1. At a Glance
GRP Ltd, the king of giving old tyres a second life, posted Q1 FY26 revenue of ₹123.8 Cr with profit plunging 60% YoY to ₹1.75 Cr. Margins compressed to 8%. Stock trades at ₹2,423, down 36% YoY, still valued at a premium P/E of 46x.
2. Introduction with Hook
Ever seen a phoenix rise from the ashes? GRP tries that with tyres. The company takes old rubber junk, recycles it, and sells it like it’s premium caviar to global tyre giants. But Q1 results? More like the phoenix catching a cold mid-flight.
3. Business Model (WTF Do They Even Do?)
- Reclaim Rubber (89% revenue) – Old tyres reborn as reclaimed rubber, sold to 8 of the top 10 tyre makers worldwide.
- Upscaled Polyamide & Engineered Products – Niche products from waste nylon and tyre scrap.
- Punchline: “Basically, they clean up your mess and charge you for it.”
4. Financials Overview
- Revenue: ₹123.8 Cr (-2% YoY)
- Operating Profit: ₹9.9 Cr (OPM 8%)
- Net Profit: ₹1.75 Cr (-60% YoY)
- EPS: ₹3.28 (vs ₹8.25 last year)
Margins dipped due to higher costs and lower export realizations.
5. Valuation
- P/E: 46x (steep for current earnings).
- CMP/BV: 6.7x (priced like luxury rubber).
- Fair Value Range: ₹1,800 – ₹2,300.
“At this P/E, the market expects Michelin-star margins… but Q1 served more like roadside vada pav.”
6. What’s Cooking – News, Triggers, Drama
- Commissioned new crumb rubber plant at Solapur (capacity expansion).
- Planning major capex to strengthen exports.
- Past fire incident at Solapur settled by insurance.
- Bonus share issuance (3:1) completed FY25.
“No new fires (thankfully), only the usual capex excitement.”
7. Balance Sheet
| (₹ Cr) | FY24 | FY25 |
|---|---|---|
| Net Worth | 166 | 191 |
| Borrowings | 113 | 147 |
| Total Assets | 342 | 412 |
| Cash Balance | Minimal | Minimal |
Note: Debt creeping up, but manageable with ROCE 17.5%.
8. Cash Flow – Sab Number Game Hai
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Operating CF | 25 | 27 | 45 |
| Investing CF | -5 | -42 | -61 |
| Financing CF | -19 | 15 | 18 |
“Cash is moving out for capex—hope it returns as profits.”
9. Ratios – Sexy or Stressy?
| Metric | Value | Comment |
|---|---|---|
| ROE | 17.4% | Attractive. |
| ROCE | 17.5% | Strong. |
| OPM | 8% | Weakening. |
| P/B | 6.7x | Overvalued. |
10. P&L Breakdown – Show Me the Money
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Sales | 451 | 461 | 550 |
| EBITDA | 25 | 51 | 69 |
| Net Profit | 14 | 23 | 31 |
FY25 was strong; Q1 FY26 signals margin pressure.
11. Peer Comparison
| Company | P/E | ROE | CMP/BV |
|---|---|---|---|
| Pix Transmission | 18x | 20.7% | 3.45x |
| Tinna Rubber | 34x | 15.1% | 8.9x |
| Apcotex | 38x | 10% | 3.7x |
| GRP Ltd | 46x | 17.4% | 6.7x |
“Priced higher than peers, but earnings growth isn’t keeping up.”
12. Miscellaneous – Shareholding, Promoters
- Promoter Holding: 40.06% (stable).
- Public: 59.5%.
- FIIs/DIIs: Almost negligible.
Market seems retail-driven; FIIs still on the sidelines.
13. EduInvesting Verdict™
GRP shines in sustainability and niche dominance, but Q1 FY26 results were a reality check. High valuations, low growth—investors may need to wait for margin recovery and export-led gains.
Final Word:
“Good company, bad quarter, expensive stock. Like buying designer sneakers made from old tyres—cool, but overpriced.”
Written by EduInvesting Team | 26 July 2025
Tags: GRP Ltd, Q1 FY26 Results, Reclaimed Rubber, EduInvesting Premium
