/** Title: Baheti Recycling FY26: Scale-up in secondary aluminium, with wire rod as the next growth lever */

Baheti Recycling FY26: Scale-up in secondary aluminium, with wire rod as the next growth lever

Baheti Recycling Industries Limited closed FY26 with a sharp step-up in scale and profitability. Revenue from operations for FY26 was INR 724.85 crore, up 38.25% YoY from INR 524.3 crore. EBITDA rose to INR 60.97 crore, up 50.02% YoY, with EBITDA margin at 8.41% versus 7.75% in FY25. PAT from operations increased to INR 27.06 crore, up 50.25% YoY, and PAT margin improved to 3.73%.

Management framed FY26 as a year where execution outpaced earlier expectations. In the promoter note, the company stated it surpassed its revenue guidance by 12% and delivered PAT growth of over 15% versus what it had guided. Alongside the headline numbers, the year also marked deeper entry into automotive supply chains. Management highlighted that TVS Motor, Royal Enfield, and Bajaj Auto were added as customers for direct automotive requirements, supported by the company’s IATF 16949 certification.

A key lens to view Baheti is that it is scaling a working-capital-intensive, volume-led business in a volatile commodity environment. Management repeatedly emphasised that the company prices output using LME and FX-linked formulas with a fixed INR delta, and that procurement is similarly linked, creating a natural hedge. In management’s view, the business should be assessed on EBITDA margin stability and volume expansion rather than absolute price moves.

FY26 operations: capacity expanded, utilisation still catching up

The presentation shows installed capacity rising meaningfully over the last few years, reaching 38,000 MT in FY26. Total production in FY26 was 22,976 MT, implying capacity utilisation of 60.46%. Management explained on the call that utilisation is lower because capacity has been scaled repeatedly year after year, and the focus is now to ramp towards full utilisation by FY28.

The company also highlighted ongoing modernization of furnaces. The presentation states two new pairs of tilting and rotary furnaces were commissioned in FY26 and that five new electric furnaces are planned to be commissioned in FY27. The promoter note also references replacement of older pit furnaces with electric furnaces as part of the modernization program.

The manufacturing footprint includes 5 acres of land, with 2.5 acres stated as idle land available, which management positions as a capital efficiency advantage for expansions.

Financial summary (as disclosed)

Revenue mix and customer moves: ingots, de-ox and a push into OEMs

During the earnings call, management provided a revenue mix in percentage terms, stating the split is around 64% for ingots and 36% for alloys. Using FY26 revenue from operations of INR 724.85 crore as the base, this implies approximately INR 464 crore linked to aluminium alloy ingots and about INR 261 crore linked to aluminium de-ox/alloy products, based strictly on the percentage split shared.

Customer commentary in both the presentation and call focused on two developments. First, the company disclosed a repeat order from ArcelorMittal Nippon Steel India worth INR 32 crore. Second, management highlighted traction with OEMs, stating that in March it supplied about 250 tons to Bajaj Auto, 150 tons to TVS Motor, and 100 tons to Royal Enfield, and that the same order was repeated in May.

Management linked OEM entry not only to volumes and brand validation but also to working capital efficiency. The company’s IATF 16949 certification is presented as a key enabler for direct supply into automotive chains.

Wire rod expansion: the next leg, but meaningful contribution is positioned for FY28

The centrepiece initiative is the aluminium wire rod division. In the promoter note and investor presentation, the company stated it will invest INR 20 to 25 crore in FY27 to build out Phase 1 infrastructure for 12,500 MT capacity. At that capacity, management expects annual revenue potential of INR 200 to 250 crore. The company also described a Phase 2 expansion to 25,000 MT, with projected revenue potential of INR 500 crore annually from the wire rod division.

On the concall, management provided commissioning and ramp-up details. Phase 1 was guided to be commissioned by end of October or early November 2026. Initial utilisation was discussed at 20 to 30% in the first quarter of operations, and management stated it expects to reach around 70% utilisation by FY28. On margin impact, management said the wire rod business should improve EBITDA margin by about 1 to 2 percentage points over the existing business, with the major impact expected once operations stabilise.

The company discussed two target customer groups. One category of wire rod is positioned for steel plants and existing customers, where management said extensive approval processes may not be required beyond vendor development steps. The second category is alloy wire rod and EC grade wire rod for conductor and cable manufacturers, where management described a testing and consistency phase of about three months.

Working capital and leverage: the core investor concern

Investor questions on the call repeatedly returned to cash flows and debt. One participant highlighted that operating cash flows have been negative for four years and asked how the company plans to reduce dependence on debt.

Management’s response was that the business has historically carried 30 to 40 days of excess inventory to cater to OEM needs and to handle supply uncertainty. They argued that once OEM approvals stabilise and demand visibility improves, inventory levels can be reduced, which should meaningfully improve operating cash flows. Management also mentioned exploring mechanisms to make working capital more efficient.

The presentation’s balance sheet shows borrowings of INR 158 crore as of March 2026, unchanged from March 2025 but higher than March 2024. Finance cost in FY26 is disclosed at INR 21.98 crore. These numbers underline that while profitability has improved, leverage and working capital discipline remain central to the investment debate.

Outlook: ambition is clear, execution is the variable

Baheti’s presentation sets an explicit target of exceeding INR 1,200 crore revenue by FY28. Management also stated on the call that it is hopeful of reaching four-digit revenue in the current financial year, while separately clarifying that FY27 should not assume meaningful wire rod contribution because commissioning is expected late in the year.

What stands out is that the company is attempting to combine three levers at once: higher utilisation of an expanded base capacity, stronger customer positioning through OEM relationships, and a forward integration into wire rod. The stated tailwinds include supply disruption in primary aluminium, rising acceptance of secondary aluminium, and policy pushes around recycled content and EPR-like norms.

For investors, the near-term monitorables remain straightforward. The market will likely track whether utilisation improves from the FY26 level of 60.46%, whether working capital intensity moderates as OEM demand becomes predictable, and whether the wire rod project meets the end-October or early-November 2026 commissioning timeline discussed on the call.