Tinna Rubber & Infrastructure Ltd Q1 FY27 Earnings Call Summary

Event Participants

Executives

3 Abhay Kumar, Gaurav Sekhri, Subodh Kumar Sharma

Analysts

12 Ajit Sethi, Amit Rathi, Ashray Sheth, Deepak Poddar, Dheeraj Ram, Hemant Soni, Khushal, Mihir, Navani Naredi, Nikunj Bhanushali, Saurav Gupta, Viraj

Financials & KPIs

Geographic & Segment Commentary

• Industrial Segment: Volumes grew 27% YoY and revenue 58% YoY, the strongest segment performance. MRP and Reclaimed Rubber volumes rose 28% and 37% YoY respectively, supported by rising tire manufacturer raw material costs and ESG-driven demand for recycled materials.
• Infrastructure Segment: Revenue grew 7% YoY on 33% volume growth despite West Asia conflict-induced bitumen shortages and elevated prices, which actually boosted rubberized bitumen demand as a cost-effective alternative. Secured a 15,000-ton rubberized bitumen processing order for FY27; government import-dependence reduction supports long-term outlook.
• Consumer Segment: Volumes declined ~20% YoY; binder and synthetic grass prices nearly tripled due to West Asia conflict and import/export disruption, delaying track and turfing project execution. Management expects segment recovery once price/import conditions stabilize; segment is only 8-10% of revenue.
• Steel Segment: Revenue steady despite marginal volume decline, supported by improved realizations after price corrections. Secured exclusive India distributorship for Zibo TAA Metal Technology (China) steel abrasives; ~50% volume growth targeted in FY27 with customer transition from Q4 FY27.
• PCMB (Plastics): Revenue tripled YoY to ₹12 crores; initial 6,000 TPA capacity operating at 82% utilization; expanded Haryana facility lifts total capacity to 18,000 TPA, targeting 10% of FY27 revenue. Registered on government portal as authorized recycler for EPR credit generation from April 1, 2026.
• PP Build Tech (Construction Chemicals): Delivered ₹19 crores revenue and ₹3 crores EBITDA in Q1; Kolkata plant scaling up with utilization expected to improve. Land acquisition in Western Maharashtra at advanced stage for new manufacturing facility; targeting >30% growth and ₹100 crores revenue in FY27.
• Oman: Revenue ~₹9 crores, EBITDA margin 8.53%, PAT ₹0.34 crores (+31% over FY26). Corrective measures including raw material imports into Oman drove meaningful margin recovery after elevated feedstock costs and Middle East conflict impact.
• South Africa (Mbodla): Phase 1 capex complete, operations commenced and semi-processed material exports begun; breakeven expected Q2 FY27. Phase 2 equipment for 9,000 TPA tire-to-crumb-rubber processing in transit, production expected Q2/Q3 FY27.
• Saudi Arabia: Land allocated for a 24,000 TPA recycling facility; construction expected toward end of CY2026, subject to Middle East geopolitical normalization.
• Chile: Wholly owned subsidiary Tinna Rubber Chile SPA established in Santiago to enhance global ELP sourcing network and expand international recycling footprint.

Company-Specific & Strategic Commentary

• Vision 2029 Targets: Targeting ₹1,000 crores revenue by FY29, presence across 10 locations, 25%+ revenue CAGR, 33%+ profitability CAGR, EBITDA margins >18% and ROCE >30%; core investment focus remains India.
• Capacity Expansion: ₹27 crores capex executed in Q1; tire crushing capacity on track for 27% expansion to 235,000 TPA by FY27; 3,500 TPA MRP expansion on schedule for Q3 FY27 commissioning, taking total MRP capacity to 20,000 TPA (believed largest in the world).
• Pyrolysis Rollout: TPO facility at Varle commenced trials in Q1; commercial sales expected Q2 FY27 with stabilization by Q3; rCB production scheduled Q3 with commercial sales by Q4; combined TPO/rCB expected to contribute 7-10% of FY27 revenue (~₹50-60 crores).
• Sustainability & Renewables: Renewable energy contributed 51% of total power production in Q1; capacity increased >3x from 1.23 MW to 4.48 MW; rooftop solar commissioned at Gummidipoondi (999 kW, June 2026) and Varle (2,218 kW, July 2026) delivered ₹1.19 crores quarterly savings; FY26 EUV-verified lifecycle assessment validated 10.37 million kg CO2 emissions reduction with 58.7% reduction from renewables.
• R&D Investment: ₹5 crores allocated for FY27; dedicated team developing high-performance new-generation recycled rubber materials, engineered plastics, recovered fiber applications from passenger tires and enhanced TPO quality.
• EPR Franchise: Annual EPR contribution of ~₹25-30 crores at PBT level; fully monetized accrued inventory up to March 31, 2026 within Q1 FY27; newly registered as authorized recycler expands plastics EPR credit generation.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Margin Sustainability & Drivers

• Question: Was there any inventory gain contribution to the EBITDA margin expansion across segments, and will margins normalize toward the 18% long-term target? (Dheeraj Ram, 360 ONE Capital)
• Answer: Inventory gains were "very marginal, nothing meaningful to report." Margin improvement is systemic - increased feedstock optionality to control raw material costs and higher value-added product sales; management believes 18-20% is deliverable once front-ended costs of Saudi and South Africa are blended. (Gaurav Sekhri)
• Question: Can you decompose the 400-500 bps incremental margin? Material plus inventory cost to sales fell from 51%+ to 46%. (Amit Rathi)
• Answer: The main contribution came at the gross margin level - a combination of more efficient raw material costs and higher realizations from value-added product sales, with some scale efficiencies. (Gaurav Sekhri)

EPR Credit Accounting & Monetization

• Question: What was the quantum of EPR credits monetized, at what price, and where is it booked? Does the ₹156 crores revenue and ₹21 crores PAT include prior-year EPR monetization? (Deepak Poddar, Sapphire Capital; Viraj, MoneyGrow; Ajit Sethi)
• Answer: 100,000 units monetized at ~₹2,500/unit floor price (₹21 crores cash). Credits were accrued in prior years as inventory on approval-basis accounting and monetized in Q1 - this has "nothing to do with the profitability of the current financial year" and was knocked off against unbilled revenue. The ₹156 crores revenue includes only Q1-accrued EPR income. EPR is integral to the recycling business, contributing ~₹25-30 crores annually at PBT level, translating down to EBITDA. (Gaurav Sekhri; Abhay Kumar)

Global Expansion Rationale & Capex

• Question: Why enter Chile and scale South Africa/Saudi before fully monetizing existing investments? Will investments scale beyond the ₹100 crores plan? (Mihir, Equirus)
• Answer: Country-entry rationale is confidential; Oman offers limited expansion scope, Saudi has similar operating parameters to the existing Middle East base, and South Africa/Chile strengthen end-of-life tire supply sourcing and hedge against global events. Core investment remains India; ₹100 crores capex over FY27-28 stands, with ~₹60 crores capitalized in FY27. (Gaurav Sekhri; Abhay Kumar)

Capacity Utilization Outlook

• Question: What is the targeted blended utilization once all plants across India, Oman, and South Africa are operational and scaled? (Ashray Sheth, Venture Securities)
• Answer: PCMB utilization should reach ~60% this year; combined across all geographies, overall capacity utilization should be ~75-80%. (Subodh Sharma)

FY27 Revenue & Margin Guidance

• Question: What is the FY27 guidance for top line and EBITDA margin given the 22% Q1 margin? (Saurav Gupta; Hemant Soni)
• Answer: FY27 revenue guidance is ₹670-700 crores (restated as ₹675-700 crores in closing remarks); margins should stabilize at 18-20%. Q1's 22% is a reality, but expansion costs are front-ended, so management prefers cautious guidance - "I will neither confirm that we will achieve 18% nor will I confirm we will achieve 22%." (Subodh Sharma; Gaurav Sekhri)

Infrastructure & Consumer Segment Outlook

• Question: Will Q2 infrastructure be hit by bitumen shortage and delayed monsoon? How will 25% topline growth be achieved? What is the consumer segment recovery timeline? (Navani Naredi, Naredi Investment)
• Answer: Infra grew 7% in Q1 despite challenges as contractors used rubberized bitumen to overcome bitumen shortage; Q1 is peak road execution season. Growth will come from TPO/rCB revenues starting Q2-Q3 and PCMB ramp-up. Consumer is only 8-10% of business - diversification is the hedge; the price problem is in contractor-used binder, beyond company control, though demand remains intact. (Subodh Sharma; Gaurav Sekhri)

India Capacity Expansion & Competitive Moat

• Question: India business is at 80-85% capacity - how will capacity be enhanced? What prevents competition from entering MRP at these margin levels? What revenue does peak utilization imply? (Nikunj Bhanushali, Walford PMS; Mihir, Equirus)
• Answer: Working on de-bottlenecking and exploring a new greenfield plant; targeting ₹1,000 crores by FY29 under current plan, with capex likely increased if demand remains strong. Entry barriers: technology efficiency, long customer onboarding process, and resilience/commitment built since 2015-16 when MRP sales were under 100 tons per month. (Gaurav Sekhri)

TPO/rCB Revenue Contribution

• Question: How much will rCB and TPO contribute to FY27 revenue? (Hemant Soni)
• Answer: Approximately 7-10% of total revenue, or ~₹50-60 crores in absolute terms. (Gaurav Sekhri)

Key Takeaway

Tinna Rubber delivered its best-ever quarterly profitability in Q1 FY27: EBITDA exceeded ₹30 crores (21%+ margin, +638 bps YoY standalone), PAT was ₹21 crores (13%+ margin) and revenue reached ~₹156 crores, up 20% YoY consolidated. Margin expansion came from feedstock cost optimization and a higher value-added product mix; inventory gains were "very marginal." Strategic execution advanced via ₹27 crores capex toward the ₹100 crores FY27-28 plan, tire crushing capacity on track to rise 27% to 235,000 TPA, MRP expansion to 20,000 TPA by Q3 FY27, TPO commercial sales from Q2, rCB by Q4, and PCMB revenue tripling to ₹12 crores. FY27 guidance remains ₹670-700 crores revenue and 18-20% EBITDA margins, with front-ended costs from South Africa/Saudi start-ups (₹53 lakhs combined Q1 loss) and Middle East geopolitics as watch points. Consumer segment recovery, Saudi construction timing and capacity expansion execution are key monitors en route to the ₹1,000 crores FY29 Vision.