The quarter's headline revenue growth of 71.61% year-on-year represents the company's strongest topline performance in recent history, with net sales reaching ₹58.88 crores—the highest quarterly figure on record. However, beneath this impressive revenue expansion lies a more complex narrative characterised by margin compression, elevated reliance on non-operating income, and persistently weak capital efficiency metrics that continue to constrain shareholder returns.
Despite the positive financial trend designation and record sales, Nupur Recyclers faces a challenging investment landscape. The stock currently carries a "SELL" rating with a Mojo Score of just 40 out of 100, reflecting concerns around stretched valuations (PEG ratio of 4.76), deteriorating technical indicators (bearish trend since October 2025), and structural profitability challenges evidenced by a meagre 10.00% average return on equity.
Financial Performance: Revenue Surge Accompanied by Margin Volatility
Nupur Recyclers' Q3 FY26 results showcase a company experiencing significant topline momentum but struggling to translate that growth into consistent bottom-line expansion. Net sales of ₹58.88 crores represented a robust 20.75% sequential increase from ₹48.76 crores in Q2 FY26 and a remarkable 71.61% year-on-year surge from ₹34.31 crores in Q3 FY25. This marks the company's highest-ever quarterly revenue, surpassing the previous peak of ₹51.18 crores recorded in September 2024.
The operating profit margin (excluding other income) improved to 10.14% in Q3 FY26 from 6.99% in the previous quarter, though it remained below the 11.53% achieved in September 2024. On an absolute basis, operating profit reached ₹5.97 crores, the highest quarterly figure in the company's recent history. However, this metric's volatility—fluctuating between 5.37% and 13.48% over the past seven quarters—raises questions about the sustainability of operational efficiency gains.
A concerning aspect of the quarter's performance is the substantial contribution of other income to profitability. Other income stood at ₹2.55 crores in Q3 FY26, representing 38.69% of profit before tax—a proportion that raises red flags about the quality of earnings. Whilst other income declined sequentially from ₹2.92 crores in Q2 FY26, it remains elevated compared to the company's core operating profit generation capacity.
The company's profit after tax margin compressed to 8.08% in Q3 FY26 from 8.88% in the previous quarter, despite the improvement in operating margins. This divergence stems from increased interest costs (₹0.84 crores versus ₹0.30 crores) and higher depreciation charges (₹1.09 crores versus ₹0.59 crores), both of which more than doubled quarter-on-quarter. The tax rate also increased to 27.77% from 20.55%, further pressuring net profitability.
| Quarter | Net Sales (₹ Cr) | QoQ Growth | Operating Margin | PAT (₹ Cr) | PAT Margin |
|---|---|---|---|---|---|
| Dec'25 | 58.88 | +20.75% | 10.14% | 4.04 | 8.08% |
| Sep'25 | 48.76 | -4.37% | 6.99% | 3.87 | 8.88% |
| Jun'25 | 50.99 | +37.00% | 7.92% | 3.54 | 7.92% |
| Mar'25 | 37.22 | +8.48% | 5.37% | 2.06 | 6.21% |
| Dec'24 | 34.31 | -32.96% | 8.54% | 3.16 | 10.11% |
| Sep'24 | 51.18 | +43.72% | 11.53% | 4.76 | 10.63% |
| Jun'24 | 35.61 | — | 13.48% | 4.48 | 14.21% |
Operational Challenges: Weak Capital Efficiency and Declining Returns
Whilst Nupur Recyclers has demonstrated capacity to grow revenues, its ability to generate attractive returns on capital deployed remains deeply troubling. The company's return on equity stands at a mere 9.88%—well below the threshold that typically attracts institutional capital and significantly lagging peers in the non-ferrous metals recycling space. This weak ROE reflects fundamental challenges in converting shareholder capital into meaningful profit generation.
The company's return on capital employed tells a similar story, registering just 7.40% in the latest period, down from an average of 10.20% over recent years. This deterioration in ROCE suggests that the company's expansion efforts are not yielding proportionate returns, with incremental capital deployed generating suboptimal profitability. For a capital-intensive recycling business, such metrics raise concerns about competitive positioning and operational efficiency.
Critical Concern: Profitability Quality
Other income contributing 38.69% of PBT: The company's dependence on non-operating income to bolster profitability is a significant red flag. With other income of ₹2.55 crores representing nearly two-fifths of profit before tax, the sustainability and quality of earnings come into question. Investors should scrutinise the sources of this other income and assess whether core operations can stand independently.
Margin volatility: Operating margins have swung wildly between 5.37% and 13.48% over the past seven quarters, indicating either inconsistent operational execution or significant input cost volatility that the company struggles to manage effectively.
The balance sheet reveals a company with modest leverage—net debt to equity of just 0.11 and debt to EBITDA of 0.92—suggesting conservative financial management. However, this prudent capital structure has not translated into superior returns, highlighting that the company's challenges are operational rather than financial in nature. With long-term debt of ₹5.40 crores and current liabilities of ₹11.99 crores against shareholder funds of ₹117.71 crores, the company maintains adequate solvency, but the question remains whether it can deploy this capital more productively.
Employee costs have risen sharply, reaching ₹2.35 crores in Q3 FY26 from ₹1.43 crores in the previous quarter and ₹1.09 crores a year ago. This 115.60% year-on-year increase in personnel expenses, whilst the company scales operations, warrants monitoring to ensure that wage inflation does not erode the operating leverage that typically accompanies revenue growth.
Industry Context: Underperformance in a Thriving Sector
The non-ferrous metals recycling sector has demonstrated robust performance over the past year, with the industry delivering returns of 54.97%. Against this backdrop, Nupur Recyclers' 37.36% decline over the same period represents a staggering 92.33 percentage point underperformance relative to its sector. This dramatic divergence suggests company-specific challenges rather than broader industry headwinds.
The recycling industry in India benefits from several structural tailwinds, including increasing environmental regulations, rising raw material costs that make recycled inputs more competitive, and government initiatives promoting circular economy principles. Despite these favourable conditions, Nupur Recyclers has failed to capitalise on sector momentum, raising questions about its competitive positioning, operational capabilities, or strategic execution.
Sector Dynamics: Missing the Industry Upswing
Whilst peers in the non-ferrous metals recycling space have thrived, Nupur Recyclers has languished. The company's inability to capture industry growth suggests either operational inefficiencies, inferior asset quality, or strategic missteps that have left it trailing competitors. With average sector ROE around 22% compared to Nupur's 10%, the performance gap is not merely cyclical but structural.
The company's five-year sales growth of -12.28% annually contrasts sharply with the industry's expansion trajectory. This negative growth rate over an extended period indicates that Nupur Recyclers has not only failed to gain market share but has actually lost ground in an expanding market. The company's EBIT growth of just 2.32% annually over five years further underscores its struggle to achieve operational scale and efficiency.
Peer Comparison: Valuation Disconnect and Profitability Gap
When benchmarked against industry peers, Nupur Recyclers presents a mixed valuation picture that ultimately tilts unfavourable. The company trades at a price-to-earnings ratio of 30.29x, higher than the peer average of approximately 22x, yet delivers significantly inferior returns on equity. This valuation premium appears unjustified given the company's operational performance and growth trajectory.
| Company | P/E (TTM) | ROE (%) | Debt/Equity | P/BV |
|---|---|---|---|---|
| Nupur Recyclers | 30.29 | 10.00% | 0.11 | 2.99 |
| Baheti Recycling | 34.14 | 17.02% | 2.14 | 10.40 |
| Bhagyanagar Industries | 14.25 | 10.63% | 1.61 | 2.28 |
| Euro Panel | 24.63 | 23.30% | 0.84 | 3.12 |
| Owais Metal | 8.18 | 33.61% | 0.20 | 2.97 |
| Sunlite Recycling | 27.83 | 23.77% | 0.31 | 5.34 |
Nupur Recyclers' return on equity of 10.00% ranks amongst the lowest in its peer group, with only Bhagyanagar Industries posting a comparable figure at 10.63%. In contrast, companies like Owais Metal (33.61% ROE), Euro Panel (23.30% ROE), and Sunlite Recycling (23.77% ROE) demonstrate the profitability levels achievable within the sector. This stark gap in capital efficiency suggests that Nupur Recyclers either operates with inferior technology, faces higher input costs, or suffers from management execution challenges.
The company's price-to-book ratio of 2.99x appears reasonable relative to its 9.88% ROE, particularly when compared to peers commanding higher multiples. However, this relative valuation attractiveness is offset by the company's negative long-term growth trajectory and deteriorating competitive position. With a PEG ratio of 4.76, the stock appears expensive relative to its growth prospects, especially considering the negative five-year sales CAGR.
Valuation Analysis: Fair Value Masks Fundamental Concerns
Nupur Recyclers currently trades at what appears to be "fair value" according to its valuation grade, with the stock having oscillated between "expensive" and "fair" classifications over recent months. At ₹54.52, the stock trades 42.00% below its 52-week high of ₹94.00 reached earlier in the cycle, but remains 11.72% above its 52-week low of ₹48.80.
The company's enterprise value to EBITDA multiple of 32.02x appears stretched, particularly for a business generating such modest returns on capital. This valuation implies market expectations for significant operational improvement that current trends do not support. The EV/EBIT ratio of 37.83x further reinforces concerns about valuation sustainability, especially given the company's reliance on other income to support reported profitability.
The absence of dividend payments, despite positive cash generation in recent quarters, suggests management prioritises capital retention for growth investments. However, given the company's track record of generating suboptimal returns on deployed capital, shareholders might prefer cash returns over reinvestment at current efficiency levels.
With the stock trading below all key moving averages—5-day (₹53.45), 20-day (₹53.19), 50-day (₹55.64), 100-day (₹61.60), and 200-day (₹67.78)—technical indicators reinforce the bearish fundamental narrative. The stock's beta of 1.50 indicates higher volatility than the broader market, amplifying downside risk in the current bearish trend that commenced in October 2025.
Shareholding Pattern: Stable Promoter Base, Negligible Institutional Interest
Nupur Recyclers' shareholding structure reflects a promoter-dominated company with minimal institutional participation. Promoter holding has remained remarkably stable at 73.02% in the December 2025 quarter, unchanged from September 2025 and up marginally from 72.54% in March 2025. This stability suggests promoter confidence but also limits free float liquidity.
| Quarter | Promoter % | FII % | MF % | Insurance % | Non-Institutional % |
|---|---|---|---|---|---|
| Dec'25 | 73.02% | 0.06% | 0.00% | 0.00% | 26.92% |
| Sep'25 | 73.02% | 0.07% | 0.00% | 0.00% | 26.91% |
| Jul'25 | 72.87% | 0.07% | 0.00% | 0.00% | 27.06% |
| Jun'25 | 72.87% | 0.07% | 0.00% | 0.00% | 27.06% |
| Mar'25 | 72.54% | 0.03% | 0.00% | 0.00% | 27.43% |
The near-total absence of institutional investors—with FII holding at a negligible 0.06%, zero mutual fund participation, and no insurance company holdings—speaks volumes about professional investors' assessment of the company's prospects. This institutional vacuum typically indicates concerns about corporate governance, growth visibility, or return potential that have deterred sophisticated capital.
The slight decline in FII holding from 0.07% to 0.06% in the latest quarter, though minimal in absolute terms, represents a negative directional signal. More concerning is the complete absence of domestic institutional investors, suggesting that even local fund managers who might better understand the company's business model have chosen to stay away.
Promoter Rajesh Gupta holds 36.36% and Anoop Garg owns 35.91%, with other family members and entities holding smaller stakes. The absence of any pledged shares is a positive indicator, suggesting promoters have not leveraged their holdings for personal financing—a practice that often signals confidence issues or capital constraints.
Stock Performance: Severe Underperformance Across All Timeframes
Nupur Recyclers' stock performance has been dismal across virtually every meaningful timeframe, with the company dramatically underperforming both the Sensex and its sector peers. Over the past year, the stock has plummeted 37.36% whilst the Sensex gained 8.82%, resulting in a negative alpha of 46.18 percentage points. This represents one of the poorest relative performances in the non-ferrous metals space.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | +3.49% | -0.87% | +4.36% |
| 1 Month | -0.22% | -0.92% | +0.70% |
| 3 Months | -17.00% | -1.92% | -15.08% |
| 6 Months | -23.25% | +2.88% | -26.13% |
| YTD | -3.81% | -2.77% | -1.04% |
| 1 Year | -37.36% | +8.82% | -46.18% |
| 2 Years | -34.93% | +15.79% | -50.72% |
| 3 Years | -30.73% | +37.11% | -67.84% |
The three-month return of -17.00% against the Sensex's -1.92% decline highlights accelerating underperformance, with negative alpha of 15.08 percentage points. This recent deterioration coincides with the stock's technical trend turning bearish in October 2025, suggesting that market participants have grown increasingly pessimistic about the company's prospects despite the recent revenue growth.
The stock's risk-adjusted return of -0.77 over the past year, compared to the Sensex's positive 0.77, places it firmly in "high risk, low return" territory—the worst possible quadrant for investors. With volatility of 48.49% compared to the Sensex's 11.46%, the stock exhibits more than four times the market's volatility whilst delivering significantly negative returns, resulting in a deeply negative Sharpe ratio.
Even the one-week performance, whilst positive at 3.49%, must be viewed in context of the stock's 42% decline from its 52-week high. Short-term bounces within a sustained downtrend rarely signal trend reversal and more often represent temporary relief rallies that ultimately fail.
Investment Thesis: Multiple Red Flags Outweigh Revenue Growth
The investment case for Nupur Recyclers presents a challenging risk-reward profile characterised by fundamental operational weaknesses, stretched valuations relative to quality, and negative technical momentum. Whilst the company has demonstrated capacity to grow revenues, this topline expansion has not translated into proportionate improvements in profitability, returns on capital, or shareholder value creation.
The company's Mojo Score of 40 out of 100 reflects these multiple concerns, placing it firmly in "SELL" territory. Key factors limiting the score include a PEG ratio of 4.76 (indicating expensive valuation relative to growth), bearish technical indicators, poor management efficiency evidenced by 10.00% ROE, and negative long-term sales growth of -12.28% annually over five years.
Key Strengths and Risk Factors
KEY STRENGTHS
- Strong revenue momentum: Q3 FY26 sales of ₹58.88 crores represent 71.61% YoY growth and the highest quarterly revenue on record
- Conservative balance sheet: Net debt to equity of just 0.11 and debt to EBITDA of 0.92 indicate low financial leverage
- No promoter pledging: Zero pledged shares signal promoter confidence and absence of financial stress
- Positive short-term trend: Financial trend classified as "Positive" with improving quarterly metrics
- Stable promoter base: Promoter holding steady at 73.02% provides governance continuity
KEY CONCERNS
- Weak capital efficiency: ROE of just 9.88% and ROCE of 7.40% significantly lag industry standards and peer performance
- Earnings quality issues: Other income represents 38.69% of PBT, raising sustainability concerns
- Margin volatility: Operating margins fluctuating between 5.37% and 13.48% indicate inconsistent operational execution
- Negative long-term growth: Five-year sales CAGR of -12.28% reflects market share losses in expanding industry
- Severe underperformance: Stock down 37.36% versus Sensex up 8.82% over past year, with 92.33% underperformance versus sector
- Zero institutional interest: Negligible FII/MF holdings suggest professional investors avoiding the stock
- Stretched valuation: PEG ratio of 4.76 and P/E of 30.29x appear expensive relative to quality and growth
Outlook: What to Watch
POSITIVE CATALYSTS
- Sustained margin improvement above 10% for multiple quarters demonstrating operational consistency
- Reduction in other income dependency with core operating profit driving earnings
- ROE improvement trajectory towards 15%+ levels through better capital deployment
- Institutional investor participation signalling improved governance or growth visibility
- Technical trend reversal with stock reclaiming 200-day moving average at ₹67.78
RED FLAGS
- Further margin compression below 8% indicating pricing power loss or cost pressures
- Continued reliance on other income exceeding 30% of PBT for multiple quarters
- Sequential revenue decline suggesting Q3 growth was temporary or unsustainable
- Additional promoter stake sales or any emergence of pledging activity
- Working capital deterioration with cash flow from operations remaining negative
- Stock breaking below 52-week low of ₹48.80 signalling technical breakdown
The Verdict: Avoid Despite Revenue Growth
Score: 40/100
For Fresh Investors: Stay away. The combination of weak capital efficiency (9.88% ROE), stretched valuations (PEG 4.76), negative long-term growth trajectory (-12.28% sales CAGR), and bearish technical momentum creates an unfavourable risk-reward profile. The recent revenue surge does not offset fundamental operational weaknesses and quality concerns. Better opportunities exist in the non-ferrous metals space with superior return profiles.
For Existing Holders: Consider exiting on any technical bounces towards ₹60-65 levels. The stock's 37% decline over the past year reflects deteriorating fundamentals that recent quarterly improvements have not reversed. With zero institutional interest and persistent underperformance versus both the market and sector, the path to sustained value creation remains unclear. Redeploy capital to higher-quality names with demonstrated ability to convert growth into shareholder returns.
Fair Value Estimate: ₹48-52 (10-15% downside from current levels), based on normalised 8-9% ROE, 15-18x P/E multiple appropriate for quality grade, and limited growth visibility beyond near-term cyclical recovery.
Note- ROCE= (EBIT - Other income)/(Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results, and all investments carry risk of loss.
