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GRP Limited FY26: Tariffs, Ramp-Up Costs, and a Bigger Bet on Pyrolysis

GRP Limited closed FY26 as a transition year. Revenue held up, but profitability fell sharply, shaped by US tariff disruption in reclaim rubber, raw material inflation in key grades, and incubation losses in the newly commercialised pyrolysis platform branded as Pyrova Energy.

On a consolidated basis, total income for FY26 stood at INR 5,380 million, down 3 percent year-on-year from INR 5,518 million. EBITDA fell to INR 429 million from INR 694 million, and the EBITDA margin compressed to 8 percent from 13 percent. Adjusted profit after tax (excluding the one-time labour code impact) was INR 46 million, versus INR 307 million in FY25.

A key base effect also mattered. FY25 included higher EPR credit recognition, including prior-period accruals in Q4. Management highlighted that FY26 EPR income was INR 202 million versus INR 434 million in FY25, with FY25 including INR 214 million of prior-period accruals recognised in Q4.

What changed in FY26: reclaim rubber shocks and mix shift

Reclaim rubber remained the core business. In the standalone revenue split, reclaim rubber contributed INR 4,692 million in FY26 versus INR 4,771 million in FY25, a 2 percent decline. Non-reclaim revenue was largely flat at INR 569 million. Overall standalone revenue (excluding other income) was INR 5,261 million.

The geographic mix moved materially. Standalone domestic revenue rose to INR 2,616 million from INR 2,366 million, up 11 percent, while exports fell to INR 2,644 million from INR 2,977 million, down 11 percent. The company noted that domestic margins are typically 200 to 250 basis points lower than export margins, which contributed to consolidated margin pressure.

Tariffs in the US-linked supply chain were a clear operational event. Management stated that around 33 percent drop in reclaim rubber revenues from key customers and nearly 44 percent of associated raw material margins were impacted by US tariffs for the year. Some relief came after revisions in February, but only for the final two months.

Raw material inflation was the second drag. The company cited as much as 43 percent inflation in certain reclaim SKUs, and the presentation noted reclaim raw material cost per ton was up 12 percent. Management said price revisions from April 2026 capture the full impact of that cost escalation, after delays caused by annual or half-yearly pricing contracts with key tyre customers.

Financial summary: stable revenue, lower spreads

The balance sheet showed a higher capex-intensity year. Consolidated total assets rose to INR 4,618 million at March 2026 from INR 4,120 million at March 2025, largely driven by higher property, plant and equipment. Borrowings increased across both non-current and current buckets. Management stated that debt to equity rose to 1.15 in FY26 from 0.76 in FY25.

GRP also recorded one-time and non-operational items in FY26. These included forex losses of INR 41 million, labour code related exceptional item of INR 14 million, QIP process expenses of INR 4.2 million after expiry of approvals without issuance, and polymer composite closure-related costs.

Pyrova Energy: the new platform that hurt FY26 but is central to FY27 and beyond

The major strategic narrative in both the presentation and the call was Pyrova Energy, GRP’s continuous tyre pyrolysis platform integrated with crumb rubber.

Phase 1, commissioned in October 2025, included a 15 KTPA continuous reactor and an integrated crumb facility. Management said the plant stabilised in Q4 and is operating beyond 85 percent utilisation on a monthly basis.

However, FY26 absorbed commercialisation losses. The company disclosed that Pyrova’s commercialisation phase led to EBITDA loss of INR 23.9 million and PAT loss of INR 85 million during FY26 from September 2025 onwards.

The monetisation path is staged. Today, management described three outlets for tyre pyrolysis oil: the fuel market linked to road surfacing, industrial furnaces, and the petrochemical value chain. The company indicated that moving up this value ladder requires product upgrades and customer validation, especially to improve flash point and reduce sulphur for industrial fuel applications.

Recovered carbon black is expected to be the larger margin unlock. The investor deck outlines Phase 2 under commissioning through February 2027, including rCB set-up at Solapur and tyre pyrolysis capacity enhancement to 45 KTPA. On the call, management said rCB facility is likely to be operational in the second half of the year, and the full platform impact would be more visible by FY28.

EPR: income volatility and the next approval trigger

EPR income has been meaningful in the last three years, but volatile in timing. The presentation disclosed consolidated EPR income of INR 79 crore across FY24 to FY26.

For pyrolysis-linked EPR, management said approvals were awaited and therefore FY26 did not include EPR accrual from the pyrolysis platform. On the call, management expected approvals within the next few weeks and said EPR income would be accrued only after approval, potentially retrospectively for the pyrolysis period, and recognised in Q1 or Q2 (H1).

On pricing, management stated EPR credit prices were at around the floor price of INR 2.52 per kg, with around 85 percent contracted sales and 15 percent sold on spot.

Capital allocation and capacity targets

The company reiterated its integrated recycling platform roadmap across reclaim rubber, plastics, and end-of-life tyre adjacencies.

In the investor deck, GRP laid out capacity aspirations for reclaim rubber expansion from about 88 KTA to 110 KTA across FY27 to FY30. For crumb, tyre pyrolysis oil and rCB, the company indicated expansion from about 39 KTA to 130 KTA over FY27 to FY30.

Management also disclosed the broad use of capex over FY24 to FY26, totalling INR 170 crore on a consolidated basis. On the call, management said around 50 percent went into Pyrova Energy, 30 to 35 percent into reclaim rubber capacity and technology transition, and the balance into other areas including renewable energy investments and debottlenecking.

For FY27, management guided to a growth capex plan of INR 90 crore to INR 100 crore, funded through a mix of sanctioned debt lines and internal accruals. The company also highlighted renewable energy investments and biofuel based heating systems as a mitigation tool during fuel volatility and a long-term cost lever.

Takeaways from FY26

GRP’s FY26 numbers reflect a difficult year of external shocks and internal ramp-up. The tariff-driven disruption in US-linked reclaim rubber demand, raw material inflation, and early-stage losses from Pyrova compressed margins and returns. At the same time, the company disclosed a clear phased roadmap for pyrolysis and rCB, quantified several one-time impacts, and explained the EPR base effect in FY25.

FY27 will likely be judged on three execution markers that management repeatedly referenced: recovery of export volumes especially indirect US-linked flows, stabilised pricing pass-through in reclaim SKUs from April 2026, and progress on pyrolysis EPR approvals plus rCB commissioning in the second half. If these move as planned, operating leverage should start to improve, though management also cautioned that the full Pyrova platform impact is more visible by FY28.