first two months of FY27.

Financial Growth and Capacity Expansion 

This growth strategy can be seen in the performance of the company financially and operationally. During FY26, the consolidated revenue increased by 30% to Rs 8,640 crore, whereas EBITDA witnessed an increase of 50% to Rs 449 crore. At the same time, the EBITDA per tonne remained high at around Rs 11,000. 

The profit after tax witnessed an increase of 47.3% to Rs 228 crore. Quarter-wise, the performance was also impressive in terms of Q4 FY26 with an increase of 45% to Rs 2,364 crore in revenue, an increase of 160% to Rs 128 crore in EBITDA and Rs 65.7 crore in PAT. 

Operationally speaking, the total sales volume increased by 24% to 80,381 metric tonnes, and the aluminium sales volume increased by 27% to 65,636 metric tonnes. Moving ahead, it is expected that the installed capacity will increase to almost 7 lakh metric tonnes from the current 6.15 lakh metric tonnes in FY27. 

At the same time, it has been planned to invest around Rs 200 crore of capital expenditure during the year. In addition to it, it is also expected that FY27 volume growth will remain the same as FY26.

Beyond Automobiles: Expanding into New Aluminium Markets

Even though automobiles continue to be the biggest contributor to the business, CMR Green Technologies is looking at expanding into some of the latest applications of aluminium. One such initiative includes a beverage can recycling plant set up by the company at Jharsuguda in Odisha near Hindalco Industries, from which they supply their recycled liquid aluminium directly to the primary producer. 

It was stated by management that it was a strategic decision taken by them, as they believe that recycling would emerge as the primary source of aluminium in the coming years and eventually surpass primary aluminium production. 

The other important initiative undertaken by the company is the recycled green billet and sheet ingot business unit , the first of its kind in the country. Their products are used in the construction industry and also in the growing business of solar panel manufacturing.

Technology, ESG and Global Partnerships Strengthen the Moat

In addition to scale, CMR claims that technology and sustainability give it an edge in the marketplace. The company has acquired patents related to the transportation of liquid aluminium and process control systems which can help customers save costs associated with remelting. 

It also uses eight process copyrights in its processes to ensure uniformity across all plants. In terms of sustainability, one-third of the company’s total energy needs come from solar energy, and the entire manufacturing plant is working on a zero-liquid and zero-solids discharge basis. 

As per the company, CMR currently possesses 2.73 lakh tonnes of carbon credits and generates an additional 70,000-80,000 tonnes each year. The creation of a carbon credits market in the future can open up revenue streams for the company. 

CMR has also been ranked 6th in the world in the S&P Global Corporate Sustainability Assessment in the aluminium category and has received a bronze medal at the 84th percentile rank in the first EcoVadis assessment.

Global Partnerships and Stable Customer Relationships 

Another significant differentiation comes from CMR’s well-established alliances with major players in the global aluminium industry. The company enjoys alliances for technology and marketing with Toyota Tsusho, Nikkei MC Aluminium, and Nippon Light Metal, which enables it to benefit from the latest technology innovations without having to pay any royalties. 

This has been instrumental in developing newer products like billets and sheet ingots while enhancing the process of production. CMR provides recycled aluminium to nearly all leading automobile Original Equipment Manufacturers (OEMs) and first-tier suppliers in India, along with other customers like Hindalco Industries, Jindal Stainless, and Germany’s Aurubis. As per the management, most of the customer relations are as old as the company itself, making it easy for them to generate a lot of repeat business.

The Road Ahead

CMR Green Technologies seems to be in a position to derive benefits out of the emerging trend towards using recycled aluminium owing to the increase in electric vehicle sales and stringent sustainability laws. The management has anticipated that the Emerging Producer Responsibility (EPR) standards requiring the use of higher amounts of recycled material in the production process will help in bolstering demand in the future. 

Although the availability of scrap on a global level and volatile aluminium prices continue to pose industry-wide threats, CMR Green Technologies feels that its broad-based sourcing portfolio, conservative hedging strategy, and customer relations are likely to serve as buffers. 

With a new capacity addition of almost 7 lakh metric tonnes and a capital expenditure of Rs 200 crore, the leader in recycled automotive aluminium, along with diversification into solar, construction, and beverage can recycling, CMR is set to benefit from India’s next wave of sustainable manufacturing growth cycles.

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