Can Jain Resource Recycling IPO deliver long-term gains for investors?

Synopsis

Jain Resource Recycling, a non-ferrous metal company, is set to launch an IPO. The company aims to raise ₹500 crore through fresh equity. It will use the funds to repay debt and cover corporate expenses. Additionally, ₹750 crore will be raised through an offer for sale. Post-IPO, promoter stake will decrease.

ET Intelligence Group: Jain Resource Recycling, a producer and recycler of non-ferrous metals, plans to raise ₹500 crore in fresh equity to repay debt and fund corporate expenses, and ₹750 crore through an offer for sale. After the IPO, the promoter stake will fall to 73.6% from 88%. Given the company's strong growth record and improving balance sheet, the IPO looks suitable for retail investors with a long-term horizon who are comfortable with the risks of a commodity-linked business.

Business

Founded in 2022, Jain Resource Recycling is a part of the Jain Metal Group. The company's product mix is led by copper and copper ingots, which contribute 45% to the revenue followed by lead and lead alloy ingots (40%), aluminium and aluminium alloys (4%), and precious metals (10%). The remaining revenue comes from trading of these metals and other commodities. The company manufactures products using scrap sourced both domestically and internationally. Over the last three years, it has procured raw materials from more than 120 countries, supported by a strong global sourcing network. The company operates three recycling facilities in Chennai. As of July 31, 2025, these facilities had a combined production capacity of 64,619 metric tonnes per annum (MTPA). Additionally, the company operates a small Hosur facility (88 MTPA).

The company serves industries such as lead-acid batteries, electrical and electronics, pigments, and automotive with a significant export footprint. Overseas sales accounted for 60.4% of revenue in FY25, up from 54.1% in FY24 and 51.6% in FY23, with key markets including Singapore, China, Japan, Taiwan, and South Korea.

Agencies

Financials
Revenue more than doubled to ₹7,125.7 crore in FY25 from ₹3,064.0 crore in FY23, while net profit rose to ₹223.2 crore from ₹91.8 crore. The operating margin (Ebitda margin) improved to 5.2% in FY25 from 4.1% in FY23. However, return on equity declined to 40.8% in FY25 from a high of 59.9% in FY23 due to rising total equity. The debt-equity ratio improved to 0.92 from 2.95, though net debt inched up to ₹671.6 crore from ₹587 crore during the same period.

Valuation
The issue is valued at a trailing price-earnings (P/E) multiple of 36, which is cheaper than peers such as Gravita India (P/E of 38) and Pondy Oxides & Chemicals (55).

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