Shares of Jain Resource Recycling fell sharply on May 19, extending their decline to nearly 30% since the company’s results, as investors focused on weak operating cash flow and rising working capital pressure despite strong revenue and profit growth.
The stock was trading at Rs 396.05, down 14.54% or Rs 67.40 on the NSE. During the session, the stock moved in a wide range of Rs 378.00 to Rs 452.95. The previous close stood at Rs 463.45.
The company reported strong FY26 numbers on the surface. Consolidated revenue from operations rose 48% to Rs 9,543 crore, while annual net profit increased nearly 59% to around Rs 352 crore.
Q4 FY26 revenue also grew 76% year-on-year to Rs 3,100 crore, compared with Rs 1,760 crore in Q4 FY25. Net profit rose 15% to Rs 60.4 crore from Rs 52.4 crore a year earlier.
However, the market reaction was driven by concerns over cash generation. Despite reporting profit of around Rs 352 crore for FY26, the company reported negative operating cash flow of Rs 602 crore. This gap between accounting profit and actual cash generation became the key concern for investors.
The pressure was visible in working capital. Trade receivables rose sharply from Rs 129 crore to Rs 476 crore, while inventory increased from Rs 675 crore to Rs 1,477 crore. Both receivables and inventory grew much faster than revenue, indicating that a large part of growth was locked in working capital.
To fund this expansion, short-term borrowings increased from Rs 916 crore to Rs 1,271 crore. This suggested that growth was being supported by debt rather than internal operating cash generation.
Segmentally, the growth remained strong. Copper revenue rose 65% to Rs 5,262 crore, while copper segment profit increased 85% to Rs 194 crore. Lead revenue rose 36% to Rs 3,818 crore, making it a key cash-generating business.
However, valuations remained demanding. At elevated multiples, the market was pricing in strong execution, steady cash conversion and clean working capital management. The negative operating cash flow weakened that assumption.
The company has also announced plans to set up a new plastic recycling facility with an estimated capex of Rs 15 crore, expected to become operational by Q3 FY27.
Overall, Jain Resource Recycling shares fell because investors looked beyond headline revenue and profit growth and focused on the sharp rise in receivables, inventory build-up, higher short-term borrowings and negative operating cash flow. The key number to watch in the next quarter will be operating cash flow. If it turns positive, the growth story may stabilise; if it remains negative, concerns around working capital intensity may continue.
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