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Building scale in a fragmented recycling industry

Jain Resource Recycling (JAINREC) is one of India’s largest non-ferrous metal recyclers. It operates an integrated platform capable of processing multiple materials at a single location with a total capacity of 287K MT. The group has evolved into a leading recycling enterprise with diversified capabilities across lead (~44% revenue/~45% volume), copper (~50% revenue/21% volume), and aluminum (~4% revenue/4% volume).

* As the world accelerates toward its climate and sustainability commitments, the importance of metal recycling continues to rise. It significantly lowers emissions, conserves finite natural resources, reduces the environmental footprint of mining, and supports a circular economy by keeping valuable materials in use for longer.

* The demand for domestic secondary lead witnessed a 3.8% CAGR over FY18-24. This trend is likely to accelerate in the future with an anticipated demand CAGR of 6.5% over FY24-FY30 from 1.18MMT to 1.7MMT. This trend will be driven by rising consumption from the lead-acid battery segment, expanding telecom infrastructure, rising adoption of energy storage solutions, and favorable regulatory policies.

* In addition, the company stands to benefit from ongoing supply disruptions at major global copper mines. These constraints on primary metal availability are projected to increase demand for secondary copper, with the domestic secondary demand expected to clock a 14% CAGR to 1,410KTPA from 645KTPA, creating a favorable environment for the company’s recycled copper portfolio.

* To leverage this growth, JAINREC plans to expand the lead/copper capacity to 300KMT/100KMT by FY28 from 184KMT/83KMT. Management also plans to simultaneously focus on high-margin value-added products such as tin to further enhance the profitability with its entry into antimony extraction and forward integration into copper cathodes, wire rods, and busbars.

* JAINREC has developed a strong global ecosystem, sourcing scrap directly from 120+ countries through long-standing supplier relationships, while simultaneously building a diversified export presence across 20+ countries. This integrated global network ensures reliable access to quality scrap, highly competitive freight and logistics costs, and strong export growth, collectively driving superior cost efficiency and operational scalability.

* We expect JAINREC to deliver a CAGR of 36%/48%/56% in revenue/EBITDA/PAT over FY25-28, driven by an increase in capacity of its core products, expansion of its global presence, entry into antimony, and higher value-added copper products. We value the stock at 21x FY28E (in line with the five-year average and ~25% discount to the three-year average of GRAVITA), EPS of INR24 to arrive at our TP of INR520. We initiate coverage on JAINREC with a BUY rating.

Where growth takes the ‘Lead’

* JAINREC commenced lead recycling operation in CY13, and it now contributes to a significant proportion of JAINREC’s revenue (~44%/43% share in FY25/9MFY26). Lead recycling spearheaded the company’s growth with a revenue CAGR of ~38% over FY22-25. Volume clocked ~32% CAGR over FY22-25 and stood at ~155MT in FY25.

* The domestic secondary market is expected to remain a key growth driver, with secondary lead demand forecast to post ~6.5% CAGR to 1.7MMT through CY30 with the share of secondary lead in the market expected to remain at 85%, driven by the growth in the end-user industry.

* The company plans to expand its lead recycling capacity from 184K MT to 300K MT by FY28, positioning itself to meet rising domestic demand while improving scale efficiencies and long-term growth visibility.

* Additionally, supportive regulatory policy is driving formalization of the sector, accelerating the shift from informal operators to organized recyclers, and increasing the consistent supply of raw material availability. Currently, ~60% of the market share is held by unorganized players.

* JAINREC is moving up the value chain by extracting higher-value by-products from lead-acid battery scrap, such as tin and antimony, with antimony recovery being the next major value unlock. As this process requires niche metallurgical expertise, it creates strong entry barriers and sharpens JAINREC’s competitive edge. Successful antimony separation enables significantly higher realizations and supports margin expansion.

* We expect the lead segment’s volume/EBITDA CAGR at ~25%/35% over FY25- FY28, driven by tailwinds from the regulatory policy. EBITDA/MT is estimated at INR21,067 in FY28 vs. INR16,897 in FY25, led by the higher-value by-products

Unlocking higher value through integrated copper recycling

* JAINREC started copper recycling operations in CY18, and copper now contributes ~50%/~21% of revenue/volume in FY25. The segment has delivered a strong revenue/volume CAGR of ~22%/15% over FY22-25.

* Disruptions at major global copper mines have led to a tightening of the primary copper supply, creating structural constraints in the global market. Simultaneously, robust demand from the global power transmission, infrastructure, industrial manufacturing, and clean energy sectors is sustaining copper consumption.

* This widening supply-demand gap is expected to increase reliance on recycled copper. The domestic secondary copper demand is expected to grow at a CAGR of 14% over the period FY24-FY30 to 1,410KTPA.

* JAINREC’s manufacturing capacity of copper recycling is at ~83KTPA as of FY25 (with capacity utilization at ~88% in FY25). Further, the company has plans to increase its capacity to 100KTPA by FY28 to meet the growing demand.

* Additionally, the company has formed a JV with Texas-based CNY Group Investment Corporation to set up a copper scrap recycling plant in Ahmedabad, enabling processing of end-of-life materials (cables, motors, alternators) and strengthening both its sourcing network and overall recycling capabilities.

* JAINREC is moving up the value chain by producing higher value-added copper products such as anodes, cathodes, wire rods, and busbars—using recycled copper. The phased commissioning of its new copper cathode unit (Unit 3) from 4QFY26 will further strengthen this forward integration, boosting margins and supporting earnings growth.

* We expect segment volume/EBITDA CAGR of ~17%/35% over the period FY25- FY28 in the copper segment, and EBITDA/MT to stand at INR48,246 in FY28 vs. INR32,903 in FY25.

End-to-end global platform: Cost-efficient sourcing to a deep-rooted customer base

* JAINREC ensures operational continuity and margin stability through a wide global sourcing network across 120+ countries, supported by direct bulk procurement from overseas scrapyards (~71% of FY25 imports), which lowers sourcing costs by avoiding intermediaries. JAINREC is advancing its forward integration strategy by producing higher valueadded products – including copper anodes, copper cathodes, wire rods, and busbars – using recycled copper as feedstock 6 March 2026 5

* Hedging plays a critical role in insulating metal recyclers from price volatility in global commodity markets. JAINREC mitigates commodity price risk arising from fluctuations in LME-traded base metals through systematic hedging via futures contracts. This approach positions the company as a pure-play recycler rather than a commodity metal producer, thereby reducing earnings volatility and supporting margin stability.

* JAINREC has a strong international presence, exporting to over 20 countries, which contributes ~57% of FY25 revenue and is recording a 32% CAGR. This, combined with long-standing customer relationships with global customers, provides revenue stability, diversifies global demand, and aids sustained growth.

Valuation and view: Initiate coverage with a BUY rating and a TP of INR520 .

* JAINREC is positioned for long-term growth, aided by rising demand for recycled metals and a regulatory shift favoring organized players. Its strategy focuses on expanding capacity, manufacturing value-added products, and strengthening customer engagements, which is likely to drive sustained margin improvement. The company is also benefiting from India’s lead and copper demand growing faster than global trends.

* To move up the value chain, JAINREC is developing higher-value products across both lead (tin) and copper (cathode, anodes, and busbar). These initiatives are expected to materially enhance realizations, margins, and earnings visibility.

* Securing reliable, cost-efficient scrap supply remains core to its operating model. JAINREC has built a strong global sourcing network spanning 120+ countries (with direct procurement of ~71% of its FY25 imports from verseas scrapyards). With total capacity set to increase from 184K MT to 300K MT by FY28, the company is well placed to capitalize on structural industry tailwinds.

* Boosted by this strong growth outlook, we expect the company to achieve a revenue/EBITDA/Adj. PAT CAGR of 36%/48%/56% over FY25-28.

* The stock currently trades at a P/E of 32x/22x/16x for FY26E/FY27E/FY28E. With an RoE/RoCE of 31%/23% in FY28E, we value JAINREC at a 21xFY28E EPS of INR24.4 (in line with the five-year average and ~25% discount to the three-year average of GRAVITA) to arrive at our TP of INR520. Initiate with a BUY rating.

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