Race Eco Chain Q4 FY26: Growth in PET and Restore, but FY26 volumes fell on standalone

Race Eco Chain Limited presented its Q4 FY26 and FY26 results with a clear message: the company is building a more organized, traceable and ESG aligned waste supply chain, but the year also saw pressure from raw material inflation and higher working capital needs. For Q4 FY26 on a standalone basis, operating revenue stood at 108.25 crore, up 22.2 percent YoY. EBITDA was 3.06 crore, up 13.75 percent YoY, while PAT rose 36.2 percent YoY to 0.81 crore. Margins remained thin, with EBITDA margin (excluding other income) at 2.83 percent and PAT margin at 0.75 percent.

FY26 on a standalone basis told a different story on topline. Operating revenue declined 17 percent YoY to 381.82 crore. Yet EBITDA increased 17.54 percent YoY to 9.85 crore, and EBITDA margin (excluding other income) improved to 2.58 percent, up 76 bps. PAT fell 38.7 percent YoY to 2.30 crore, reflecting the impact of higher finance costs and other pressures discussed by management.

Segment performance: PET stayed core, Restore showed margin strength

The presentation provides segment level highlights for three divisions on a standalone basis: PET Waste, Biomass, and Restore (recycled products). In Q4 FY26, the PET Waste division generated revenue of 99.9 crore, up 27 percent YoY, while aggregating 21,124 MT of PET waste, down from 27,176 MT in Q4 FY25. EBIT for the quarter was 1.67 crore, translating into an EBIT margin of 1.67 percent.

Biomass was smaller but fast growing in Q4 FY26. Revenue increased 172.6 percent YoY to 5.07 crore, with 6,440 MT aggregated versus 2,439 MT in Q4 FY25. EBIT stood at 0.17 crore, with an EBIT margin of 3.38 percent.

Restore, the recycled products division, stood out for profitability. Q4 FY26 revenue was 3.29 crore, up 450.2 percent YoY. EBIT was 1.53 crore and EBIT margin was 46.2 percent.

On a full year standalone basis, PET Waste revenue was 363.68 crore, up 16 percent YoY, with plastic waste aggregated at 80,609 MT versus 95,318 MT in FY25. The segment reported EBIT of 7.76 crore with a margin of 2.13 percent.

Biomass division revenue was 8.27 crore, up 55.8 percent YoY, but volumes fell sharply to 10,140 MT from 25,840 MT in FY25. Restore revenue for FY26 was 9.88 crore, up 10.5 percent YoY, with EBIT of 1.66 crore and an EBIT margin of 16.83 percent.

Consolidated picture: stronger growth and profitability

The consolidated highlights for FY26 were meaningfully stronger than standalone. Consolidated operating revenue was 618.75 crore, up 11.5 percent YoY. EBITDA rose 46.39 percent YoY to 14.20 crore and PAT increased 73.9 percent YoY to 7.29 crore. PAT margin improved to 1.18 percent, up 42 bps. The presentation also states FY26 aggregated 1,44,737 MT of PET and biomass on a consolidated basis.

The consolidated income statement also shows a notable jump in share of profit or loss in associate companies, rising to 331.50 lakh in FY26 from 6.18 lakh in FY25. This supports the higher consolidated profitability but also makes comparability to standalone less direct.

What held back profitability: raw material inflation and higher capital needs

Management commentary in the presentation explains that profitability was impacted primarily by a sharp increase in raw material prices, estimated at around 25 percent. The company maintained stable margins to stay competitive and retain customers, but could not fully pass through higher input costs, causing temporary pressure on EBITDA margins. It also highlighted that higher working capital requirements and investments towards strengthening the operational ecosystem impacted short-term profitability.

The standalone income statement reflects this broader pressure environment. Finance costs increased to 7.60 crore in FY26 from 4.05 crore in FY25, and depreciation rose to 1.10 crore from 0.68 crore. On a consolidated basis, finance costs increased to 8.20 crore from 4.24 crore and depreciation increased to 1.80 crore from 0.87 crore.

Strategy: organizing the unorganized with ESG and traceability

A consistent theme across the deck is the effort to organize the unorganized scrap industry. The company highlights a pan India network of waste suppliers and dedicated regional collection centers. It also emphasizes ESG focused procurement, including building an ESG compliant supply chain for waste procurement.

Digitization is positioned as a key lever. The company references digitizing the supply chain through a TRACE app and describes the RACE App, available on Android and iOS, as a platform intended to streamline waste selling with transparent price negotiation and coordinated pickups and deliveries. Future versions are described as potentially integrating AI to provide market insights such as price trends, government regulations and environmental compliance updates.

The way ahead: partnership, expansion, and a proposed demerger

The presentation outlines a strategic alliance with Ganesha EcospHERE Limited, described as India’s largest PET waste recycler. Race states the partnership will involve setting up dedicated collection centers for Ganesha EcospHERE with stringent ESG compliance and improved end-to-end traceability. The company expects the alliance to drive structural improvements in operations through efficiency, scalability and long-term profitability.

Separately, the Board has proposed a demerger of existing business segments into three entities: plastic packaging waste, biomass briquettes and recycled products. The deck lists potential benefits as unlocking value across the three businesses and providing shareholders stock in two additional listed entities apart from Race.

On the operational front, Race also disclosed that it is establishing four new collection centers in Roorkee, Haridwar, Rishikesh and Dehradun, and it participated in Biofuel Expo 2026 to engage with the renewable energy ecosystem.

Regulatory backdrop: recycled content and traceability requirements

The deck cites regulatory tailwinds, including rising EPR compliance requirements and ESG driven corporate demand for traceable supply chains. It also references India’s Plastic Waste Management Amendment Rules 2026, stating rigid plastic packaging must contain 30 percent recycled content, increasing to 60 percent by FY 2028-29, and that end-of-life credits have been removed, requiring actual recycling.

For biomass, the presentation cites policy support including mandatory biomass co-firing in thermal power plants starting at 5 percent from FY 2024-25 and rising to 7 percent from FY 2025-26, along with government support for biomass collection machinery.

Key takeaways

Race Eco Chain ended Q4 FY26 with higher standalone revenue and PAT, while FY26 standalone topline and volumes declined even as EBITDA and EBITDA margin improved. The consolidated numbers were stronger, with higher revenue growth and a sharp rise in PAT. Management attributes near-term pressure to raw material inflation, working capital needs and investments in the operating ecosystem. The company is positioning its next phase around ESG compliant collection, digitized traceability through the RACE App, expansion of collection centers, a strategic alliance with Ganesha EcospHERE, and a proposed demerger into three focused entities.