Tinna Rubber and Infrastructure · risk themes across the available quarters.
Bear-case history
Phase 1 capex completed but South Africa venture is currently losing money. Management expects to break even from Q2 FY27, indicating continued earnings pressure from international operations for at least two more quarters.
Q2 EBITDA margin of 18.5% was inflated because EPR credits were accounted for in one quarter due to government portal lag. Q3 normalized to 16.3%, making quarter-on-quarter margin comparison misleading without adjusting for this timing issue.
Analyst raised concern about declining revenue per metric ton of tire crushed. Management attributed this to tire quality mix and revenue mix changes but did not provide specific data. This trend could pressure margins if lower-grade material mix persists.
Individual investor questioned whether guidance has been consistent, noting FY26 guidance was initially 20%, then revised to 12-15%, now 8-9%. Management defended its guidance track record but the exchange reveals potential credibility sensitivity.
Bitumen prices have nearly doubled due to Middle East crisis and reduced Iranian imports. Infrastructure revenue declined from Rs 222 crore to Rs 205 crore in FY26. Management expects Q1-Q2 softness before normalization as road construction activity resumes.
Oman plant performance was impacted by higher raw material costs and geopolitical disruptions in GCC region. While the plant reached break-even on standalone basis, management expects normalization within Q1 FY27 after implementing corrective actions.
Geopolitical tensions in Middle East led management to delay commencement of capital works for the 24,000 ton/year Saudi Arabia tire recycling facility. Expected to begin work possibly during end of Q2 or Q3, representing uncertainty in Vision 2029 timeline.
Receivable days increased from 42 to 55 days due to new PCMBB business where industry practice involves higher credit periods. Management expects working capital to remain at current levels, potentially constraining cash flow as business scales.